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# Ac314-Q 2 - X THE FOLLOWING INFORMATION APPLIES TO...

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X £ ......................... - - - ............................................. THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 1 THROUGH 4: Kaiser’s Kraft Korner sells a single product. 7,000 units were sold resulting in \$70,000 of sales revenue, \$28,000 of variable costs, and \$12,000 of fixed costs. 1. Contribution margin per unit is a. \$4.00 b. \$4.29 c. \$6.00 d. None of these answers are correct. Answer : c (\$70,000 – \$28,000) / 7,000 units = \$6 per unit 2. Breakeven point in units is: Answer : a \$10X – \$4X – \$12,000 = 0; X = 2,000 units 3. The number of units that must be sold to achieve \$60,000 of operating income is: Answer : c 10X – 4X – 12,000 = 60,000; X = 12,000 units 4. If sales increase by \$25,000, operating income will increase by: Answer : b [(\$70,000 – \$28,000) / \$70,000] x \$25,000 = \$15,000

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