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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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