EXAM 4 - EXAM 4 1.

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EXAM 4 1.  Scobie Corporation's fixed monthly expenses are $16,000 and its contribution margin ratio is 57%.  Assuming that the fixed monthly expenses do not change, what is the best estimate of the  company's net operating income in a month when sales are $69,000? A) $39,330 B) $23,330 C) $13,670 D) $53,000 Feedback:  Points Earned:  0.0/1.0  Correct Answer(s): 2.  Hurst Co. manufacturers and sells a single product. Price and cost data regarding this product are  as follows:       In the current year, the company sold 43,000 units. Due to competition, management will be forced  to lower the selling price by 10% next year. How many units must be sold next year to earn the  same income as was earned in the current year? A) 50,000 units B) 53,200 units C) 58,800 units D) 60,200 units Feedback:  Variable expenses per unit = $20 + $6 = $26 Total fixed expenses = $208,000 + $324,000 = $532,000 Last year's net operating income:
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New selling price per unit = $40 - (10% x $40) = $36 New contribution margin per unit = $36 - $26 = $10 Sales to achieve target profit = ($532,000 + $70,000)  $10 = 60,200 units Points Earned:  0.0/1.0  Correct Answer(s): 3.  Data concerning Enslow Corporation's single product appear below:      The break-even in monthly unit sales is closest to: A) 6,711 B) 4,390 C) 12,495 D) 3,249 Feedback:  Contribution margin per unit = $200 - $52 = $148 Break-even point in units = $649,720  $148 = 4,390 Points Earned:  0.0/1.0  Correct Answer(s): 4. 
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The following is last month's contribution format income statement:      What is the company's margin of safety in dollars? A) $100,000 B) $600,000 C) $1,500,000 D) $250,000 Feedback:  Break-even in total sales dollars = Fixed expenses  Contribution margin ratio = $500,000  0.40 = $1,250,000 Margin of safety in dollars = Sales - Break-even sales = $1,500,000 - $1,250,000 = $250,000 Points Earned:  0.0/1.0  Correct Answer(s): 5.  Once the break-even point is reached: A) the total contribution margin changes from negative to positive. B) net operating income will increase by the unit contribution margin for each additional item  sold. C) variable expenses will remain constant in total. D) the contribution margin ratio begins to decrease. Points Earned:  0.0/1.0  Correct Answer(s):
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6.  Wertman Corporation produces and sells a single product with the following characteristics:     The company is currently selling 3,000 units per month. Fixed expenses are $215,000 per month.  Consider each of the following questions independently.  
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This note was uploaded on 07/10/2010 for the course ACCT 222 taught by Professor Jones during the Spring '08 term at Johnson County Community College.

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EXAM 4 - EXAM 4 1.

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