Cengage_Now_Assignment_9_Solutions

# Cengage_Now_Assignment_9_Solutions - Answer C BE(\$ = Fixed...

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Cengage Now Assignment 9 Solutions 1. (MC 6-3) Answer: B 2. (MC 6-5) Answer: A The net income will increase by the CM per unit multiplied by the increase in units sold. The CM per unit is \$10 so income will increase by \$10,000. 3. (MC 6-6) Answer: B The net income will increase by the contribution margin per unit multiplied by the increase in units sold. The contribution margin per unit is \$1.25 (\$4.50 sales price - \$3.25 variable cost). 4. (MC 6-7) Answer: C Operating leverage = Contribution margin Net income Operating leverage = \$200,000 = 2 \$100,000 5. (MC 6-8) Answer: B Operating leverage = \$200,000 / \$100,000 = 2 If sales increase by 20%, income will increase by 2 x 20% or 40% to \$140,000 6. (MC 6-10) Answer: D A \$25,000 reduction in sales will decrease contribution margin by \$8,500 (\$25,000 x .34). If fixed costs increase by \$7,000, income will decrease by \$15,500.

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7. (MC 6-12)
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Unformatted text preview: Answer: C BE (\$) = Fixed Costs Contribution margin ratio where CM ratio = \$4.00/\$6.00 BE (\$) = \$12,000 66.67% BE (\$) = \$18,000 8. (MC 6-13) Answer: C BE (units) = Fixed Costs Contribution margin per unit CM ratio = CM per unit Sales price per unit .35 = CM per unit \$6 CM per unit = \$2.10 BE (units) = \$42,000 = 20,000 units \$2.10 9. (MC 6-14) Answer: A Units = __Fixed Costs+ Target profit Contribution margin per unit CM ratio = CM per unit Sales price per unit .35 = CM per unit \$6 CM per unit = \$2.10 Units to reach target profit = \$42,000 + \$50,000 = 43,810 units \$2.10 10. (MC 6-16) Answer: D Sales Volume (\$) to reach after-tax profit = [FC + After-tax profit/(1 – tax rate)] CM ratio Sales Volume (\$) to reach after-tax profit = [\$20,000 + 60,000/(1 - .40)] .80 Sales Volume (\$) to reach after-tax profit = \$150,000...
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## This note was uploaded on 01/11/2011 for the course ACC 200 taught by Professor Buckless during the Winter '08 term at N.C. State.

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Cengage_Now_Assignment_9_Solutions - Answer C BE(\$ = Fixed...

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