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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