examchap6

# examchap6 - Folk Exam Questions - Chapter 6 1. A company...

This preview shows pages 1–2. Sign up to view the full content.

Folk Exam Questions - Chapter 6 1. A company has provided the following data: Sales 12,000 units Sales price \$100 per unit Variable cost \$50 per unit Fixed cost \$300,000 If the dollar contribution margin per unit is increased by 10%, total fixed cost is decreased by 20%, and all other factors remain the same, by how much will net income increase? Solution: Current Change Revised Sales (12,000 x \$100) \$1,200,000 Less variable expenses (12,000 x \$50) 600,000 Contribution margin 600,000 \$ 60,000 (1) \$660,000 Less fixed expenses 300,000 (60,000 ) (2) 240,000 Net income \$ 300,000 \$120,000 \$420,000 (1) \$600,000 x 10% = \$60,000 (2) \$300,000 x 20% = \$60,000 2. Hamada Company sells a single product. The product has a selling price of \$100 per unit and variable expenses of 80% of sales. If the company's fixed expenses total \$150,000 per year, what will the break-even be? Solution: The contribution margin (CM) percentage may be calculated as: Sales percentage (100%) minus Variable expenses percentage equals CM percentage

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 04/06/2012 for the course 10 275 taught by Professor Sahay during the Summer '11 term at Rutgers.

### Page1 / 2

examchap6 - Folk Exam Questions - Chapter 6 1. A company...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online