MSQ-01 - Activity Cost & CVP Analysis (Final)

# Abc company breaks even at 300000 sales and earns

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29. ABC Company breaks even at \$300,000 sales and earns \$30,000 at \$350,000 sales. Which of the following is true? MSQ-01 Page 9
30. A company has sales of \$500,000, variable costs of \$300,000, and pretax profit of \$150,000. If the company increased the sales price per unit by 10%, reduced fixed costs by 20%, and left variable cost per unit unchanged, what would be the new breakeven point in sales dollars? A . \$88,000 B. \$100,000 C. \$110,000 D. \$125,000 31. The Machan Manufacturing Company’s year-end income statement is as follows: Sales (20,000 units) \$360,000 Variable costs 220,000 Contribution margin \$140,000 Fixed costs 105,000 Net income \$ 35,000 Management is unhappy with the results and plans to make some changes for next year. If management implements a new marketing program, fixed costs are expected to increase by \$19,200 and variable costs to increase by \$1 per unit. Unit sales are expected to increase by 15 percent. What is the effect on income? A. decrease of \$21,200 E. no change B. increase of \$1,800 E. increase of \$14,800 C. increase of \$13,800
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