Question

39. The Puppet Co. has the following unit and mix data: Dah To $4.00 0.6 20% $5.00 Unit sales price Unit contribution margin Sales mix (S) Fixed costs Target 0.75 $99,000 24.750 How many units of Dah must be sold at the breakeven point? a) 75,000 b) 27,500 c) 37,500 d) 55,000 Answer: b Difficulty: Easy Learning Objective: Apply CVP calculations for a single CPA: Management Accounting 40. The Puppet Co. has the following unit and mix data: Dah To $4.00 20% $99,000 24,750 $5.00 Unit sales price Unit contribution margin Sales mix ($) Fixed costs Target profit 0.75 80% 0.60 How many units in total must be sold to earn the target profit? a) 687,500 b) 165,000 c) 112,500 d) 171,875 Answer: d Difficulty: Easy Learning Objective: Apply CVP calculations for a single

Answer 1

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Answer 39
			Do	Dah	total
	unit sale price		5	4
	Unit contribution margin		0.75	0.6
	Mix		80%	20%
	Unit contribution margin * mix		0.60	0.12	0.72
	Fixed cost =				99000
	Break even unit = 99000/.72				137,500
	Dah must sale = 137500*20%				27,500
	Correct answer is option b. 27500
Answer 40
			Do	Dah	total
	unit sale price		5	4
	Unit contribution margin		0.75	0.6
	Mix		80%	20%
	Unit contribution margin * mix		0.60	0.12	0.72
	Fixed cost =				99000
	Target profit =				24750
	Total contribution required				123750
	Unit required to sale = 123750/.72				171,875
	Correct answer is option d. 171875
Answer 41
	Sale price per unit		60
	Variable cost per unit =15+10		25
	Contribution margin		35
	Fixed cost =35000+60000		95000
	Break even unit =95000/35		2,714
	Correct answer is option c. 2714
Answer 42
	Current break even unit
	Sale price per unit		10
	Variable cost per unit =2+2		4
	Contribution margin		6
	Fixed cost =100000+140000		240000
	Break even unit =240000/6		40,000
	New break even unit
	Sale price per unit		10
	Variable cost per unit =2+2		3
	Contribution margin		7
	Fixed cost		350000
	Break even unit =240000/6		50,000
	Correct answer is option a. Greater than before (50000 unit compared to 40000 earlier)