Homework Answers
[As HOMEWORKLIB’s policy and guideline, the first-four MCQs are answered below:]
65.
Answer: a
Fixed cost should be calculated first.
Fixed cost = Breakeven sale × Contribution margin ratio
= $200,000 × 40%
= $80,000
Income before tax = Income after tax / Tax rate
= $50,000 / 50%
= $100,000
Contribution = Fixed cost + Income before tax = $80,000 + $100,000 = $180,000
Total sale = Contribution / Contribution margin
= $180,000 / 40%
= $450,000
66.
Answer: a
Pretax-income = Contribution – Fixed cost
Contribution = Sales – Variable cost
Since the fixed cost remains the same but contribution decreases, as per the equation pretax income would decrease certainly with equal amount of decrease.
68.
Answer: b
This is total FC curve. Fixed cost remains unchanged by the change in units of production. This is the reason why it becomes parallel to X axis.
69.
Answer: a
This is total VC curve. Variable cost changes by the change in units of production. It becomes 0 when there is no production and increases constantly as unit increases. Therefore, it starts from 0 and goes upward. This is the reason why the curve is upward slopping from left to right.
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65, Chisholm Co. has a contribution margin ratio of 40% and a breakeven point of $200,000...
68. Data extracted from the accounting information system of Turner Corporation produced the following graph. The...
68. Data extracted from the accounting information system of Turner Corporation produced the following graph. The equation of the dashed line is y $25x; the equation of the solid line is y $200 $5x. 600 $500 400 $300 200 $100 The solid line represents: a) Total variable costs b) Total fixed costs c) Total costs d) Total revenues Answer: C Difficulty: Easy Learning Objective: Apply CVP calculations for a single CPA: Management Accounting 69. Data extracted from the accounting information...
95. Ferguson Co. incurs $568,000 in fixed costs while producing three products with the following characteristics:...
95. Ferguson Co. incurs $568,000 in fixed costs while producing three products with the following characteristics: Sales Mix Unit Product (Units) $900 600 35% What is the breakeven point in units? a) 400 b) 240 c) 299 d) 800 Answer: d Difficulty: Medium Learning Objective: Apply CVP calculations for multiple CPA: Management Accounting 96. Ferguson Co. incurs $568,000 in fixed costs while producing three products with the following characteristics: Sales Mix Unit Product (Units) $900 600 400 45% At the...
39. The Puppet Co. has the following unit and mix data: Dah To $4.00 0.6 20%...
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...
52. The cost function for Ciao Company is: TC $800+0.375 Revenue. If Ciao expects after-tax income...
52. The cost function for Ciao Company is: TC $800+0.375 Revenue. If Ciao expects after-tax income of $600, and the tax rate is 40%, what is the firm's margin of safety? a) $3,680 b) $2,400 c) $2,880 d) $1,600 Answer: d Difficulty: Hardard Learning Objective: Assess operational risk using margin of safety and operating leverage CPA: Management Accounting 53. Terry's Donut Shop had the following activity for Total donuts sold 17,000 Total revenues $595,000 Total fixed costs 99.000 Total variable...
82. Dundas Inc. manufactures a single product. The product sells for $10. The variable manufacturing cost...
82. Dundas Inc. manufactures a single product. The product sells for $10. The variable manufacturing cost per unit is $2 and the variable selling cost is $2 per unit. Dundas incurs monthly fixed costs of $100,000 for manufacturing and $140,000 for administration and selling If Dundas raises its selling price by 10% in response to a 10% increase in variable costs, and income taxes are 40%, its new breakeven point in sales dollars (relative to that of the original data...
76. A firm selling three products has the following data: Unit Unit Variable Product Sales Mix...
76. A firm selling three products has the following data: Unit Unit Variable Product Sales Mix Price Cost 60,000 units $40 S20 40,000 units 60 30 20,000 units 30 5 If the firm can change the sales mix from 60,000 P, 40,000 Q, and 20,000 R to 60,000 P, 20,000 Q, and 40,000 R, pre-tax income will be a) Lower b) Higher c) Unchanged d) Cannot be determined Answer: a Difficulty: Medium Learning Objective: Apply CVP calculations for multiple products....
ROGERS 1:47 PM 37% і Done tb03.docx 31. If sales are $80,000, variable costs are $50,000,...
ROGERS 1:47 PM 37% і Done tb03.docx 31. If sales are $80,000, variable costs are $50,000, and fixed costs are $20,000, the contribution margin ratio is: a) 37.5% b) 12.5% c) 62.5% d) 25.0% Answer: a Difficulty: Easy Learning Objective: Apply CVP calculations for a single product. CPA: Management Accounting 32. Hangers Co. manufactures and sells a single product. This product has the following operational data Unit sales price 30 Variable Fixed manufacturing costs 72,000 Variable selling cost per unit...
35. PhotoMix Corporation produces three products. Cost, price, and volume data is shown below: Total Fixed...
35. PhotoMix Corporation produces three products. Cost, price, and volume data is shown below: Total Fixed costs $2.400 Tax rate 40% Candle Holders Holders Holders Normal volume Price per unit Variable cost per unit 150 $5 $10 3 2 When using units as the measure, what proportion of the sales mix do picture holders represent? Round to the nearest whole percent. a) 33% b) 46% c) Some other percentage d) Cannot be determined Answer: b Difficulty: Easy Learning Objective: Explain...
46. Tom and Mike are installing new flooring in their home. The house has 5 rooms...
46. Tom and Mike are installing new flooring in their home. The house has 5 rooms of approximately equal size where the flooring will be replaced. Tom and Mike spent 3 hours removing the old flooring from the first room. If Tom and Mike are operating with an 85% learning curve, what is the estimated average time to remove the flooring from all 5 rooms? Note: In(85%)/ In(2)--0.234. a) 2.05 hours total b) 2.05 hours per room c) 2.55 hours...
40. The labour cost to construct the first unit of a special piece of equipment was...
40. The labour cost to construct the first unit of a special piece of equipment was $126,000. If labour costs are subject to a 90% learning curve, what will be the cost to build the second unit? Use the following values as needed to respond In(95%) / ln(2)s-0074 In(90%) /ln(2) =-0.152 In(8596) / ln(2) =-0.234 In(80%) / In(2) =-0.322 n(75%)/In(2) =-0.415 In(70%)/In(2) -0.515 a) $126,000 b) $113,000 c) $100,800 d) $113,400 Answer: d 41 A firm will build 8 units...
68. Data extracted from the accounting information system of Turner Corporation produced the following graph. The equation of the dashed line is y $25x; the equation of the solid line is y $200 $5x. 600 $500 400 $300 200 $100 The solid line represents: a) Total variable costs b) Total fixed costs c) Total costs d) Total revenues Answer: C Difficulty: Easy Learning Objective: Apply CVP calculations for a single CPA: Management Accounting 69. Data extracted from the accounting information...
95. Ferguson Co. incurs $568,000 in fixed costs while producing three products with the following characteristics: Sales Mix Unit Product (Units) $900 600 35% What is the breakeven point in units? a) 400 b) 240 c) 299 d) 800 Answer: d Difficulty: Medium Learning Objective: Apply CVP calculations for multiple CPA: Management Accounting 96. Ferguson Co. incurs $568,000 in fixed costs while producing three products with the following characteristics: Sales Mix Unit Product (Units) $900 600 400 45% At the...
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...
52. The cost function for Ciao Company is: TC $800+0.375 Revenue. If Ciao expects after-tax income of $600, and the tax rate is 40%, what is the firm's margin of safety? a) $3,680 b) $2,400 c) $2,880 d) $1,600 Answer: d Difficulty: Hardard Learning Objective: Assess operational risk using margin of safety and operating leverage CPA: Management Accounting 53. Terry's Donut Shop had the following activity for Total donuts sold 17,000 Total revenues $595,000 Total fixed costs 99.000 Total variable...
82. Dundas Inc. manufactures a single product. The product sells for $10. The variable manufacturing cost per unit is $2 and the variable selling cost is $2 per unit. Dundas incurs monthly fixed costs of $100,000 for manufacturing and $140,000 for administration and selling If Dundas raises its selling price by 10% in response to a 10% increase in variable costs, and income taxes are 40%, its new breakeven point in sales dollars (relative to that of the original data...
76. A firm selling three products has the following data: Unit Unit Variable Product Sales Mix Price Cost 60,000 units $40 S20 40,000 units 60 30 20,000 units 30 5 If the firm can change the sales mix from 60,000 P, 40,000 Q, and 20,000 R to 60,000 P, 20,000 Q, and 40,000 R, pre-tax income will be a) Lower b) Higher c) Unchanged d) Cannot be determined Answer: a Difficulty: Medium Learning Objective: Apply CVP calculations for multiple products....
ROGERS 1:47 PM 37% і Done tb03.docx 31. If sales are $80,000, variable costs are $50,000, and fixed costs are $20,000, the contribution margin ratio is: a) 37.5% b) 12.5% c) 62.5% d) 25.0% Answer: a Difficulty: Easy Learning Objective: Apply CVP calculations for a single product. CPA: Management Accounting 32. Hangers Co. manufactures and sells a single product. This product has the following operational data Unit sales price 30 Variable Fixed manufacturing costs 72,000 Variable selling cost per unit...
35. PhotoMix Corporation produces three products. Cost, price, and volume data is shown below: Total Fixed costs $2.400 Tax rate 40% Candle Holders Holders Holders Normal volume Price per unit Variable cost per unit 150 $5 $10 3 2 When using units as the measure, what proportion of the sales mix do picture holders represent? Round to the nearest whole percent. a) 33% b) 46% c) Some other percentage d) Cannot be determined Answer: b Difficulty: Easy Learning Objective: Explain...
46. Tom and Mike are installing new flooring in their home. The house has 5 rooms of approximately equal size where the flooring will be replaced. Tom and Mike spent 3 hours removing the old flooring from the first room. If Tom and Mike are operating with an 85% learning curve, what is the estimated average time to remove the flooring from all 5 rooms? Note: In(85%)/ In(2)--0.234. a) 2.05 hours total b) 2.05 hours per room c) 2.55 hours...
40. The labour cost to construct the first unit of a special piece of equipment was $126,000. If labour costs are subject to a 90% learning curve, what will be the cost to build the second unit? Use the following values as needed to respond In(95%) / ln(2)s-0074 In(90%) /ln(2) =-0.152 In(8596) / ln(2) =-0.234 In(80%) / In(2) =-0.322 n(75%)/In(2) =-0.415 In(70%)/In(2) -0.515 a) $126,000 b) $113,000 c) $100,800 d) $113,400 Answer: d 41 A firm will build 8 units...
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