Question

If sales are $820,000, variable costs are 55% of sales, and operating income is $260,000, what is the contribution margin ratio?

	a.	45%
	b.	55%
	c.	62%
	d.	32%

________2. A firm operated at 90% of capacity for the past year, during which fixed costs were $420,000, variable costs were 40% of sales, and sales were $1,000,000. Operating profit was:

	a.	$180,000
	b.	$420,000
	c.	$1,080,000
	d.	$980,000

________3. Bryce Co. sales are $914,000, variable costs are $498,130, and operating income is $196,000. What is the contribution margin ratio?

	a.	52.2%
	b.	28.4%
	c.	54.5%
	d.	45.5%

________4. A firm operated at 80% of capacity for the past year during which fixed costs were $330,000, variable costs were 70% of sales, and sales were $1,000,000. Operating profit (loss) was:

	a.	$140,000
	b.	$(30,000)
	c.	$370,000
	d.	$670,000

________5. Zeke Company sells 25,000 units at $21 per unit. Variable costs are $10 per unit, and the fixed costs are $75,000. The contribution margin ratio and the unit contribution margin are:

	a.	47% and $11 per unit
	b.	53% and $7 per unit
	c.	47% and $8 per unit
	d.	52% and $11 per unit

________6. If the fixed costs are $1,200,000, the unit selling price is $240, and the unit variable costs are $110, what is the amount of sales required to realize an operating income of $200,000?

	a.	9,231 units
	b.	12,000 units
	c.	10,769 units
	d.	5,833 units

________7. If the fixed costs are $500,000, the unit selling price is $55, and the unit variable costs are $30, what is the break-even sales (units) if the fixed costs are increased by $80,000?

	a.	10,545 units
	b.	19,333 units
	c.	23,200 units
	d.	25,000 units

________8. Reynold's Grocery has fixed costs of $350,000, the unit selling price is $29, and the unit variable costs are $20. What is the break-even sales (units) if the variable costs are decreased by $4?

	a.	26,923 units
	b.	12,069 units
	c.	21,875 units
	d.	38,889 units

________9. Johnson's Plumbing's fixed costs are $700,000 and the unit contribution margin is $17. What amount of units must be sold in order to realize an operating income of $100,000?

	a.	5,000
	b.	41,176
	c.	47,059
	d.	58,882

________10. If the fixed costs are $561,000 and the unit contribution margin is $8.00, what is the break-even point in units if the variable costs are decreased by $0.50 a unit?

	a.	66,000
	b.	70,125
	c.	74,800
	d.	60,000

Answer 1

1. Contribution margin ratio = 100% - Variable cost ratio = 100% - 55% = 45% Option A is the answer
2. Operating profit = Contribution margin - Fixed cost = (1,000,000*60%) - 420,000 = 180,000 Option A is the answer
3. Contribution margin ratio = (Sales - Variable cost) /Sales = (914,000-498,130)/914,000 = 45.5% Option D is the answer
4. Operating profit = Contribution margin - Fixed cost = (1,000,000*30%) - 330,000 = (30,000) Option B is the answer