Q1 | For calculating Break even point we need the Fixed cost and contribution Margin | |||||
So we do not require the Units sold | ||||||
So option a | ||||||
Q2 | The labor efficiency variance measures the ability to utilize labor in accordance with expectations | |||||
This variance is calculated as the difference between the actual labor hours used to produce an item and the standard amount that should have been used, multiplied by the standard labor rate. | ||||||
So if an untrainded workers is used then he will take more hours and it will effect the efficiency of work | ||||||
So option c | ||||||
Q3 | Break even point | = | Fixed cost/Sales price per unit - Variable cost per unit | |||
500 | = | $10,000/Sales price per unit - $12 | ||||
Sales price per unit | = | $32 | ||||
So contribution Margin | = | $32 - $12 | $20 | |||
At 501 units Contribution Margin | = | $10,020 | ||||
(501*$20) | ||||||
Fixed cots | = | $10,000 | ||||
Profit | = | $20 | ||||
So option c | ||||||
Q4 | Option b is not a correct definition of Break-even Point | |||||
The Break-even Point is a point where the profit is ZERO | ||||||
Q5 | Contribution Margin Ratio | = | Contribution Margin/Sales | |||
OR | ||||||
= | Sales - Variable expense/Sales | |||||
Q6 | Solve it by an example where Fixed cost is same at $10,000 | |||||
Normal | 10% increase from normal | |||||
Sales | 10 | 11 | ||||
Variable cost | 6 | 6.6 | ||||
Contribution Margin per unit | 4 | 4.4 | ||||
Contribution Margin Ratio | 40% | 40% | ||||
Break-even unit | 2500 | 2272.73 | ||||
By the above example it clear that answer is option d |
Exam #2 Review I. Which of the following would not affect the units required to break-even?...
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