Question

1. PNG electric company manufactures a number of electric products. Rechargeable light is one of the PNG's products that sells for $180/unit. Total fixed expenses related to rechargeable electric light are $270,000 per month and variable expenses involved in manufacturing this product are $126 per unit. Monthly sales are 8,000 rechargeable lights. If PNG decreases selling price by 10% and sells 10,000 units what is the profit or loss? a. 200,000 b. 90,000 C. -50,000 d. 300,00 2. Kool Company sells its only product for $11 per unit, and variable costs include production costs at $3 per unit, and selling and administrative costs at $2.50 per unit. Fixed costs for 10,000 units are $5,000. The contribution margin is: a. $6.00 per unit b. $4.50 per unit c. $5.50 per unit d. $4.00 per unit 3. PNG electric company manufactures a number of electric products. Rechargeable light is one of the PNG's products that sells for $180/unit. Total fixed expenses related to rechargeable electric light are $270,000 per month and variable expenses involved in manufacturing this product are $126 per unit. Monthly sales are 8,000 rechargeable lights. What is the break even point in sales dollars? a. 1,000,000 b. 2,000,000 c. 500,000 d. 900,000 4. YCD Company sells its only product for $12 per unit, variable production costs are $2 per unit, and variable selling and administrative costs are $1 per unit. Fixed costs for 10,000 units are $40,000. The contribution margin ratio is: a. 82% b. 35% C. 68% d. 75%

Answer the questions above

Answer 1

1) Selling Price = (180*0.90) =162

Profit = ( Selling Price - Variable cost)*Units - Fixedcost

=(162-126)*1000-270,000

= $90,000 (Answer) Option : B)

2) Contribution MArgin = Selling Price - Variable cost

= $11-(3+2.50) = 11-5.5 = $5.50

Answer : C) $5.50

3)

Break Even Point = Fixed Cost / CM Ratio

CMratio = (180-126)/180 = 30%

Break Even Sales = 270,000 /30% = $900,000

Answer : D) $900,000

4) Contibution MArgin ratio = Contribution MArgin / Selling Price

Contribution Margin = 12-(2+1)= 12-3 =9

Contribution MArgin Ratio = 9/12 =75%

Answer : D) 75%