Question

Question 20 4 pts Cunningham, Inc. sells MP3 players for $60 each. Variable costs are $40 per unit, and fixed costs total $120,000. How many MP3 players must Cunningham sell to earn net income of $280,000? 20,000 5,000. 6,000. 7,000.

Answer 1

Q:20 Cunningham Inc.,

Selling price - $ 60

Variable cost - $ 40

Contribution margin = Selling price - Variable cost

= 60 - 40 = $ 20

Fixed cost - $ 120,000

Units to earn $ 280,000 = (Fixed cost + Income) / Contribution margin per unit

= (120,000 + 280,000) / $ 20 = 20,000 units

Q:23 Mercantile corporation

Sales $ 20,00,000

Variable cost $ 800,000

Fixed cost $ 900,000

Degree of operating leverage = Contribution / Net income

= (20,00,000-800,000) / (20,00,000-800,000-900,000)

= 12,00,000/300,000 = 4.0

Q:28 Swanson Company

Break even point = Fixed cost / Contribution margin ratio

= 66,60,000/{ (30%×65%) + (50%×35%) }

= 66,60,000 / 37% = $ 180,00,000

Q:29 Swanson Company

BEP sales = $ 180,00,000 × 35%

BEP sales of Sporting Goods Division = $ 63,00,000