Question

The following data are available for product no. CK74, manufactured and sold by Ruby Corporation:

Maximum capacity with present facilities		6,500	units
Total fixed cost (per period)	$	736,300
Variable cost per unit	$	117.00
Sales price per unit	$	191.00

31) The contribution margin per unit for product no. CK74 is:

Multiple Choice

• $74.00.

• $56.00.

• $154.00.

• $34.00.

32) The number of units of CK74 that Ruby must sell to break- even is:

Multiple Choice

• 3,855.

• 4,111.

• 6,293.

• 9,950.

33) Accents Associates sells only one product, with a current selling price of $110 per unit. Variable costs are 30% of this selling price, and fixed costs are $16,800 per month. Management has decided to reduce the selling price to $105 per unit in an effort to increase sales. Assume that the cost of the product and fixed operating expenses are not changed by this reduction in selling price.

At the current selling price of $110 per unit, the contribution margin ratio is:

Multiple Choice

• 70%

• 140%

• 30%

• 33%

34) At the current selling price of $110 per unit, the dollar volume of sales per month necessary for Accents to break-even is:

Multiple Choice

• $16,800.

• $24,000.

• $80,000.

• Some other amount.

35) At the current selling price of $110 per unit, what dollar volume of sales per month is required for Accents to earn a monthly operating income of $10,200?

Multiple Choice

• $16,800.

• $300,000.

• $38,571.

• Some other amount.

Answer 1

31. Contribution margin per unit = Sales price per unit - Variable cost per unit

= 191 - 117

= 74

Option A is the answer

32. Break-even point = Fixed cost/Contribution margin per unit

= 736,300/74

= 9950 units

Option D is the answer