Question 1

Information regarding a product manufactured and sold by Schiffman is shown below:
 
-Refer to the above data. The contribution margin ratio for this product is:

Accepted Answer

B

Question 2

Information regarding a product manufactured and sold by Schiffman is shown below:
 
-Refer to the above data. The number of units Schiffman must sell to break even is: (rounded)

Accepted Answer

B

Question 3

Information regarding a product manufactured and sold by Schiffman is shown below:
 
-Refer to the above data. The dollar sales volume necessary to produce monthly operating income of $12,000 before taxes is:

Accepted Answer

D

Question 4

The monthly high and low levels of units and total manufacturing overhead for Ratnere Company are shown below:
 
-Refer to the above data. The cost formula for Ratnere's monthly overhead cost can be expressed as:

Accepted Answer

The answer of The monthly high and low levels of...

Question 5

The monthly high and low levels of units and total manufacturing overhead for Ratnere Company are shown below:
 
-Refer to the above data. In a month in which 30,000 equivalent full units are produced, Ratnere's manufacturing overhead should be approximately:

Accepted Answer

The answer of The monthly high and low levels of...

Question 6

Management predicts total sales for June to be $3,000,000, yielding a margin of safety of $1,000,000 and a contribution margin ratio of 25%. Which of the following amounts is not consistent with this information?

Accepted Answer

The variable costs cannot be $750,000 because with a contribution margin ratio of 25%, the contribution margin is $750,000 (25% of $3,000,000), meaning variable costs should be $2,250,000, not $750,000.

Question 7

The recent high and low levels of hours operated and monthly repair cost for heavy equipment for Universal Mfg. are shown below:
 
-Refer to the above data. Using the high-low method, compute the variable element of repair cost per hour of operation for Universal's equipment.

Accepted Answer

The high-low method calculates the variable cost per unit by taking the difference in costs between the highest and lowest activity levels and dividing it by the difference in activity levels. Here, the variable element of repair cost per hour is $0.30.

Question 8

The recent high and low levels of hours operated and monthly repair cost for heavy equipment for Universal Mfg. are shown below:
 
-Refer to the above data. Using the high-low method, compute the fixed element of Universal's monthly repair cost.

Accepted Answer

The high-low method calculates the fixed cost by taking the total cost at the highest activity level and subtracting the variable cost (variable rate multiplied by the highest activity level). The difference between the highest and lowest total costs is divided by the difference in activity levels to find the variable rate. The fixed cost is then found by subtracting the total variable cost from the total cost at either the high or low activity level.

Question 9

The recent high and low levels of hours operated and monthly repair cost for heavy equipment for Universal Mfg. are shown below:
 
-Refer to the above data. The total estimated repair cost for a month in which Universal operates equipment for 19,000 hours is:

Accepted Answer

The total estimated repair cost for a month in which Universal operates equipment for 19,000 hours is $5,950. This is calculated by multiplying the number of hours operated by the repair cost per hour.

Question 10

Perkins Corporation manufactures two products; data are shown below:
 If Perkins' monthly fixed costs average $425,000, what is its break-even point expressed in sales dollars?

Accepted Answer

The answer of Perkins Corporation manufactures two products; data are...

Question 11

Paulsen Company sells only one product. The regular selling price is $50. Variable costs are 70% of this selling price, and fixed costs are $7,500 per month.
Management decides to increase the selling price from $50 to $55 per unit. Assume that the cost of the product and the fixed operating expenses are not changed by this pricing decision.
-Refer to the above data. At the original selling price of $50 per unit, what is the contribution margin ratio?

Accepted Answer

The answer of Paulsen Company sells only one product. The...

Question 12

Paulsen Company sells only one product. The regular selling price is $50. Variable costs are 70% of this selling price, and fixed costs are $7,500 per month.
Management decides to increase the selling price from $50 to $55 per unit. Assume that the cost of the product and the fixed operating expenses are not changed by this pricing decision.
-Refer to the above data. At the original selling price of $50 per unit, how many units must Paulsen sell to break even?

Accepted Answer

The answer of Paulsen Company sells only one product. The...

Question 13

Paulsen Company sells only one product. The regular selling price is $50. Variable costs are 70% of this selling price, and fixed costs are $7,500 per month.
Management decides to increase the selling price from $50 to $55 per unit. Assume that the cost of the product and the fixed operating expenses are not changed by this pricing decision.
-Refer to the above data. At the original selling price of $50 per unit, what dollar volume of sales per month is required for Paulsen to earn a monthly operating income of $5,000 (round final answer to whole number)?

Accepted Answer

The answer of Paulsen Company sells only one product. The...

Question 14

Paulsen Company sells only one product. The regular selling price is $50. Variable costs are 70% of this selling price, and fixed costs are $7,500 per month.
Management decides to increase the selling price from $50 to $55 per unit. Assume that the cost of the product and the fixed operating expenses are not changed by this pricing decision.
-Refer to the above data. At the increased selling price of $55 per unit, what is the contribution margin ratio (round final answer to 1 decimal place)?

Accepted Answer

The answer of Paulsen Company sells only one product. The...

Question 15

Paulsen Company sells only one product. The regular selling price is $50. Variable costs are 70% of this selling price, and fixed costs are $7,500 per month.
Management decides to increase the selling price from $50 to $55 per unit. Assume that the cost of the product and the fixed operating expenses are not changed by this pricing decision.
-Refer to the above data. At the increased selling price of $55 per unit, what dollar volume of sales per month is required to break-even (use the contribution margin ratio computed in question 4)?

Accepted Answer

The answer of Paulsen Company sells only one product. The...

Question 16

Rhinefold brews reduced calorie beer and regular beer. Sales of its reduced calorie beer represent 25% of the company's total revenue. Sales of regular beer represent the remaining 75%. Reduced calorie beer has a contribution margin ratio of 80%, whereas the contribution margin ratio of regular beer is only 60%. Rhinefold's monthly fixed costs average $609,500.
-What is the company's monthly break-even point expressed in sales dollars? $__________

Accepted Answer