Question 1

HugME Company produces dolls.Each doll sells for $20.00.Variable costs are $14.00 per unit.If the break-even volume in dollars is $1,446,000,then the total fixed costs for the period are ________.

Accepted Answer

The break-even point in dollars is calculated as Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). Here, the contribution margin per unit is $20 - $14 = $6. Therefore, Fixed Costs = $1,446,000 * ($6 / $20) = $433,800.

Question 2

Assume the sales price is $100 per unit and the variable cost is $75 per unit.Total fixed costs are $150,000.Then the break-even volume in dollar sales is ________.

Accepted Answer

The break-even volume in dollar sales is calculated using the formula: Break-even volume = Fixed Costs / (Sales price per unit - Variable cost per unit). Plugging in the numbers: $150,000 / ($100 - $75) = $150,000 / $25 = 6,000 units. To find the dollar sales, multiply the units by the sales price per unit: 6,000 units * $100 = $600,000.

Question 3

General Hospital has variable costs of 90% of total revenues and total fixed costs of $50 million per year.There are 50,000 patient-days estimated for next year.What is the average daily revenue per patient necessary to breakeven?

Accepted Answer

The answer of General Hospital has variable costs of 90%...

Question 4

HugME Company produces dolls.Each doll sells for $20.00.Variable costs per unit are $14.00 and total fixed costs for the period are $435,000.What is the break-even volume in dollars?

Accepted Answer

The answer of HugME Company produces dolls.Each doll sells for...

Question 5

Suppose a Holiday Inn Hotel has annual fixed costs applicable to its rooms of $1.2 million for its 300-room hotel.Average daily room rents are $50 per room and average variable costs are $10 for each room rented.It operates 365 days per year.If the hotel is one-half full throughout the entire year,what is the amount of net income for one year?

Accepted Answer

First, we need to find the total revenue generated by the hotel in one year:

Total rooms = 300
Rooms booked daily = 300/2 = 150
Average daily revenue per room = $50
Total revenue per day = 150 x $50 = $7,500
Total revenue per year = $7,500 x 365 = $2,737,500

Next, we need to find the total variable costs for the hotel:

Variable cost per room = $10
Variable cost per day = 150 x $10 = $1,500
Total variable cost per year = $1,500 x 365 = $547,500

Finally, we can calculate the net income for the hotel:

Net income = Total revenue - Total variable costs - Fixed costs
Net income = $2,737,500 - $547,500 - $1,200,000
Net income = $990,000

Therefore, the answer is (B) $990,000.

Question 6

Deadwood Hospital has variable costs of 50% of total revenues and fixed costs of $40 million per year.There are 40,000 patient-days estimated for the next year.The break-even point expressed in total revenue is ________.

Accepted Answer

To calculate the break-even point in total revenue, we need to find the total cost and divide it by the contribution margin (the percentage of revenue that goes towards covering the fixed costs).

Total cost = Fixed cost + Variable cost
Variable cost = 50% of total revenue
Fixed cost = $40 million

Total cost = $40 million + 0.5 x Total revenue

At the break-even point, total revenue equals total cost, so:

Total revenue = $40 million + 0.5 x Total revenue

Solving for Total revenue, we get:

Total revenue = $80 million

Therefore, the answer is C) $80 million.

Question 7

Assume the sales price is $100 per unit and the total fixed costs are $75,000.The break-even volume in dollar sales is $250,000.What is the variable cost per unit?

Accepted Answer

The formula for calculating the break-even volume in dollar sales is:

Break-even volume = (Total fixed costs / Contribution margin ratio)

We are given the sales price per unit and the total fixed costs, but we need to find the variable cost per unit to calculate the contribution margin ratio.

Let's use the formula for calculating the contribution margin per unit:

Contribution margin per unit = (Sales price per unit - Variable cost per unit)

We can rearrange this formula to find the variable cost per unit:

Variable cost per unit = (Sales price per unit - Contribution margin per unit)

We are given the sales price per unit ($100) and the break-even volume in dollar sales ($250,000), so we can calculate the contribution margin per unit:

Contribution margin per unit = (Break-even volume in dollar sales / Break-even volume in units) - Variable cost per unit

Break-even volume in units = (Break-even volume in dollar sales / Sales price per unit) = ($250,000 / $100) = 2,500 units

Contribution margin per unit = ($250,000 / 2,500 units) - Variable cost per unit = $100 - Variable cost per unit

We know the contribution margin per unit is positive (because the break-even volume is less than the total possible volume), so we can solve for the variable cost per unit:

$100 - Variable cost per unit > 0

Variable cost per unit < $100

Therefore, the variable cost per unit must be less than $100, and the only option that satisfies this condition is B ($70).

Question 8

Suppose a Holiday Inn Hotel has annual fixed costs applicable to its rooms of $1.2 million for its 300-room hotel.Average daily room rents are $50 per room and average variable costs are $10 for each room rented.It operates 365 days per year.If the hotel is completely full throughout the year,what is net income for one year?

Accepted Answer

The answer of Suppose a Holiday Inn Hotel has annual...

Question 9

Suppose a Holiday Inn Hotel has annual fixed costs applicable to its rooms of $1.2 million for its 300-room hotel.Average daily room rents are $50 per room,and average variable costs are $10 for each room rented.It operates 365 days per year.What is the break-even point in number of rooms rented?

Accepted Answer

The formula for break-even point is: 
Fixed Costs / (Price per Unit - Variable Costs per Unit)

In this case, the fixed costs are $1.2 million or 1,200,000. The price per unit is the average daily room rent, which is $50. The variable costs per unit are $10.

Therefore, the break-even point in number of rooms rented is:
1,200,000 / (50 - 10) = 30,000 rooms rented per year

Question 10

Oakes Corporation sells desks at $480 per desk.The variable costs are $372 per desk.Total fixed costs for the period are $456,840.The break-even point in desks is ________.

Accepted Answer

The answer of Oakes Corporation sells desks at $480 per...

Question 11

The sales price is $30 per unit,the contribution margin is $8 per unit and total fixed costs are $32,000.What is the break-even point in units?

Accepted Answer

The answer of The sales price is $30 per unit,the...

Question 12

Mercy Hospital has total variable costs of 80% of total revenues and fixed costs of $20 million per year.There are 70,000 estimated patient-days for next year.What is the break-even point expressed in total revenue?

Accepted Answer

To find the break-even point in total revenue, we use the formula: Break-even Revenue = Fixed Costs / (1 - Variable Cost Ratio). Here, Fixed Costs = $20 million and Variable Cost Ratio = 80% or 0.8. Thus, Break-even Revenue = $20 million / (1 - 0.8) = $20 million / 0.2 = $100 million.

Question 13

HugME Company produces dolls.Each doll sells for $20.00.Variable costs per unit are $14.00 and total fixed costs for the period are $435,000.What is the break-even point in units?

Accepted Answer

The answer of HugME Company produces dolls.Each doll sells for...

Question 14

Medina Hospital has variable costs of 75% of total revenues and fixed costs of $40 million per year.There are 40,000 patient-days estimated for next year.What is the average daily revenue per patient necessary to breakeven?

Accepted Answer

First, we need to calculate the total cost for next year: 
Total Cost = Fixed Cost + Variable Cost 
Variable Cost = 75% of Revenue 
We don't know the revenue yet, but we can use the fact that there will be 40,000 patient-days next year. Let's assume that the average revenue per patient-day is R. 
Total Revenue = R * 40,000 
Variable Cost = 75% * Total Revenue = 0.75 * R * 40,000 
Total Cost = Fixed Cost + Variable Cost = 40,000,000 + 0.75 * R * 40,000 
For break-even, Total Cost = Total Revenue: 
40,000,000 + 0.75 * R * 40,000 = R * 40,000 
40,000,000 = R * (40,000 - 0.75 * 40,000) 
40,000,000 = R * 10,000 
R = $4,000

Therefore, the average daily revenue per patient necessary to break-even is $4,000.

Question 15

Company ZZZ has the following information available:  What is the expected operating income for a year?

Accepted Answer

The answer of Company ZZZ has the following information available:...

Question 16

On Fire Company,a producer of electronic devices,has the following information:  The contribution-margin ratio is ________.

Accepted Answer

The answer of On Fire Company,a producer of electronic devices,has...

Question 17

Suppose a Holiday Inn Hotel has annual fixed costs applicable to its rooms of $1.2 million for its 300-room hotel.Average daily room rents are $50 per room and average variable costs are $10 for each room rented.It operates 365 days per year.What percent of occupancy is needed to breakeven?

Accepted Answer

Total revenue per day = (number of rooms rented per day) x (average daily room rent)
Total variable cost per day = (number of rooms rented per day) x (average variable cost per room)
Total revenue per day must cover total fixed cost per day plus total variable cost per day for the hotel to break even.
Using algebra, we can calculate the number of rooms that must be rented each day to break even:
(number of rooms rented per day) x ($50 - $10) = $1,200,000 / 365 
(number of rooms rented per day) x $40 = $3,287.67 
(number of rooms rented per day) = 82.19 
To find the occupancy rate needed to rent 82.19 rooms per day out of 300 rooms available: 
Occupancy rate = (82.19 x 365) / (300 x 365) x 100% 
= 27.4% 
Therefore, the answer is C.

Question 18

Assume the sales price is $34 per unit and the variable cost is $19 per unit.The break-even point is 12,000 units.What are total fixed costs?

Accepted Answer

Total fixed costs can be calculated using the formula: Fixed Costs = (Sales Price per Unit - Variable Cost per Unit) * Break-Even Point in Units. Here, it is ($34 - $19) * 12,000 = $15 * 12,000 = $180,000.

Question 19

Knotty Company sells desks at $480 per desk.The variable costs are $372 per desk.Total fixed costs for the period are $456,840.The break-even volume in dollars is ________.

Accepted Answer

Break-even point in units= Fixed costs/ (Price per unit - Variable costs per unit)

Break-even point in units= $456,840/($480-$372)= 710 units

Break-even point in dollars= Break-even point in units x Price per unit
Break-even point in dollars= 710 x $480= $340,800

Therefore, the break-even volume in dollars is $340,800 or option C.

Question 20

Sizzling Company,a producer of electronic components,has the following information:  The break-even point in dollars is ________.

Accepted Answer

The answer of Sizzling Company,a producer of electronic components,has the...

Quiz 2: Introduction to Cost Behavior and Cost-Volume Relationships