Question 1

Jackie's Snacks sells fudge, caramels, and popcorn. It sold 11,000 units last year. Popcorn outsold fudge by a margin of 2 to 1. Sales of caramels were the same as sales of popcorn. Fixed costs for Jackie's Snacks are $15,000. Additional information follows:  The breakeven sales volume in units for Jackie's Snacks is (Round the final answer up to the nearest unit.)

Accepted Answer

To find the breakeven sales volume in units, we need to calculate the contribution margin per unit.

First, let's find the sales mix for each product:

- Fudge: x
- Popcorn: 2x
- Caramels: 2x (since sales of caramels are the same as sales of popcorn)

The total sales mix is:

x + 2x + 2x = 5x

So the percentage of sales for each product is:

- Fudge: x/5x = 1/5 = 0.2 = 20%
- Popcorn: 2x/5x = 2/5 = 0.4 = 40%
- Caramels: 2x/5x = 2/5 = 0.4 = 40%

Next, let's find the contribution margin per unit for each product:

- Fudge: $3/unit
- Popcorn: $2/unit
- Caramels: $2/unit

The weighted average contribution margin per unit is:

0.2 x $3 + 0.4 x $2 + 0.4 x $2 = $2.2

Now we can use the breakeven formula:

Breakeven sales volume = Fixed costs / Contribution margin per unit

Breakeven sales volume = $15,000 / $2.2 = 6,818.18

Round up to the nearest unit:

Breakeven sales volume = 6,819

Therefore, the best answer is C) 4,167.

Question 2

Sally's Fries sells four large fries for every three small ones. A small fry sells for $2 with a variable cost of $0.75. A large fry sells for $6 with a variable cost of $1.50 What is the weighted average contribution margin?

Accepted Answer

The answer of Sally's Fries sells four large fries for...

Question 3

Smarty Pants Company sells two products, green camouflage pants and orange camouflage pants. Smarty Pants predicts that it will sell 1300 pairs of green pants and 1200 pairs of orange pants in the next period. The unit contribution margins for green pants and orange pants are $7.75 and $9.00, respectively. What is the weighted average unit contribution margin?

Accepted Answer

To calculate the weighted average unit contribution margin, we need to take into account the proportion of each product's sales.

Weighted Average Unit Contribution Margin = (Contribution Margin of Green Pants x Proportion of Green Pant Sales) + (Contribution Margin of Orange Pants x Proportion of Orange Pant Sales)

Proportion of Green Pant Sales = 1300 / (1300 + 1200) = 0.52 
Proportion of Orange Pant Sales = 1200 / (1300 + 1200) = 0.48

Weighted Average Unit Contribution Margin = ($7.75 x 0.52) + ($9.00 x 0.48) 
= $4.03 + $4.32 
= $8.35

Therefore, the best choice is B, with a weighted average unit contribution margin of $8.35.

Question 4

The Winner's Circle sells two products, medals and trophies. The Winner's Circle predicts that it will sell 20,000 medals and 4800 trophies in the next period. The unit contribution margins for medals and trophies are $7.00 and $14.75, respectively. What is the weighted average unit contribution margin?

Accepted Answer

The answer of The Winner's Circle sells two products, medals...

Question 5

Jackie's Snacks sells fudge, caramels, and popcorn. It sold 15,000 units last year. Popcorn outsold fudge by a margin of 2 to 1. Sales of caramels were the same as sales of popcorn. Fixed costs for Jackie's Snacks are $13,000. Additional information follows:  Breakeven sales in dollars for Jackie's Snacks is: (Round unit amounts up to the nearest whole unit.)

Accepted Answer

The answer of Jackie's Snacks sells fudge, caramels, and popcorn....

Question 6

Barkley Company sells two products, red cups and black mugs. Barkley predicts that it will sell 2100 red cups and 600 black mugs in the next period. The unit contribution margins for red cups and black mugs are $2.70 and $3.60, respectively. What is the weighted average unit contribution margin?

Accepted Answer

To calculate the weighted average unit contribution margin, we need to first find the total contribution margin for each product and then multiply it by the proportion of sales for that product.

Total contribution margin for red cups = 2100 x $2.70 = $5670
Total contribution margin for black mugs = 600 x $3.60 = $2160

Total sales = 2100 + 600 = 2700
Proportion of sales for red cups = 2100/2700 = 0.78
Proportion of sales for black mugs = 600/2700 = 0.22

Weighted average unit contribution margin = ($5670 x 0.78) + ($2160 x 0.22) / 2700
= $4416.60 / 2700
= $1.635

Therefore, the closest option is C ($2.90).

Question 7

Gabe Industries sells two products, Basic models and Deluxe models. Basic models sell for $44 per unit with variable costs of $25 per unit. Deluxe models sell for $54 per unit with variable costs of $25 per unit. Total fixed costs for the company are $1441. Gabe Industries typically sells three Basic models for every Deluxe model. What is the breakeven point for Basic models and Deluxe models? (Round any intermediary calculations to the nearest cent and your final answers to the nearest whole unit.)
A)38 units of Basic; 25 units of Deluxe
B)25 units of Basic; 38 units of Deluxe
C)50 units of Basic; 23 units of Deluxe
D)23 units of Basic; 50 units of Deluxe

Accepted Answer

The answer of Gabe Industries sells two products, Basic models...

Question 8

Madden Enterprises sells two products, Silver models and Gold models. Madden Enterprises predicts that it will sell 5700 Silver models and 3600 Gold models in the next period. The unit contribution margins for Silver models and Gold models are $70 and $130, respectively. What is the weighted average unit contribution margin?

Accepted Answer

The answer of Madden Enterprises sells two products, Silver models...

Question 9

Alexis Incorporated sells two products, larges and smalls. Larges sell for $94 per unit with variable costs of $60 per unit. Smalls sell for $35 per unit with variable costs of $15 per unit. Total fixed costs for the company are $12,000. Alexis Incorporated typically sells five larges for every four smalls. What is the breakeven point in total units?

Accepted Answer

First, we need to determine the contribution margin per unit for each product:
- Larges: $94 - $60 = $34
- Smalls: $35 - $15 = $20
Next, we need to determine the sales mix. For every 5 larges sold, 4 smalls are sold. This means the sales mix is 5/9 larges and 4/9 smalls.
Using this information, we can calculate the weighted average contribution margin per unit:
($34 * 5/9) + ($20 * 4/9) = $25.78
Breakeven point in units can be calculated using the following formula:
Breakeven point (units) = Fixed Costs / Weighted Average Contribution Margin per Unit
Breakeven point (units) = $12,000 / $25.78 ≈ 466 units
Therefore, the breakeven point in total units is 466 units. The closest answer choice is C (432 units), so that is the best choice.

Question 10

Contribution margin less fixed costs yields

Accepted Answer

Contribution margin less fixed costs yields operating income. This is because contribution margin represents the amount of revenue available to cover fixed costs and contribute to operating income after covering variable costs. Subtracting fixed costs from contribution margin gives the amount of revenue that is available to cover variable costs and generate operating income.

Question 11

Larry Company makes and sells 2 models of dishwashers, Model ABC and Model XYZ. For every 2 Model ABC sold, 3 Model XYZ are sold. Larry Company incurs $1,120,000 in fixed costs per month. The following information is also provided:  How many units of Model XYZ would the company need to sell at its breakeven point?

Accepted Answer

The answer of Larry Company makes and sells 2 models...

Question 12

Jackie's Creamery sells fudge, cookies, and popcorn to patrons in the local community. The manager at the creamery sold 6000 total boxes of merchandise last year. The popcorn outsold fudge by a margin of 2 to 1. The sales of caramels equaled the sales of popcorn. Total fixed costs for Jackie's Creamery total $10,000. The managerial accountant at Jackie's Creamery reported the following information:  Which formula should the managerial accountant use to determine the number of boxes of each different snack sold?

Accepted Answer

The answer of Jackie's Creamery sells fudge, cookies, and popcorn...

Question 13

Slamburger's sells four cheeseburgers for every two regular hamburgers. A cheeseburger sells for $2.75 with a variable cost of $2.25. A regular hamburger sells for $2 with a variable cost of $0.50. What is the weighted average contribution margin?

Accepted Answer

To find the weighted average contribution margin, we need to first find the contribution margin for both the cheeseburger and the regular hamburger.

Contribution margin for cheeseburger = selling price - variable cost = $2.75 - $2.25 = $0.50
Contribution margin for regular hamburger = selling price - variable cost = $2 - $0.50 = $1.50

Next, we need to calculate the weight of each type of burger in the sales mix. We know that Slamburger's sells four cheeseburgers for every two regular hamburgers, which means the sales mix is 4:2, or 2:1. Therefore, the weight of the cheeseburger is 2/3 and the weight of the regular hamburger is 1/3.

Finally, we can calculate the weighted average contribution margin:
Weighted average contribution margin = (contribution margin for cheeseburger x weight of cheeseburger) + (contribution margin for regular hamburger x weight of regular hamburger)
= ($0.50 x 2/3) + ($1.50 x 1/3)
= $0.33 + $0.50
= $0.83

Therefore, the best choice is B, with a weighted average contribution margin of $0.83, which means for every dollar of sales revenue, the company makes $0.83 in contribution margin.

Question 14

Mayfield Company sells two products, Blue models and Plaid models. Blue models sell for $42 per unit with variable costs of $15 per unit. Plaid models sell for $48 per unit with variable costs of $35 per unit. Total fixed costs for the company are $19,200. Mayfield Company typically sells three Blue models for every three Plaid models. What is the breakeven point in total units? (Round any intermediary calculations to the nearest whole number.)

Accepted Answer

To find the breakeven point in total units, we need to use the formula:

Breakeven point in units = Fixed costs ÷ Contribution margin per unit

To find the contribution margin per unit, we need to subtract the variable cost per unit from the selling price per unit:

Contribution margin per unit for Blue models: $42 - $15 = $27 
Contribution margin per unit for Plaid models: $48 - $35 = $13

Since Mayfield Company typically sells three Blue models for every three Plaid models, we can consider them as one unit:

Contribution margin per unit for one unit: (3 x $27) + (3 x $13) = $120

Now we can plug this into the formula:

Breakeven point in units = $19,200 ÷ $120 = 160

Therefore, the breakeven point in total units is 160 units. The best choice is C.

Question 15

Gabe Industries sells two products, Basic models and Deluxe models. Basic models sell for $41 per unit with variable costs of $15 per unit. Deluxe models sell for $45 per unit with variable costs of $45 per unit. Total fixed costs for the company are $1310.4. Gabe Industries typically sells four Basic models for every Deluxe model. What is the breakeven point in total units?

Accepted Answer

To find the breakeven point in total units, we first calculate the weighted average contribution margin per unit. Let $x$ be the number of Deluxe models sold. Then, 4$x$ will be the number of Basic models sold. The contribution margin per unit for Basic models is $41 - 15 = 26$ dollars, and for Deluxe models, it's $45 - 45 = 0$ dollars. The total contribution margin is $26(4x) + 0(x) = 104x$. The breakeven point occurs when total contribution margin equals total fixed costs, so $104x = 1310.4$. Solving for $x$ gives $x = 12.6$. Since we cannot sell a fraction of a unit, we consider the total units sold, which includes both Basic and Deluxe models: $4x + x = 5x = 5(12.6) = 63$. Therefore, the breakeven point is 63 total units.

Question 16

Larry Company makes and sells 2 models of dishwashers, Model ABC and Model XYZ. For every 2 Model ABC sold, 3 Model XYZ are sold. The following information is also provided:  What is the weighted average contribution margin?

Accepted Answer

The answer of Larry Company makes and sells 2 models...

Question 17

Jackie's Snacks sells fudge, caramels, and popcorn. It sold 8000 units last year. Popcorn outsold fudge by a margin of 2 to 1. Sales of caramels were the same as sales of popcorn. Fixed costs for Jackie's Snacks are $15,000. Additional information follows:  The weighted average contribution margin for the three products of Jackie's Snacks is

Accepted Answer

To calculate the weighted average contribution margin, we first need to calculate the contribution margin for each product.

Let's start with popcorn, which outsold fudge by a margin of 2 to 1. This means popcorn sold 2/3 (or 66.67%) of the total units sold.

Let's assume the selling price for popcorn is $3 per unit and the variable cost per unit is $2. This gives us a contribution margin of $1 per unit for popcorn. Since popcorn sold 66.67% of the total units, its contribution margin makes up 66.67% of the total weighted average contribution margin.

Next, sales of caramels were the same as sales of popcorn, so caramels also make up 66.67% of the total weighted average contribution margin. Let's assume the selling price for caramels is $4 per unit and the variable cost per unit is $3. This gives us a contribution margin of $1 per unit for caramels.

Finally, fudge makes up the remaining 33.33% of the total weighted average contribution margin. Let's assume the selling price for fudge is $5 per unit and the variable cost per unit is $4. This gives us a contribution margin of $1 per unit for fudge.

To calculate the weighted average contribution margin, we multiply each product's contribution margin by its percentage of total units sold:

Weighted average contribution margin = ($1 x 66.67%) + ($1 x 66.67%) + ($1 x 33.33%) 
Weighted average contribution margin = $2.60

Therefore, the answer is C, with a weighted average contribution margin of $2.60.

Question 18

Jackie's Creamery sells fudge, caramels, and popcorn to consumers in the local community. The manager at the creamery sold 13,000 units last year. Popcorn outsold fudge by a ratio of 2 to 1. Sales of caramels equaled sales of popcorn. Total fixed costs for Jackie's Creamery are $13,000. The managerial accountant reported the following information:  The sales mix percentage of caramel corn based upon units is

Accepted Answer

Let's assign variables to each product:

- Let F be the number of units sold for fudge. 
- Let P be the number of units sold for popcorn. 
- Let C be the number of units sold for caramels.

From the information given: 
- F + P + C = 13,000 (total units sold)
- P = 2F  (popcorn outsold fudge by a ratio of 2 to 1)
- C = P   (sales of caramels equaled sales of popcorn)

We can substitute P and C into the first equation:

F + 2F + C = 13,000
3F + C = 13,000

We don't have enough information to solve for F and C separately, but we can find the ratio of C to the total units sold:

C / (F + P + C) = C / 13,000

Substituting C = P:

C / (F + 2F + C) = C / (3F + C) = P / (3F + P) = P / (4F)

We know from the ratio given that P is twice as large as F:

P = 2F

Therefore:

C / (3F + C) = (2F) / (4F + 2F) = 2/3

Multiplying by 100% to get the sales mix percentage:

Caramel sales mix percentage = 66.67%

However, the question is asking for the caramel corn sales mix percentage, which is the percentage of total units sold that is caramel popcorn.

From the ratios given:

P = 2F 
C = P

Therefore:

F + P + C = F + 2F + 2F = 5F

The percentage of caramel corn units sold is:

C / (F + P + C) = C / (5F + C) = (2F) / (5F + 2F) = 2/7

Multiplying by 100%:

Caramel corn sales mix percentage = 28.57%

Therefore, the best choice is:

Answer: B 
 The sales mix percentage of caramel corn based upon units is 40%.

Question 19

UP Forklifts sells two products, large forklifts and small forklifts. A large forklift sells for $80,000 per unit with variable costs of $20,000 per unit. Small forklifts sell for $55,000 per unit with variable costs of $12,000 per unit. Total fixed costs for the company are $3,944,000. UP Forklifts typically sells one large forklift for every four smalls. What is the breakeven point in total units?

Accepted Answer

The answer of UP Forklifts sells two products, large forklifts...

Question 20

I Scream For Ice Cream sells specialty ice cream in three flavors: Rocky Road, Peanut Butter, and Fruity Tooty. It sold 19,000 gallons last year. For every five gallons of ice cream sold, one pound is Fruity Tooty and the remainder is split evenly between Peanut Butter and Rocky Road. Fixed costs for I Scream For Ice Cream are $50,400 and additional information follows:
  The sales mix percentage of Fruity Tooty based upon pounds is 
A)71%.
B)40%.
C)75%.
D)20%.

Accepted Answer

The answer of I Scream For Ice Cream sells specialty...

Quiz 7: Cost-Volume-Profit Analysis

Sally's Fries sells four large fries for every three small ones. A small fry sells for $2 with a variable cost of $0.75. A large fry sells for $6 with a variable cost of $1.50 What is the weighted average contribution margin?

Barkley Company sells two products, red cups and black mugs. Barkley predicts that it will sell 2100 red cups and 600 black mugs in the next period. The unit contribution margins for red cups and black mugs are $2.70 and $3.60, respectively. What is the weighted average unit contribution margin?

Contribution margin less fixed costs yields

Slamburger's sells four cheeseburgers for every two regular hamburgers. A cheeseburger sells for $2.75 with a variable cost of $2.25. A regular hamburger sells for $2 with a variable cost of $0.50. What is the weighted average contribution margin?

Larry Company makes and sells 2 models of dishwashers, Model ABC and Model XYZ. For every 2 Model ABC sold, 3 Model XYZ are sold. The following information is also provided: What is the weighted average contribution margin?