Practice Quiz
Practice Quiz
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 1 Redford, Inc. has provided the following data: (11.0K)If the dollar contribution margin per unit is increased by 10%, total fixed cost is decreased by 20%, and all other factors remain the same, net income will: A) decrease by \$60,000. B) increase by \$60,000. C) increase by \$120,000. D) increase by \$420,000. 2 Gardner Manufacturing Company produces a product that sells for \$120. A selling commission of 10% of the selling price is paid on each unit sold. Variable manufacturing costs are \$60 per unit. Fixed manufacturing costs are \$20 per unit based on the current level of activity, and fixed selling and administrative costs are \$16 per unit. The contribution margin per unit is: A) \$104. B) \$72. C) \$60. D) \$48. 3 Newman Corporation produced and sold 80,000 units and reported sales of \$4,000,000 during the past year. Management determined that variable expenses totaled \$2,800,000 and fixed expenses totaled \$720,000. What is the company’s contribution margin ratio? A) 30% B) 70% C) 150% D) 250% 4 Astair, Inc. reported sales of \$8,000,000 for the month and incurred variable expenses totaling \$5,600,000 and fixed expenses totaling \$1,440,000. The company has no beginning or ending inventories. A total of 80,000 units were produced and sold last month. If sales increase by 200 units, how much should net income increase? A) \$1,600 B) \$6,000 C) \$10,000 D) \$19,200 5 Astair, Inc. reported sales of \$8,000,000 for the month and incurred variable expenses totaling \$5,600,000 and fixed expenses totaling \$1,440,000. The company has no beginning or ending inventories. A total of 80,000 units were produced and sold last month. (Note that this is the same data that was provided for the previous question.) How many units would the company have to sell to achieve a desired profit of \$1,200,000? A) 88,000 B) 100,000 C) 106,668 D) 150,000 6 Astair, Inc. reported sales of \$8,000,000 for the month and incurred variable expenses totaling \$5,600,000 and fixed expenses totaling \$1,440,000. The company has no beginning or ending inventories. A total of 80,000 units were produced and sold last month. (Note that this is the same data that was provided for the previous question.) What is the company’s break-even in units? A) 0 units B) 48,000 units C) 72,000 units D) 80,000 units 7 Astair, Inc. reported sales of \$8,000,000 for the month and incurred variable expenses totaling \$5,600,000 and fixed expenses totaling \$1,440,000. The company has no beginning or ending inventories. A total of 80,000 units were produced and sold last month. (Note that this is the same data that was provided for the previous question.) What is the company’s margin of safety in dollars? A) \$480,000 B) \$2,400,000 C) \$3,200,000 D) \$3,520,000 8 Astair, Inc. reported sales of \$8,000,000 for the month and incurred variable expenses totaling \$5,600,000 and fixed expenses totaling \$1,440,000. The company has no beginning or ending inventories. A total of 80,000 units were produced and sold last month. (Note that this is the same data that was provided for the previous question.) What is the company’s degree of operating leverage? A) 0.12 B) 0.4 C) 2.5 D) 3.3 9 Grant Company sells a single product. The product has a selling price of \$50 per unit and variable expenses of 80% of sales. If the company’s fixed expenses total \$150,000 per year, then it will have a break-even point in sales dollars of: A) \$750,000 B) \$187,500 C) \$15,000 D) \$3,750 10 Lange Company sells three products: X, Y and Z. Product X’s unit contribution margin is higher than Product Y’s and Product Y’s is higher than Products Z’s. Which one of the following events is most likely to increase the company’s overall break-even point? A) The installation of new automated equipment and subsequent lay-off of factory workers. B) A decrease in Product Z’s selling price. C) An increase in the overall market demand for Product Y. D) A change in the relative market demand for the products, with the increase favoring Product Z relative to Product Y and Product X.

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