ACC2008 Introduction to Management Accounting-statement or answers

Identify the letter of the choice that best completes the statement or answers the question.

1. If variable costs per unit decrease, sales volume at the break-even point will
a. increase
b. decrease
c. remain the same
d. remain the same; however, contribution margin per unit will decrease

2. If fixed costs increase, the break-even point in units will
a. increase
b. decrease
c. remain the same
d. remain the same; however, contribution margin per unit will decrease

3. If the selling price per unit increases, the break-even point in units will
a. increase
b. decrease
c. remain the same
d. remain the same; however, contribution margin per unit will decrease

4. If the contribution margin per unit decreases, the break-even point in units
a. will increase
b. will decrease
c. will remain the same
d. cannot be determined from the information given

Single Product
    
1. Enola, Inc., manufactures a product that sells for $400.  The variable costs per unit are as follows:
Direct materials       $100
Direct labor             80
Variable manufacturing overhead      50

During the year, the budgeted fixed manufacturing overhead is estimated to be $500,000, and budgeted fixed selling and administrative costs are expected to be $250,000.  Variable selling costs are $20 per unit.

a. Determine the break-even point in units.

b. Determine the number of units that must be sold to earn $300,000 in profit before taxes.

c. Determine the number of units that must be sold to generate an after-tax profit of $90,000 if there is a 40 percent tax rate.

2. LaVerle, Inc., manufactures a product that sells for $480.  The variable costs per unit are as follows:

Direct materials      $160
Direct labor           100
Variable manufacturing overhead        40

During the year, the budgeted fixed manufacturing overhead is estimated to be $100,000, and budgeted fixed selling and administrative costs are expected to be $40,000.  Variable selling costs are $20 per unit.

3. Determine the following missing amounts:

4. The break-even point in units is 2,000 for Lumus Company.  Contribution margin per unit was $20 per unit.  What would total sales units if Lumus Company desires a net income of $45,000?

5. Danna Company has a margin safety of $20,000.  The break-even point is $220,000, and the variable cost ratio is 25 percent.  Given this information, what would be the net income?

6. The following information pertains to Kangas Company:

Selling price per unit    $250
Variable manufacturing costs per unit    $75
Fixed manufacturing costs per unit    $90
Variable selling costs per unit    $45
Fixed selling costs per unit    $20
Expected production and sales    2,000 units

By how many units can Kangas Company’s sales decline before losses are incurred?

Multi-Product

The firm expects 60 percent of its sales (in units) to be Product C (a sales mix of 6:4).  Fixed costs are expected to be $82,000. What is the Break-even in units?

2. Information about two products is as follows:
Product E    Product Z
Selling price per unit    $40    $65
Variable costs per unit     15     45
Contribution margin per unit    $25    $20

Required

a. calculate the break-even sales in dollars for Economy.

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Tellus molestie nunc non blandit massa enim nec dui. Tellus molestie nunc non blandit massa enim nec dui. Ac tortor vitae purus faucibus ornare suspendisse sed nisi. Pharetra et ultrices neque ornare aenean euismod. Pretium viverra suspendisse potenti nullam ac tortor vitae. Morbi quis commodo odio aenean sed. At consectetur lorem donec massa sapien faucibus et. Nisi quis eleifend quam adipiscing vitae proin sagittis nisl rhoncus. Duis at tellus at urna condimentum mattis pellentesque. Vivamus at augue eget arcu dictum varius duis at. Justo donec enim diam vulputate ut. Blandit libero volutpat sed cras ornare arcu. Ac felis donec et odio pellentesque diam volutpat commodo. Convallis a cras semper auctor neque. Tempus iaculis urna id volutpat lacus. Tortor consequat id porta nibh.

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Hac habitasse platea dictumst vestibulum rhoncus est pellentesque. Amet dictum sit amet justo donec enim diam vulputate ut. Neque convallis a cras semper auctor neque vitae. Elit at imperdiet dui accumsan. Nisl condimentum id venenatis a condimentum vitae sapien pellentesque. Imperdiet massa tincidunt nunc pulvinar sapien et ligula. Malesuada fames ac turpis egestas maecenas pharetra convallis posuere. Et ultrices neque ornare aenean euismod. Suscipit tellus mauris a diam maecenas sed enim. Potenti nullam ac tortor vitae purus faucibus ornare. Morbi tristique senectus et netus et malesuada. Morbi tristique senectus et netus et malesuada. Tellus pellentesque eu tincidunt tortor aliquam. Sit amet purus gravida quis blandit. Nec feugiat in fermentum posuere urna. Vel orci porta non pulvinar neque laoreet suspendisse interdum. Ultricies tristique nulla aliquet enim tortor at auctor urna. Orci sagittis eu volutpat odio facilisis mauris sit amet.

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