Assignment
Question 1
Sweet Charity Company manufactures candy bars for fundraising initiatives for children's nonprofits. Candy bars are sold to organizations at $1.00 each. Variable costs of production and packaging are $.60 and company fixed costs are $700,000. The company's current sales level is $2,000,000. What is Sweet Charity's margin of safety in dollars?
a $100,000
b $144,000
c $250,000
d $240,000
Question 2
True or False: All else being equal, as variable costs rise, the breakeven point decreases.
True
False
Question 3
Which of the following costs would not be deducted from the revenue per unit to arrive at contribution margin?
a cost of ink for a printing company
b cost of property insurance for a cell phone manufacturer
c cost of steel for an automobile manufacturing company
d cost of direct labor for a pharmaceutical company
Question 4
Swiss Chocolate Manufacturing Company manufactures boxes of truffles and peppermint bark for sales at various holidays throughout the year. The sales and variable costs are given below:
|
Peppermint bark tins
|
Truffle boxes
|
|
per unit
|
per unit
|
|
Sell price to retailer
|
$ 9.00
|
$ 15.00
|
|
Cost of raw materials (chocolate/sugar/etc.)
|
$ 2.00
|
$ 3.00
|
|
Cost of packaging (tin or heart-shaped box)
|
$ 3.00
|
$ 2.00
|
|
Cost of labor (manufacturing and packing)
|
$ 1.50
|
$ 2.50
|
|
Cost of selling commission (per tin/box)
|
$ 0.125
|
$ 0.50
|
|
Cost of shipping (per tin/box)
|
$ 0.25
|
$ 0.25
|
The ratio of sales units is two peppermint bark tins for each truffle box sold. Swiss Chocolate Manufacturing Company's fixed costs are $100,000. How many units of each product must be sold to achieve an operating profit of $10,000?
a 10,000 peppermint bark tins and 10,000 truffle boxes
b 20,000 peppermint bark tins and 10,000 truffle boxes
c 10,000 peppermint bark tins and 20,000 truffle boxes
d 20,000 peppermint bark tins and 20,000 truffle boxes
Question 5
Tasty Toffee Company's total revenue is $400,000. Variable costs of manufacturing are $100,000 and fixed costs of manufacturing are $200,000. Variable costs of marketing are $10,000 and fixed costs of marketing are $50,000. Its corporate tax rate is 50%. How much must total revenue increase if Tasty Toffee wishes to achieve a net income of $100,000?
a $120,690
b $220,690
c $620,690
d $420,690
Question 6
All else being equal, when sales revenue per unit increases, ________.
a the breakeven point is unaffected
b contribution margin per unit increases
c fixed costs will be more likely to increase
d contribution margin per unit is unaffected
Question 7
True or False: On a cost volume profit graph, the breakeven point is depicted at the intersection of the revenue and total cost lines.
True
False
Question 8
True or False: On a cost volume profit graph, if the revenue line is below the total cost line, a profit results.
True
False
Question 9
Tasty Toffee Company's total revenue is $400,000. Variable costs of manufacturing are $100,000 and fixed costs of manufacturing are $200,000. Variable costs of marketing are $10,000 and fixed costs of marketing are $50,000. What is Tasty Toffee's operating income?
a $100,000
b $40,000
c $60,000
d $0
Question 10
Sweet Charity Company manufactures candy bars for fundraising initiatives for children's nonprofits. Candy bars are sold to organizations at $1.00 each. Variable costs of production and packaging are $.60 and company fixed costs are $700,000. The company's current sales level is $2,000,000. What is Sweet Charity's breakeven point in units?
a 2,000,000
b 1,300,000
c 1,750,000
d 700,000.