Question 1: Evergreen Corp. has provided the following data:
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Sales per period
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1,000 units
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Selling price
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$40 per unit
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Variable manufacturing cost
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$12 per unit
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Selling expenses
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$5,100 plus 5% of selling price
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Administrative expenses
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$3,000 plus 20% of selling price
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The number of units needed to achieve a target net operating income of $49,500 would be:
1,238 Units
2,750 Units
3,200 Units
2,057 Units
Question 2. All other things the same, which of the following would be true of the contribution margin and variable expenses of a capital-intensive company with fixed costs and low variable costs as compared to a labor-intensive company with low fixed costs and high variable costs?
Contribution Margin - Higher, Variable Costs - Higher
Contribution Margin - Lower, Variable Costs - Higher
Contribution Margin - Higher, Variable Costs - Lower
Contribution Margin - Lower, Variable Costs - Lower
Question 3. Garth Company sells a single product. If the selling price per unit and the variable expense per unit both increase by 10% and fixed expenses do not change, then:
Contribution Margin Per Unit - Increases, Contribution Margin Ratio - Increases, Break-Even in Units - Decreases
Contribution Margin Per Unit - No Change, Contribution Margin Ratio - No Change, Break-Even in Units - No Change
Contribution Margin Per Unit - No Change, Contribution Margin Ratio - Increases, Break-Even in Units - No Change
Contribution Margin Per Unit - Increases, Contribution Margin Ratio -No Change, Break-Even in Units - Decreases
Question 4. Korn Company sells two products, as follows:
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Selling price
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Variable expense
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|
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per unit
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per unit
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Product Y
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$120
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$ 70
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Product Z
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500
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200
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Fixed expenses total $300,000 annually. The expected sales mix in units is 60% for product Y and 40% for product Z. How much is Korn's expected break-even sales in dollars?
$300,000
$420,000
$475,000
$544,0001.