FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:5. A company has provided the following data:
Sales
3,000 units
$70 per unit
$50 per unit
$25,000
Sales Price
Variable Cost
Fixed Cost
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, what will the outcome
be for operating income?
Increase by $61,000.
A)
B)
Increase by $20,000.
C)
Increase by $3,500.
D)
Increase by $11,000.
Transcribed Image Text:1. A firm expects to sell 25,000 units of its product at $11 per unit. Net income before tax is predicted
to be $60,000. If the variable costs per unit are $6 per unit, total fixed costs must be:
A)
$ 65,000.
B)
$215,000.
C)
$125,000.
D)
$ 90,000.
2. Mar Co. has fixed costs of $36,000 and a contribution rate of 24%. If predicted sales are $200,000,
what is the margin of safety as a percent of sales?
A)
B)
C)
D)
E)
6%.
25%.
33%.
50%.
75%.
3. Marnan Company has fixed costs of $56,000. Its product sells for $25 per unit and variable costs
amount to $15 per unit. Next year Marnan Company wishes to earn a before-tax net income that
equals 10% of fixed costs. How many units must be sold to achieve this income level?
A)
B)
4,107.
560.
C)
D)
5,600.
6,160.
E)
7,040
田
4. A product sells for $15 per unit and has variable costs of $9 per unit. The fixed costs for the period
are $360,000. If the variable costs per unit were to decrease to $7.50 per unit and fixed costs increase
to $450,000, the number of units required to break even would:
Increase by 20,000.
A)
B)
Equal 6,000.
Increase by 6,000.
C)
D)
Decrease by 20,000.
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