Q1: Doughton Bearings produces ball bearings for industrial equipment. In evaluating their financial data from the previous year, the accounting manager has determined that their unit sales price is $25 per bearing and their unit variable cost is $18 per bearing. What is the unit contribution margin per unit?

Q2: Felton Paper produces paper for textbooks. Felton plans to produce 500,000 cases of paper next quarter to sell at a price of $100 per case. Each case costs the company $80 to produce. What is the total contribution margin for next quarter?

Q3: Ford Tops manufactures hats for baseball teams. For has fixed costs of $175,000 per quarter and each hat sells for $20. If the variable cost per hat is $10, how many hats must the company sell each quarter to break even?

Q4: The Cobb Clinic treats walk in patients for various illnesses. The accounting manager has estimated they have $5,000 in monthly fixed costs in addition to a $20 cost per patient. If the charge is $30 per visit, how many visits per month does the clinic need to breakeven?

Q5: Oxicon, Inc. manufactures several different types of candy for various retail stores. The accounting manager has requested that you determine the sales dollars required to break even for next quarter based on past financial data. Your research tells you that the total variable cost will be $500,000, total sales will be $750,000, and fixed costs will be $75,000. What is the breakeven point in sales dollars?

Q6: Williams & Williams Co. produces plastic spray bottles and wants to earn a profit of $200,000 next quarter and have variable costs of $0.50 per bottle, fixed costs of $400,000, and sell the bottles for $1.00 each. How many bottles must they sell to meet this goal?

Q7: Scott Power produces batteries. Scott has determined its contribution margin to be $8 per battery and their contribution margin ratio to be 0.4. What is the effect on operating profit from the sale of one additional battery? One additional dollar of sales?

Q8: ABC Audio sells headphones and would like to earn after tax profit of $400 every week. Each set of headphones costs $5 and is sold for $10. They also incur costs of $200 for rent and other fixed costs, and their tax rate is 20%. How many headphones must they sell per week to meet this goal?

Q9: Franklin Cards sells greeting cards for $2 each, and plans to sell 100,000 cards every quarter. The accounting manager has determined they must sell 80,000 cards to break even every quarter. What is the margin of safety (MOS), in units and in sales dollars?

Q10: May Clothing is a retail men's clothing store. May's cost is $20 per shirt. The sales price is $40 per shirt. They plan to sell 400,000 shirts each year, which at this level would result in a before tax profit of $2,500,000. What is their degree of operating leverage (DOL) at this volume level?