Question: 1. Stites Corporation will make $100,000 if it sells 8,000 bathtubs for $200 per unit. If the contribution margin is 30%, what will the fixed costs be?
A) $480,000
B) $380,000
C) $580,000
D) $1,020,000
2. A firm's per-unit contribution margin is $30, its fixed costs are $67,500, and its daily production output is 18 units. How many days will it take to break even after it is in operation?
A) 155 days
B) 139 days
C) 100 days
D) 125 days
Exhibit 21-5: The following is a partial income statement for Duncan Corporation for 2011:
Duncan Corporation
Projected Income Statement For the Year Ended December 31, 2011
Sales revenue (750 units at $20) $15,000
Manufacturing cost of goods sold:
Direct materials used $2,250
Direct labor 2,100
Variable manufacturing overhead 2,650
Fixed manufacturing overhead 750 7,750
Gross margin $ 7,250
Selling expenses:
Variable costs $1,100
Fixed costs 950
Administrative expenses:
Variable costs 900
Fixed costs 620
Total selling and administrative expenses 3,570
Operating income $ 3,680
3. Refer to Exhibit 21-5. How many units of its product will Duncan Corporation have to sell to break even?
A) 194
B) 116
C) 300
D) 290
4. Refer to Exhibit 21-5. What will be Duncan Corporation's operating income if sales volume increases by 40 percent?
A) $6,080
B) $2,400
C) $6,800
D) $7,280
5. At a break-even point of 600 units sold, the variable costs were $600 and the fixed costs were $300. What will the sale of each additional unit contribute to profit before income taxes?
A) $1.00
B) $0.50
C) $0
D) $1.50
6. Collins Co. earned a profit of $2,000 in January. The company has estimated that sales will increase by $13,500 in February. Assume that fixed costs for January were $3,000 (and are not expected to change) and the variable cost ratio is 40%. What is the expected profit for the next month?
A) $10,100
B) $8,100
C) $13,500
D) Not enough information available
7. After the break-even point is reached, a firm that has a per-unit contribution margin of $20 will have a $500 increase in profits when sales increase by:
A) 20 units
B) 15 units
C) 25 units
D) 50 units
8. Stanley Company manufactures and sells one product for $200 per unit. The variable costs per unit are $140, and monthly total fixed costs are $7,500. Last month Stanley sold 100 units and expects sales to remain the same for the current month. If fixed costs increase by $1,500, what is the break-even point for the current month?
A) $12,800
B) $30,000
C) $25,000
D) $45,000
9. Everclean Company cleans draperies. It charges $90 to clean a full-size drape, and its variable and fixed costs are $55 per drape and $10,000 per year, respectively. Given these data, if Everclean's variable costs were reduced to $50 per drape, how many drapes would the firm have to clean to break even?
A) 286
B) 250
C) 200
D) 112
10. Everclean Company cleans draperies. It charges $90 to clean a full-size drape, and its variable and fixed costs are $55 per drape and $10,000 per year, respectively. Given these data, if Everclean's fixed costs increased to $15,000, how many drapes must the firm clean to earn $60,000?
A) 2,143
B) 2,000
C) 429
D) 1,364