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Managerial Accounting, Ch.6

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Question;Multiple Choice Question 58In 2012, Carow sold 3,000 units at $500 each. Variable expenses were $250 per unit, and fixed expenses were $250,000. The same selling price is expected for 2013. Carow is tentatively planning to invest in equipment that would increase fixed costs by 20%, while decreasing variable costs per unit by 20%. What is Carow's break-even point in units for 2013?A1,500B1,250C1,000D1,200Multiple Choice Question 59In 2012, Raleigh sold 1,000 units at $500 each, and earned net income of $50,000. Variable expenses were $300 per unit, and fixed expenses were $150,000. The same selling price is expected for 2013. Raleigh's variable cost per unit will rise by 10% in 2013 due to increasing material costs, so they are tentatively planning to cut fixed costs by $15,000. How many units must Raleigh sell in 2013 to maintain the same income level as 2012?A794B971C1,176D1,088Multiple Choice Question 64Ramirez Corporation sells two types of computer chips. The sales mix is 30% (Q-Chip) and 70% (Q-Chip Plus). Q-Chip has variable costs per unit of $60 and a selling price of $100. Q-Chip Plus has variable costs per unit of $70 and a selling price of $130. Ramirez's fixed costs are $540,000. How many units of Q-Chip would be sold at the break-even point?A3,000B5,000C7,000D3,522Multiple Choice Question 70Swanson Company has two divisions, Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Swanson incurs $4,440,000 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%. What will be the total contribution margin at the break-even point?A$4,480,000B$4,440,000C$3,820,466D$5,160,000Multiple Choice Question 74MacCloud Industries has two divisions?Standard and Premium. Each division has hundreds of different types of tennis racquets and tennis products. The following information is available:Standard DivisionPremium DivisionTotalSales$400,000$600,000$1,000,000Variable costs 280,000 360,000Contribution margin$120,000$240,000Total fixed costs $320,000What is the break-even point in dollars?A$888,889B$914,286C$115,200D$941,117Multiple Choice Question 77Brooks Corporation can sell all the units it can produce of either Plain or Fancy but not both. Plain has a unit contribution margin of $120 and takes two machine hours to make and Fancy has a unit contribution margin of $150 and takes three machine hours to make. There are 2,400 machine hours available to manufacture a product. What should Brooks do?AMake Plain which creates $10 more profit per machine hour than Fancy does.BMake Fancy which creates $30 more profit per unit than Plain does.CMake Plain because more units can be made and sold than Fancy.DThe same total profits exist regardless of which product is made.Multiple Choice Question 79Greg's Breads can produce and sell only one of the following two products:OvenContributionHours RequiredMargin Per UnitMuffins0.2$3Coffee Cakes0.3$4The company has oven capacity of 1,200 hours. How much will contribution margin be if it produces only the most profitable product?A$12,000B$18,000C$16,000D$24,000Multiple Choice Question 85Mercantile Corporation has sales of $2,000,000, variable costs of $1,100,000, and fixed costs of $750,000.Mercantile's degree of operating leverage isA6.00.B1.22.C1.47.D1.20.Multiple Choice Question 87Which of the following statements is not true?AOperating leverage refers to the extent to which a company's net income reacts to a given change in sales.BWhen a company's sales revenue is decreasing, high operating leverage is good because it means that profits will decrease at a slower pace than revenues decrease.CCompanies that have higher fixed costs relative to variable costs have higher operating leverage.DWhen a company's sales revenue is increasing, high operating leverage is good because it means that profits will increase rapidly.Multiple Choice Question 88Miller Manufacturing's degree of operating leverage is 1.5. Warren Corporation's degree of operating leverage is 6. Warren's earnings would go up (or down) by ________ as much as Miller's with an equal increase (or decrease) in sales.A1/4B7.5 timesC4.5 timesD4 times

 

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