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# \$6.00Accounting Chapter 4 Quiz #5

Chapter 4, # 0
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1. Carter Co. sells two products, Arks and Bins. Last year Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are:

Product                    Unit Selling Price                Unit Variable Cost             Unit Contribution Margin
Arks                              \$120                                    \$80                            \$40
Bins                                 80                                      60                             20

Assuming that last year's fixed costs totaled \$960,000, what was Carter Co.'s break-even point in units?
1. 35,000 units
2. 12,000 units
3. 28,000 units
4. 40,000 units

2. The Harold Corporation just started business in January of 2010. They had no beginning inventories. During 2010 they manufactured 12,000 units of product, and sold 10,000 units. The selling price of each unit was \$20. Variable manufacturing costs were \$4 per unit, and variable selling and administrative costs were \$2 per unit. Fixed manufacturing costs were \$24,000 and fixed selling and administrative costs were \$6,000.

What would be the Harold Corporations Net income for 2010 using absorption costing?
1. \$106,000
2. \$110,000
3. \$114,000
4. \$4,000

3. The manufacturing cost of Prancer Industries for three months of the year are provided below:
Total Cost               Production
April                 \$ 60,700                1,200 Units
May                    80,920                1,800
June                 100,300                  2,400

Using the high-low method, the variable cost per unit, and the total fixed costs are:
1. \$32.30 per unit and \$22,780 respectively.
2. \$32 per unit and \$76,800 respectively.
3. \$33 per unit and \$21,100 respectively.
4. \$32.30 per unit and \$77,520 respectively.

4. If fixed costs are \$350,000, the unit selling price is \$29, and the unit variable costs are \$20, what is the break-even sales (units) if the variable costs are decreased by \$4?
1. 12,069 units
2. 26,924 units
3. 38,889 units
4. 21,875 units

5. If employees accept a wage contract that decreases the unit contribution margin, the break-even point will decrease.
1. False
2. True

6. If fixed costs are \$300,000, the unit selling price is \$31, and the unit variable costs are \$22, what is the break-even sales (units) if fixed costs are reduced by \$30,000?
1. 20,000 units
2. 8,710 units
3. 12,273 units
4. 30,000 units

7. Which of the following conditions would cause the break-even point to decrease?
1. Unit variable cost decreases
2. Total fixed costs increase
3. Unit selling price decreases
4. Unit variable cost increases

8. If fixed costs are \$750,000 and variable costs are 60% of sales, what is the break-even point (dollars)?
1. \$300,000
2. \$1,250,000
3. \$1,875,000
4. \$2,500,000

9. The dollars available from each unit of sales to cover fixed cost and profit is the unit variable cost.
1. True
2. False

10. If fixed costs are \$240,000, the unit selling price is \$32, and the unit variable costs are \$20, what are the old and new break-even sales (units) if the unit selling price increases by \$4?
1. 20,000 units and 30,000 units
2. 7,500 units and 6,667 units
3. 12,000 units and 15,000 units
4. 20,000 units and 15,000 units

11. A firm operated at 80% of capacity for the past year, during which fixed costs were \$330,000, variable costs were 70% of sales, and sales were \$1,000,000. Operating profit was:
1. \$370,000
2. \$670,000
3. (\$30,000)
4. \$140,000

12. If fixed costs are \$400,000, the unit selling price is \$25, and the unit variable costs are \$15, what is the break-even sales (units) if the variable costs are increased by \$2?
1. 40,000 units
2. 30,770 units
3. 26,667 units
4. 50,000 units

13. In cost-volume-profit analysis, all costs are classified into the following two categories:
1. sunk costs and fixed costs
2. variable costs and fixed costs
3. mixed costs and variable costs
4. discretionary costs and sunk costs

14. Which of the following is not an assumption underlying cost-volume-profit analysis?
1. Total sales and total costs can be represented by straight lines.
2. The sales mix is constant.
3. Costs can be accurately divided into fixed and variable components.
4. The break-even point will be passed during the period.

15. If a business had a capacity of \$8,000,000 of sales, actual sales of \$5,000,000, break-even sales of \$3,500,000, fixed costs of \$1,400,000, and variable costs of 60% of sales, what is the margin of safety expressed as a percentage of sales?
1. 18%
2. 25%
3. 28%
4. 30%

16. If fixed costs increased and variable costs per unit decreased, the break-even point would:
1. remain the same
2. decrease
3. increase
4. increase, decrease, or remain the same, depending upon the amounts of increase in fixed cost and decrease in variable cost

17. The Harold Corporation just started business in January of 2010. They had no beginning inventories. During 2010 they manufactured 12,000 units of product, and sold 10,000 units. The selling price of each unit was \$20. Variable manufacturing costs were \$4 per unit, and variable selling and administrative costs were \$2 per unit. Fixed manufacturing costs were \$24,000 and fixed selling and administrative costs were \$6,000.
What would be the Harold Corporations Net income for 2010 using direct costing?
1. \$114,000
2. \$4,000
3. \$110,000
4. \$106,000

18. When the fixed costs are \$120,000 and the contribution margin is \$20, the break-even point is
1. 6,000 units
2. 16,000 units
3. 8,000 units
4. 7,998 units

19. If fixed costs are \$1,500,000, the unit selling price is \$250, and the unit variable costs are \$130, what is the amount of sales required to realize an operating income of \$200,000?
1. 12,500 units
2. 11,538 units
3. 16,000 units
4. 14,166 units

20. If fixed costs are \$700,000 and the unit contribution margin is \$14, what amount of units must be sold in order to realize an operating income of \$100,000?
1. 5,000
2. 41,667
3. 57,143
4. 58,333

Tutorial

\$6.00
Accounting Chapter 4 Quiz #5
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• Posted on Dec 04, 2010 at 3:12:39PM
A:
Preview: ... Answer: 1 8. If fixed costs are \$750,000 and variable costs are 60% of sales, what is the break-even point (dollars)? 1. \$300,000   2. \$1,250,000   3. \$1,875,000   4. \$2,500,000   Answer: 3 9. The dollars available from each unit of sales to cover fixed cost and profit is the unit variable cost. 1. True   2. False   Answer: F 10. If fixed costs are \$240,000, the unit selling price is \$32, and the unit variable costs are \$20, what are the old and new break-even sales (units) if the unit selling price increases by \$4? 1. 20,000 units and 30,000 units   2. 7,500 units and 6,667 units   3. 12,000 units and 15,000 units   4. 20,000 units and 15,000 units   Answer: 4 11. A firm operated at 80% of capacity for the past year, during which fixed costs were \$330,000, variable costs were 70% of sales, and sales were \$1,000,000. Operating profit was: 1. \$370,000   2. \$670,000   3. (\$30,000)   4. \$140,000   Answer: 3 12. If fixed costs are \$400,000, the unit selling price is \$25, and the unit variable costs are \$15, what is the break-even sales (units) if the variable costs are increased by \$2? 1. 40,000 units   2. 30,770 units   3. 26,667 units   4. 50,000 units   Answer: 4 13. In cost-volume-profit analysis, all costs are classified into the followin ...

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