Exam 5: Merchandising Operations and the Multiple-Step Income Statement

Boswell company reported the following information for the current year: Sales (50,000 units) $1,000,000, direct materials and direct labor $500,000, other variable costs $50,000, and fixed costs $360,000.What is Boswell's break-even point in units?

If variable costs per unit are 70% of sales, fixed costs are $290,000 and target net income is $70,000, required sales are $1,200,000.

Dunbar Manufacturing's variable costs are 30% of sales.The company is contemplating an advertising campaign that will cost $55,000.If sales are expected to increase $100,000, by how much will the company's net income increase?

Hayduke Corporation reported the following results from the sale of 5,000 units in May: sales $300,000, variable costs $180,000, fixed costs $90,000, and net income $30,000.Assume that Hayduke increases the selling price by 5% on June 1.How many units will have to be sold in June to maintain the same level of net income?

For an activity base to be useful in cost behavior analysis,

Fixed costs are $900,000 and the variable costs are 75% of the unit selling price.What is the break-even point in dollars?

Why is identification of a relevant range important?

Ponszko Nursery used high-low data from June and July to determine its variable cost of $12 per unit.Additional information follows: Month Units produced Total costs June 2,000 \ 32,000 July 1,000 20,000 If Ponszko's produces 2,300 units in August, how much is its total cost expected to be?

Nelson Manufacturing has the following data: Variable costs are 60% of the unit selling price. The contribution margin ratio is 40%. The unit contribution margin is $500. The fixed costs are $500,000. Which of the following does not express the break-even point?

At the break-even point of 2,000 units, variable costs are $55,000, and fixed costs are $35,000.How much is the selling price per unit?

Which of the following is not a fixed cost?

How much sales are required to earn a target net income of $200,000 if total fixed costs are $250,000 and the contribution margin ratio is 40%?

The break-even point is where

The following monthly data are available for Lumberyard Company.which produces only one product: Selling price per unit, $42; Unit variable expenses, $14; Total fixed expenses, $42,000; Actual sales for the month of June, 3,000 units.How much is the margin of safety for the company for June?

Hollis Industries produces flash drives for computers, which it sells for $20 each.Each flash drive costs $13 of variable costs to make.During April, 1,000 drives were sold.Fixed costs for March were $2 per unit for a total of $1,000 for the month.How much is the contribution margin ratio?

An assumption of CVP analysis is that all costs can be classified as either variable or fixed.