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Connect Managerial Accounting Chapter 5

Q1. A jeans maker is designing a new line of jeans called Slims. The jeans will sell for $355 per pair and cost $262.70 per pair in variable costs to make. (Round your answers to 2 decimal places.)

Q2. Blanchard Company manufactures a single product that sells for $220 per unit and whose total variable costs are $176 per unit. The company’s annual fixed costs are $664,400.

(1) Prepare a contribution margin income statement for Blanchard Company at the break-even point.

(2) Assume the company’s fixed costs increase by $136,000. What amount of sales (in dollars) is needed to break even?

Q3. Blanchard Company manufactures a single product that sells for $190 per unit and whose total variable costs are $152 per unit. The company’s annual fixed costs are $562,400. Management targets an annual pretax income of $950,000. Assume that fixed costs remain at $562,400.

Q4. Handy Home sells windows and doors in the ratio of 7:3 (windows:doors). The selling price of each window is $119 and of each door is $269. The variable cost of a window is $72.00 and of a door is $184.50. Fixed costs are $320,375. (Enter your “per unit” values in two decimal places.)

Connect Managerial Accounting Chapter 5 Quiz

Q1. Use the following information to determine the contribution margin ratio:

Unit sales	50,000 Units
Unit selling price	$14.50
Unit variable cost	$7.50
Fixed costs	$204,000

• 6.9%
• 48.3%
• 24.5%
• 34.1%

Q2. An important tool in predicting the volume of activity, the costs to be incurred, the sales to be made, and the profit to be earned is:

• Target income analysis.
• Cost-volume-profit analysis.
• Least-squares regression analysis.
• Variance analysis.
• Process costing

Q3. A firm expects to sell 25,000 units of its product at $11 per unit and to incur variable costs per unit of $6. Total fixed costs are $70,000. The pretax net income is:

• $55,000
• $90,000
• $125,000
• $150,000
• $380,000

Q4. Use the following information to determine the break-even point in units (rounded to the nearest whole unit):

Unit sales	50,000 Units
Unit selling price	$14.50
Unit variable cost	$7.50
Fixed costs	$186,000

• 12,828
• 26,571
• 8,455
• 46,667
• 24,800

Q5. Maroon Company’s contribution margin ratio is 24%. Total fixed costs are $84,000. What is Maroon’s break-even point in sales dollars?

• $20,160
• $110,526
• $350,000
• $240,000
• $84,000

Q6. During its most recent fiscal year, Raphael Enterprises sold 200,000 electric screwdrivers at a price of $15 each. Fixed costs amounted to $400,000 and pretax income was $600,000. What amount should have been reported as variable costs in the company’s contribution margin income statement for the year in question?

• $2,400,000.
• $1,600,000.
• $3,000,000.
• $2,000,000.
• $1,000,000.

Q7. The following information is available for a company’s cost of sales over the last five months.

Month	Units sold	Cost of sales
January	400	$31,000
February	800	$37,000
March	1,600	$49,000
April	2,400	$61,000

Using the high-low method, the estimated total fixed cost is:

• $25,000
• $30,000
• $13,692
• $100,000
• $50,000

Q8. A manufacturer reports the following costs to produce 10,000 units in its first year of operations: Direct materials, $10 per unit, Direct labor, $6 per unit, Variable overhead, $70,000, and Fixed overhead, $120,000. Of the 10,000 units produced, 9,200 were sold, and 800 remain in inventory at year-end. Under absorption costing, the value of the inventory is:

• $12,800
• $18,400
• $28,000
• $22,400
• $13,600

Q9. Flannigan Company manufactures and sells a single product that sells for $450 per unit; variable costs are $270. Annual fixed costs are $800,000. Current sales volume is $4,200,000. Compute the break-even point in units.

• 5,500
• 1,933
• 4,444
• 2,900
• 1,160

Q10. During its most recent fiscal year, Dover, Inc. had total sales of $3,200,000. Contribution margin amounted to $1,500,000 and pretax income was $400,000. What amount should have been reported as fixed costs in the company’s contribution margin income statement for the year in question?

• $1,900,000.
• $2,800,000.
• $1,300,000.
• $1,100,000.
• $1,700,000.

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