Connect Managerial Accounting Chapter 5

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.)

Connect Managerial Accounting Chapter 5

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.

Connect Managerial Accounting Chapter 5

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

Connect Managerial Accounting Chapter 5

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.

Connect Managerial Accounting Chapter 5

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

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.