# 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.