116) A product sells for $200 per unit, and its variable costs are 65% of sales. The fixed costs are
$420,000. What is the break-even point in sales dollars?
A) $2,100.
B) $1,200,000.
C) $420,000.
D) $646,154.
E) $6,000.
117) A product sells for $30 per unit and has variable costs of $18 per unit. The fixed costs are
$720,000. If the variable costs per unit were to decrease to $15 per unit, fixed costs increase to
$900,000, and the selling price does not change, break-even point in units would:
A) Increase by 6,000.
B) Not change.
C) Equal 6,000.
D) Decrease by 20,000.
E) Increase by 20,000.
118) Forrester Company is considering buying new equipment that would increase monthly fixed costs
from $120,000 to $150,000 and would decrease the current variable costs of $70 by $10 per unit.
The selling price of $100 is not expected to change. Forrester’s current break-even sales are
$400,000 and current break-even units are 4,000. If Forrester purchases this new equipment, the
revised contribution margin ratio would be:
A) 10%. B) 70%. C) 30%. D) 40%. E) 60%.
119) Forrester Company is considering buying new equipment that would increase monthly fixed costs
from $120,000 to $150,000 and would decrease the current variable costs of $70 by $10 per unit.
The selling price of $100 is not expected to change. Forrester’s current break-even sales are
$400,000 and current break-even units are 4,000. If Forrester purchases this new equipment, the
revised break-even point in dollars would be:
A) $400,000. B) $325,000. C) $500,000. D) $375,000. E) $300,000.
120) Forrester Company is considering buying new equipment that would increase monthly fixed costs
from $120,000 to $150,000 and would decrease the current variable costs of $70 by $10 per unit.
The selling price of $100 is not expected to change. Forrester’s current break-even sales are
$400,000 and current break-even units are 4,000. If Forrester purchases this new equipment, the
revised break-even point in units would:
A) Decrease by 250.
B) Decrease by 8,000.
C) Increase by 250.
D) Increase by 8,000.
E) Increase by 12,000.
121) The difference between sales price per unit and variable cost per unit is the:
A) Gross margin per unit.
B) Contribution margin per unit.
C) Fixed cost per unit.
D) Gross profit from sales.
E) Margin of safety per unit.
122) The contribution margin per unit expressed as a percentage of the product’s selling price is the:
A) Volume variance.
B) Rate of return on sales.
C) Margin of safety.
D) Contribution margin ratio.
E) Break-even point.
123) A company manufactures and sells a product for $120 per unit. The company’s fixed costs are
$68,760, and its variable costs are $90 per unit. The company’s break-even point in units is:
A) 2,292. B) 764. C) 573. D) 840. E) 327.
124) A company manufactures and sells a product for $120 per unit. The company’s fixed costs are
$68,760, and its variable costs are $90 per unit. The company’s break-even point in dollars is:
A) $275,040. B) $68,760. C) $206,280. D) $2,292. E) $91,680.
125) A company has fixed costs of $90,000. Its contribution margin ratio is 30% and the product sells
for $75 per unit. What is the company’s break-even point in dollar sales?
A) $128,571. B) $180,000. C) $60,000. D) $210,000. E) $300,000.
126) Mason Company manufactures and sells shoelaces for $2.00 per pair. Its variable cost per unit is
$1.70. Mason’s total fixed costs are $10,500. How many pairs must Mason Company sell to break
even?
A) 52,500. B) 5,250. C) 61,760. D) 6,176. E) 35,000.
127) The Goldfarb Company manufactures and sells toasters. Each toaster sells for $23.75 and the
variable cost per unit is $16.25. Goldfarb’s total fixed costs are $25,000, and budgeted sales are
8,000 units. What is the contribution margin per unit?
A) $16.25. B) $23.75. C) $1.25. D) $7.50. E) $60,000.
128) Leeks Company’s product has a contribution margin per unit of $11.25 and a contribution margin
ratio of 22.5%. What is the selling price of the product?
A) $5. B) $30. C) $40. D) $20. E) $50.
129) Alvarez Company’s break-even point in units is 1,000. The sales price per unit is $10 and variable
cost per unit is $7. If the company sells 2,500 units, what will net income be?
A) $3,000 B) $4,500 C) $35,000 D) $7,500 E) $17,000
130) Mullis Corp. manufactures DVDs that sell for $5.00. Fixed costs are $28,000 and variable costs are
$3.60 per unit. Mullis can buy a newer production machine that will increase fixed costs by $8,000
per year, but will decrease variable costs by $0.40 per unit. What effect would the purchase of the
new machine have on Mullis’ break-even point in units?
A) 9,850 unit decrease.
B) 4,444 unit increase.
C) 5,714 unit increase.
D) No effect.
E) 4,444 unit decrease.
131) At Midland Company’s break-even point of 9,000 units, fixed costs are $180,000 and variable costs
are $540,000 in total. The unit sales price is:
A) $60. B) $20. C) $80. D) $100. E) $40.
132) Assume that sales are predicted to be $3,750, the expected contribution margin is $1,500, and a net
loss of $250 is anticipated. The break-even point in sales dollars is:
A) $2,500. B) $1,750. C) $4,375. D) $4,250. E) $4,000.
133) During a recent fiscal year, Creek Company reported pretax income of $125,000, a contribution
margin ratio of 25% and total contribution margin of $400,000. Total variable costs must have
been:
A) $500,000.
B) $1,100,000.
C) $2,100,000.
D) $1,600,000.
E) $1,200,000.
134) In Keegan Corporation’s most recent fiscal year, the company reported pretax earnings of
$215,000. Fixed costs totaled $325,800, the unit selling price of the firm’s only product was $60,
and the variable costs per unit were 40% of the selling price. Based on this information, the firm’s
break-even point in units was:
A) 8,750 units.
B) 13,575 units.
C) 9,050 units.
D) 13,750 units.
E) 15,023 units.
135) A cost-volume-profit chart is also known as a(n)
A) Break-even chart.
B) Operating profit chart.
C) Sales chart.
D) Operating leverage chart.
E) Margin of safety chart.
136) When graphing cost-volume-profit data on a CVP chart:
A) Both units and costs are plotted on the horizontal axis.
B) Data points always represent expected future points.
C) Units are plotted on the horizontal axis; costs on the vertical axis.
D) Both units and cost are plotted on the vertical axis.
E) Units are plotted on the vertical axis; costs on the horizontal axis.
137) A CVP graph presents data on:
A) Profit, loss, and break-even on a total dollar basis.
B) Profit and loss on a budget and actual basis.
C) Profit and loss on a per unit basis.
D) Profit, loss, and break-even on a per unit basis.
E) Only profit and loss on a total basis.
138) A firm sells two products, Regular and Ultra. For every unit of Regular the firm sells, two units of
Ultra are sold. The firm’s total fixed costs are $1,612,000. Selling prices and cost information for
both products follow. The contribution margin per composite unit is:
Product
Unit Sales
Price
Variable Cost Per
Unit
Regular $ 20 $ 8
Ultra 24 4
A) $52. B) $32. C) $20. D) $12. E) $44.
139) A firm sells two products, Regular and Ultra. For every unit of Regular the firm sells, two units of
Ultra are sold. The firm’s total fixed costs are $1,612,000. Selling prices and cost information for
both products follow. What is the firm’s break-even point in units of Regular and Ultra?
Product
Unit Sales
Price
Variable Cost Per
Unit
Regular $ 20 $ 8
Ultra 24 4
A) 62,000 Regular units and 31,000 Ultra units.
B) 31,000 Regular units and 31,000 Ultra units.
C) 10,333 Regular units and 20,667 Ultra units.
D) 36,167 Regular units and 72,333 Ultra units.
E) 31,000 Regular units and 62,000 Ultra units.