101.
Lake Sales had $2,200,000 in sales last month. The contribution margin ratio was 30% and
operating profits were $180,000. What sales volume does Lake’s need to yield a $240,000
operating profit?
102.
Lake Sales had $2,200,000 in sales last month. The contribution margin ratio was 30% and
operating profits were $180,000. What is Lake’s margin of safety in sales dollars?
103.
Eastwick produces and sells three products. Last month’s results are as follows:
P1
P2
P3
$100,000
$200,000
$200,000
40,000
140,000
80,000
Fixed costs total $200,000. What is Eastwick’s break-even sales volume? (Assume the
current product mix.)
104.
Eastwick produces and sells three products. Last month’s results are as follows:
P1
P2
P3
$100,000
$200,000
$200,000
40,000
140,000
80,000
Fixed costs total $200,000. What is Eastwick’s margin of safety? (Assume the current
product mix.)
105.
Eastwick produces and sells three products. Last month’s results are as follows:
P1
P2
P3
$100,000
$200,000
$200,000
40,000
140,000
80,000
3-86
106.
A company has provided the following data:
Sales
3,000
Units
Sales price
$70
per unit
Variable cost
$50
per unit
Fixed cost
$25,000
Sales
Fixed costs
107.
Winters Company sells three products. Sales and contribution margin ratios for the three
products follow:
Product
A
Product
B
Product
C
Sales in dollars
$20,000
$40,000
$100,000
Contribution
margin ratio
45%
40%
15%
Given these data, the contribution margin ratio for the company as a whole would be:
Sales in
108.
Break-even analysis assumes that:
109.
Break-even analysis assumes that over the relevant range: (CPA adapted)
Essay Questions
110.
You have been provided with the following information regarding the Omaha
Manufacturing Company:
Sales price
$50
Variable manufacturing
cost per unit
24
Variable marketing cost
per unit
6
Fixed manufacturing
costs
360,000
Fixed administrative
costs
80,000
111.
Lincoln, Inc. is considering the introduction of a new music player with the following price
and cost characteristics:
Sales price
$125
each
Variable costs
75
each
Fixed costs
180,000
per year
112.
You have been provided with the following information regarding the Closure
Manufacturing Company:
Sales Price
$50
Variable manufacturing cost per unit
24
Fixed manufacturing costs per unit
12
Variable marketing cost per unit
6
Fixed administrative costs per unit
3
113.
You have been provided with the following information regarding the Pharma
Manufacturing Company:
Sales Price
$25
Variable manufacturing cost per unit
12
Variable marketing cost per unit
3
Fixed manufacturing costs
180,000
Fixed administrative costs
40,000
114.
Chita Corporation produces and sells a single product. The company’s contribution format
income statement for January appears below:
Sales (5,500 units)
$297,000
Variable costs
165,000
Contribution margin
132,000
Fixed costs
105,300
Operating profit
$26,700
Sales (5,700 units)
Variable costs
Contribution margin
Fixed costs
Operating profit
$31,500
115.
Folsom Inc., which produces and sells a single product, has provided the following
contribution format income statement for August:
Sales (4,600 units)
$105,800
Variable costs
41,400
Contribution margin
64,400
Fixed costs
46,000
Operating profit
$18,400
Required:
Redo the company’s contribution format income statement assuming that the company
sells 4,500 units.
Sales (4,500 units)
Variable costs
Contribution margin
Fixed costs
Operating profit
$17,000
116.
Champion Corporation produces and sells a single product. In April, the company sold
1,700 units. Its total sales were $153,000, its total variable costs were $79,900, and its
total fixed costs were $56,800.
Required:
a. Construct the company’s contribution format income statement for April in good form.
b. Redo the company’s contribution format income statement assuming that the company
sells 1,600 units.
117.
In November, Townhouse Corporation sold 2,100 units of its only product. Its total sales
were $195,300, its total variable costs were $84,000, and its total fixed costs were $98,700.
Required:
a. Construct the company’s contribution format income statement for November in good
form.
b. Redo the company’s contribution format income statement assuming that the company
sells 2,300 units.
118.
119.
120.
121.
Rudy Corporation produces and sells a single product. Data concerning that product
appear below:
Per Unit
Percent of Sales
Selling price
$150
100%
Variable costs
60
40%
Contribution margin
$90
60%
Less incremental fixed costs
Change in operating profit