Which of the following formulas is used to calculate the contribution margin ratio? (Sales − Total costs) ÷ Sales. (Sales − Fixed costs) ÷ Sales. (Sales − Cost of goods sold) ÷ Sales. (Sales − Variable costs) ÷ Sales.Honeysuckle Manufacturing has the following data:Selling Price$60 Variable manufacturing cost$33 Fixed manufacturing cost$250,000per monthVariable selling & administrative costs$9 Fixed selling & administrative costs$120,000per monthWhat dollar sales volume does Honeysuckle need to achieve a $50,000 operating profit per month? $933,333. $1,233,333. $7,560,000. $1,400,000.With regard to the CVP graph, which of the following statements is not correct? The CVP graph assumes that fixed costs are constant in total within the relevant range. The CVP graph assumes that selling prices do not change. The CVP graph assumes that variable costs go down as volume goes up. The CVP graph assumes that volume is the only factor affecting total cost.Neef Corporation has provided the following data for its two most recent years of operation: Selling price per unit$84Manufacturing costs: Variable manufacturing cost per unit produced: Direct materials$12Direct labor$5Variable manufacturing overhead$4Fixed manufacturing overhead per year$432,000 Selling and administrative expenses: Variable selling and administrative expense per unit sold$5Fixed selling and administrative expense per year$61,000 Year 1 Year 2Units in beginning inventory0 3,000Units produced12,000 9,000Units sold9,000 10,000Units in ending inventory3,000 2,0000 The unit product cost under variable costing in Year 1 is closest to: $26.00 $57.00 $21.00 $62.00A company's break-even point will not be changed by: a change in the selling price per unit. a change in the income tax rate. a change in the variable cost per unit. a change in total fixed costs.Self-imposed budgets prepared by lower-level managers should be scrutinized by higher levels of management. True FalseBreak-even analysis assumes that over the relevant range: (CPA adapted) Total Costs are unchanged. Total Fixed Costs are nonlinear. Unit Revenues are nonlinear. Unit Variable Costs are unchanged.Ahrends Corporation makes 70,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows: Direct materials$17.80 Direct labor 19.00 Variable manufacturing overhead 1.00 Fixed manufacturing overhead 17.10 Unit product cost$54.90 An outside supplier has offered to sell the company all of these parts it needs for $48.50 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $273,000 per year.If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $8.20 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products.How much of the unit product cost of $54.90 is relevant in the decision of whether to make or buy the part? $37.80 per unit $19.00 per unit $46.70 per unit $54.90 per unit

Name: Which of the following formulas is used to calculate the contribution
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Description: Which of the following formulas is used to calculate the contribution margin ratio? (Sales − Total costs) ÷ Sales. (Sales − Fixed costs) ÷ Sales. (Sales − Cost of goods sold) ÷ Sales. (Sales − Variable costs) ÷ Sales.Honeysuckle Manufacturing has

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FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Which of the following formulas is used to calculate the contribution margin ratio?

		(Sales − Total costs) ÷ Sales.
		(Sales − Fixed costs) ÷ Sales.
		(Sales − Cost of goods sold) ÷ Sales.
		(Sales − Variable costs) ÷ Sales.

Honeysuckle Manufacturing has the following data:

Selling Price	$	60
Variable manufacturing cost	$	33
Fixed manufacturing cost	$	250,000	per month
Variable selling & administrative costs	$	9
Fixed selling & administrative costs	$	120,000	per month

What dollar sales volume does Honeysuckle need to achieve a $50,000 operating profit per month?

		$933,333.
		$1,233,333.
		$7,560,000.
		$1,400,000.

With regard to the CVP graph, which of the following statements is not correct?

		The CVP graph assumes that fixed costs are constant in total within the relevant range.
		The CVP graph assumes that selling prices do not change.
		The CVP graph assumes that variable costs go down as volume goes up.
		The CVP graph assumes that volume is the only factor affecting total cost.

Neef Corporation has provided the following data for its two most recent years of operation:


Selling price per unit	$	84
Manufacturing costs:
Variable manufacturing cost per unit produced:
Direct materials	$	12
Direct labor	$	5
Variable manufacturing overhead	$	4
Fixed manufacturing overhead per year	$	432,000
Selling and administrative expenses:
Variable selling and administrative expense per unit sold	$	5
Fixed selling and administrative expense per year	$	61,000

	Year 1	Year 2
Units in beginning inventory	0	3,000
Units produced	12,000	9,000
Units sold	9,000	10,000
Units in ending inventory	3,000	2,0000

The unit product cost under variable costing in Year 1 is closest to:

		$26.00
		$57.00
		$21.00
		$62.00

A company's break-even point will not be changed by:

		a change in the selling price per unit.
		a change in the income tax rate.
		a change in the variable cost per unit.
		a change in total fixed costs.

Self-imposed budgets prepared by lower-level managers should be scrutinized by higher levels of management.

True

False

Break-even analysis assumes that over the relevant range: (CPA adapted)

		Total Costs are unchanged.
		Total Fixed Costs are nonlinear.
		Unit Revenues are nonlinear.
		Unit Variable Costs are unchanged.

Ahrends Corporation makes 70,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows:


Direct materials	$	17.80
Direct labor		19.00
Variable manufacturing overhead		1.00
Fixed manufacturing overhead		17.10
Unit product cost	$	54.90

An outside supplier has offered to sell the company all of these parts it needs for $48.50 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $273,000 per year.

If the part were purchased from the outside supplier, all of the direct labor cost of the part would be avoided. However, $8.20 of the fixed manufacturing overhead cost being applied to the part would continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead cost would be applied to the company's remaining products.

How much of the unit product cost of $54.90 is relevant in the decision of whether to make or buy the part?

		$37.80 per unit
		$19.00 per unit
		$46.70 per unit
		$54.90 per unit

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