Monthly break-even point in unit sales

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Reference no: EM13920240

1 Which of the following time value of money factors is the largest value. Assume that the investment horizon is 10 years and the discount rate is 10%

a) future value of a single sum

b) present value of a single sum

c) future value of an annuity

d) present value of an annuity

2 MSM Inc. sells garden statues. Each statue sells for $95. MSM Inc. buys each statue for $40 and pays a 20% commission to salespeople for all sales made by the company. All other costs ($3,000 each month) are fixed. If MSM Inc. reduces monthly fixed cost by $800 but increases the commission rate by 8%

a) the monthly break-even point in unit sales will increase

b) the monthly break-even point in unit sales will decrease

c) the monthly break-even point in unit sales will not change

d) need more information to be able to calculate the change

e) monthly sales in units -beginning inventory + ending inventory

3 A contribution type income statement presents costs grouped by

a. dollar value

b. function (admin, selling, cogs, etc)

c. behavior

d. alphabetical order

4 The capital budgeting model focuses on a project's expected

a. annual cash flows over the life of the project

b. annual net income over the life of the project

c. annual revenue created over the life of the project

d. annual costs saved over the life of the project

5 ABC Company currently has monthly fixed costs of $20,000, variable cost per unit of $10 and a selling price of $15 per unit. The firm is considering decreasing monthly fixed cost by $3,000 and increasing variable cost per unit by $3. The impact of these changes will be to

a. increase the unit breakeven point

b. decrease the unit breakeven point

c. have no impact on the unit breakeven point

Reference no: EM13920240

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