Reference no: EM132598015

Question 1: If the sales mix in a multi-product environment shifts to a higher volume in low contribution margin products, the break-even point will ________.

a. remain unchanged because all products are included in the calculation of break-even

b. increase because the low contribution margin products have little effect on break-even

c. increase because the per composite unit contribution margin will decrease

d. decrease because the per composite unit contribution margin will increase

Question 2: Break-even for a multiple product firm ________.

a. can be calculated by dividing total fixed costs by the contribution margin of a composite unit

b. can be calculated by multiplying fixed costs by the contribution margin ratio of a composite unit

c. can only be calculated when the proportion of products sold is the same for all products

d. can be calculated by multiplying fixed costs by the contribution margin ratio of the most common product in the sales mix

Question 3: A company sells two products, Model 101 and Model 202. For every one unit of Model 101, they sell they sell two units of Model 202. Sales and cost information for the two products is shown. What is the contribution margin for a composite unit based on the sales mix?

a. $14

b. $21

c. $35

d. $56

Question 4: If a firm has a contribution margin of $59,690) and a net income of $12,700 for the current month, what is their degree of operating leverage?

A. 0.18

B. 1.18

C. 2.4

D. 4.7

Question 5: If a firm has a contribution margin of $78,090 and a net income of $13,700 for the current month, what is their degree of operating leverage?

a. 0.21

b. 1.21

c. 2.4

d. 5.7

Question 6: Wallace Industries has total contribution margin of $58,560 and net income of $24,400 for the month of April. Wallace expects sales volume to increase by 5% in May. What are the degrees of operating leverage and the expected percent change in income for Wallace Industries?

a. 0.42 and 2.2%

b. 0.42 and 5%

c. 2.4 and 12%

d. 2.5 and 13%

Question 7: Macom Manufacturing has total contribution margin of $61,250 and net income of $24,500 for the month of June. Marcus expects sales volume to increase by 10% in July. What are the degrees of operating leverage and the expected percent change in income for Macom Manufacturing?

a. 0.4 and 10%

b. 2.5 and 10%

c. 2.5 and 25%

d. 5.0 and 50%