Reference no: EM132754825

Questions -

Q1) If the sales price per unit decreases while the variable cost per unit and total fixed costs remain constant, which of the following will occur?

a. The contribution margin decreases and the breakeven point increases.

b. The contribution margin decreases and the breakeven point decreases.

c. The contribution margin decreases and the breakeven point decreases.

d. The contribution margin increases and the breakeven point increases.

Q2) John James Junk Food sells brownies for $4 per brownie. Variable costs are $3 per brownie. Fixed costs are $2,500 per month. What is James' contribution margin ratio?

a. 63%

b. 25%

c. 75 %

d. 267%

Q3) Abby Broyles sells handmade bags at farmer's markets for $120 per bag. Current sales are 12,300 bags and break-even sales are 10,824 bags. The margin of safety as a percentage of sales is closest to:

a. 12%

b. 88%

c. 14%

d. 86%

Q4) Cal Cunningham Company is considering increasing its single product's selling price by $2 per unit due to an increase in its variable labor cost of $2 per unit. Break-even point in units will:

a. increase

b. not change

c. decrease

d. change but direction cannot be determined.

Q5) Espy's contribution margin ratio is 60% and its fixed monthly expenses are $46,000. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $134,000?

a. $34,400

b. $7600

c. $80,400

d. $88,000