Chapter 21

Straight-line depreciation on a truck is a

• Variable cost

• Fixed cost

• Mixed cost

• High-Low cost

Contribution margin is the _______.

• difference between net sales revenue and mixed costs

• sum of net sales revenue and variable costs

• sum of net sales revenue and fixed costs

• difference between net sales revenue and variable costs

Calculate the contribution margin ratio using the following information.

Net sales revenue $165,000

Fixed cost $25,000

Variable cost $55,000

Selling and distribution overhead $15,000

Cost of goods sold $115,000

• 39%

• 42%

• 67%

• 52%

A manufacturer of pens, sells each unit for $85. The company incurs variable costs of $55 per unit. The total fixed manufacturing costs are $500. The target profit of the company is $1,600. Calculate the number of units that must be sold to earn the target profit.

• 79 units

• 70 units

• 62 units

• 53 units

Contribution per unit is $41. Calculate the required sales in units to break-even using the contribution margin approach.

Net sales revenue $655,000

Mixed cost $75,000

Fixed cost $205,000

Selling & distribution overhead $22,000

Cost of goods sold $197,000

• 2,500 units

• 3,000 units

• 5,000 units

• 4,463 units

At the break-even point _________.

• total revenues exceed total costs

• total revenues equal total costs

• total revenues exceed fixed costs

• total revenues equal fixed costs

An increase in sales price will result in a(n) _____.

• increase in fixed cost

• decrease in contribution margin

• increase in variable cost

• decrease in the break-even point

A company’s forecasted sales are $300,000 and its sales at break-even are $180,000. Its margin of safety in dollars is

• $180,000

• $120,000

• $480,000

• $300,000

If a company increases fixed costs for a product, then the contribution margin per unit will

• Increase

• Decrease

• Remain the same

• More information is needed

The water-park sells half of its tickets for the regular price of $75. The other half go to senior citizens and children for the price of $35. Variable cost per guest is $15 for both groups, and fixed costs total $60,000 per month. What is the break-even point in total guests using composite units?

• 750

• 1,000

• 1,500

• 2,000