Management Accounting Quiz

Question 1 A cement manufacturer has supplied the following data: Tons of cement produced and sold 680,000 Sales revenue $ 2,788,000 Variable manufacturing expense $ 1,156,000 Fixed manufacturing expense $ 760,000 Variable selling and administrative $ 272,000 expense Fixed selling and administrative expense $ 294,000 Net operating income $ 306,000 What is the company's unit contribution margin?'(Round your intermediate calculations to 2 decimal places.) $2.00 per unit $0.45 per unit $4.10 per unit $2.10 per unit Explanation: Step 1: Sales Revenue – Variable Expenses = Contribution margin (for 680000 tons of cement or units) = 1360000 Step 2: Contribution Margin/ Tons of cement produced and sold = $2 per unit Question 2 A cement manufacturer has supplied the following data: Tons of cement produced and sold 680,000 Sales revenue $ 2,788,000 Variable manufacturing expense $ 1,156,000 Fixed manufacturing expense $ 760,000 Variable selling and administrative $ 272,000 expense Fixed selling and administrative expense $ 294,000 Net operating income $ 306,000 If the company increases its unit sales volume by 4% without increasing its fixed expenses, then total net operating income should be closest to:'(Round your intermediate calculations to 2 decimal places.) $311,973 $318,240 $12,240 $360,400 New contribution margin ($1,360,000 × 1.04)............................ Fixed expenses ($760,000 + $294,000)....................................... Net operating income.................................................................. $1,414,400 1,054,000 $ 360,400 Question 3 Which of the following is correct? The break-even point occurs on the Cost-VolumeProfit graph where: total profit equals total fixed expenses. total variable expenses equal total contribution margin. total profit equals total expenses. total contribution margin equals total fixed expenses. Question 4 Gayne Corporation's contribution margin ratio is 19% and its fixed monthly expenses are $52,500. If the company's sales for a month are $316,000, what is the best estimate of the company's net operating income? Assume that the fixed monthly expenses do not change. $7,540 $203,460 $60,040 $263,500 Explanation: Given that, Contribution margin ratio = 19% Fixed monthly expenses = $52,500 Sales for a month = $316,000 Contribution: = Contribution margin ratio × Sales for a month = 19% × $316,000 = $60,040 Net operating income: = Contribution - Fixed monthly expenses = $60,040 - $52,500 = $7,540 Therefore, the company's net operating income is $7,540. Selling price per unit ($300,000 ÷ 6,000 units) $50 Variable cost per unit ($240,000 ÷ 6,000 units) $40 Unit contribution margin $10 Selling price ($50 per unit + $3 per unit) $53 per unit Variable cost per price $40 per unit Unit contribution margin (a) $13 per unit Unit sales (6,000 units − 400 units) (b) 5,600 units Contribution margin (a) × (b) $72,800 Fixed expenses 59,000 Net operating income $13,800 Question 6 Borich Corporation produces and sells a single product. Data concerning that product appear below: Selling price per unit $150.00 Variable expense per $73.50 unit Fixed expense per month $308,29 5 The break-even in monthly unit sales is closest to:'(Round your intermediate calculations to 2 decimal places.) 2,055 3,426 4,030 4,194 Solution: Sales = Variable expenses + Fixed expenses + Profit $150.00Q = $73.50Q + $308,295 + $0 $76.50Q = $308,295 Q = $308,295 ÷ $76.50 per unit = 4,030 units Question 7 Caneer Corporation produces and sells a single product. Data concerning that product appear below: Selling price per unit $240.00 Variable expense per $81.60 unit Fixed expense per $997,92 month 0 The unit sales to attain the company's monthly target profit of $44,000 is closest to:'(Round your intermediate calculations to 2 decimal places.) 4,341 6,578 12,769 7,896 Solution: Sales = Variable expenses + Fixed expenses + Target profit $240.00Q = $81.60Q + $997,920 + $44,000 $158.40Q = $1,041,920 Q = $1,041,920 ÷ $158.40 per unit = 6,578 units (rounded) Question 8 A company makes a single product that it sells for $16 per unit. Fixed costs are $76,800 per month and the product has a contribution margin ratio of 40%. If the company's actual sales are $224,000, its margin of safety is: $96,000 $128,000 $192,000 $32,000 Ans: A LO: 5; 7 Source: CIMA; adapted Solution: Break-even in total sales dollars = Fixed expenses/CM ratio = $76,800/0.400 = $192,000 Margin of safety in dollars = Sales - Break-even sales = $224,000 - $192,000 = $32,000 Question 9 A manufacturer of cedar shingles has supplied the following data: Bundles of cedar shakes produced and sold 360,000 Sales revenue $ 2,412,000 Variable manufacturing expense $ 1,170,000 Fixed manufacturing expense $ 714,000 Variable selling and administrative $ 414,000 expense Fixed selling and administrative expense $ 82,000 Net operating income $ 32,000 The company's degree of operating leverage is closest to: 1.99 75.38 25.88 11.25 Question 10 Flesch Corporation produces and sells two products. In the most recent month, Product C90B had sales of $24,000 and variable expenses of $6,480. Product Y45E had sales of $29,000 and variable expenses of $11,010. The fixed expenses of the entire company were $32,280. If the sales mix were to shift toward Product C90B with total dollar sales remaining constant, the overall break-even point for the entire company: would not change. would increase. would decrease. could increase or decrease. Explanation: Extras: