Question

Consider the following Nichols Company data:

                              Selling price                       $90 per unit

                              Variable costs                   $36 per unit

                              Total fixed costs               $300,000

If Nichols Company’s target operating income is $240,000, how many units must the company sell to reach this target?       

a) 8,333

b) 6,667

c) 15,000

d) 1,350,000

Suppose Morrison Corp.’s breakeven point is revenues of $1,100,000. Fixed costs are $660,000.

Use Morrison Corp.’s contribution margin percentage to compute the selling price if variable costs are $16 per unit.

a) $24.00

b) $40.00

c) $25.60

d) $26.67

Steen Manufacturing sells a marble slab for $1,000. Fixed costs are $45,000, while the variable costs are $400 per slab. The company currently plans to sell 200 slabs this month. What is the margin of safety in dollars assuming 140 slabs are budgeted?

a) 65

b) $39,000

c) $60,000

d) $65,000

Answer 1