Question

Flesch Corporation produces and sells two products. In the most recent month, Product C90B had sales of $19,950 and variable expenses of $5,985. Product Y45E had sales of $26,190 and variable expenses of $10,476. The fixed expenses of the entire company were $17,000. 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:

Multiple Choice

• would increase.

• would decrease.

• could increase or decrease.

• would not change.

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Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price	$102
Units in beginning inventory	0
Units produced	3,800
Units sold	3,230
Units in ending inventory	570

Variable costs per unit:
Direct materials	$ 18
Direct labor	$ 38
Variable manufacturing overhead	$ 7
Variable selling and administrative expense	$ 5
Fixed costs:
Fixed manufacturing overhead	$64,200
Fixed selling and administrative expense	$ 2,500

The total contribution margin for the month under variable costing is:

Multiple Choice

• $43,120

• $45,620

• $109,820

• $125,970

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WV Construction has two divisions: Remodeling and New Home Construction. Each division has an on-site supervisor who is paid a salary of $86,000 annually and one salaried estimator who is paid $48,000 annually. The corporate office has two office administrative assistants who are paid salaries of $52,000 and $38,000 annually. The president's salary is $156,000. How much of these salaries are common fixed expenses?

Multiple Choice

• $246,000

• $156,000

• $90,000

• $318,000

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Younie Corporation has two divisions: the South Division and the West Division. The corporation's net operating income is $89,000. The South Division's divisional segment margin is $39,500 and the West Division's divisional segment margin is $171,900. What is the amount of the common fixed expense not traceable to the individual divisions?

Multiple Choice

• $122,400

• $128,500

• $260,900

• $211,400

Answer 1

Answer:-

(1) Would Decrease

(2) $109,820

(3)$246,000

(4)$122,400

Explanation and solution:-

Answer (1)

​​​​​contribution margin =( Sales - Variable Expenses)÷ sales

So, contribution margin for C90B is

= ($19,950 - $5,985) ÷ $19,950

= 0.7% or 70%

And for Y45E is

= ($26,190 - $10,476) ÷ ($26,190)

= 0.6% or 60%

The break even point will decrease , which is good.

The reason is that C90B has a better profit margin than Y45E .So, if the sales shift towards C90B the contribution mix margin ratio will be higher and it will be easy to pay fixed cost and make a gain.

Answer:-

(2) Contribution Margin = 109,280

we will find here contribution margin that is expressed as:

contribution margin = total sales - total variable costs

and

total variable cost per unit = 18+38+7+5 = 68

and

sales = 3,230 × 102

Sales = $329,460

and

variable cost = 3,230 × 68

variable cost = $219,640

so

contribution margin = total sales - total variable costs

contribution margin = $329,460 - $219,640

contribution margin = $109,820

Answer :-

(3) Common fixed expenses = $246,000

Common fixed expenses =

Salaries paid to two office assistants + President salary

= 52,000 + 38,000 + 156,000

= $246,000

Answer :-

(4) untraceable common fixed expenses = $122,400

Segment margin or division margin is a measure of profitability to individual product segment.

Untraceable common fixed expenses =

South divisional margin + west west divisional margin - total net operating income

= 39,500+ 171,900 - 89,000

= 211,400 - 89,000

= $122,400