Question

1). If a company had a contribution margin (CM) of $300,000 and a contribution margin (CM) ratio of 40%, total variable costs (VIC) must have been

A) $450,000.

B) $180,000.

C) $750,000.

D) $120,000.

2). A company has contribution margin (Unit CM) per unit of $60 and a contribution margin (CM) ratio of 40%. What is the unit selling or sales price (SP) ?

A) $100

B) $150

C) $24

D) Cannot be determined.

3). The Most Excellent and Genius Outfit, Inc. has a product with a selling price per unit (Unit SP) of $200, the unit variable cost (VIC) is $110, and the total monthly fixed costs (FIC) are $300,000. How much is The Most Excellent and Genius Professor Mullen's contribution margin ratio (CM%)?

A) 45%

B) 55%

C) 150%

D) 90%

4). The Talent Company has a contribution margin of (CM) $210,000 and a contribution margin (CM) ratio of 30%. How much are total variable costs
A) $63,000
B) $490,000
C) $147,000
D) $700,000

5).  The Talent Company has a contribution margin (CM) per unit of $30 and a contribution-margin-(CM) ratio-of 60%. How much-is-the selling or sales price each unit?
A) $50
B) $75
C) $18
D) Cannot be determined without more information.

6).  At the break-even point (BEP) of 2,000 units, variable costs (V/C) are $55,000, and fixed costs (F/C) are $34,000. How much is the selling price (SP) per unit?
A) $44.50
B) $10.50
C) $17.00
D) Not enough information

7).  A company has total fixed costs (F/C) of $160,000 and a contribution margin (CM) ratio of 20%. The total sales necessary to break even (BEP $$) are how much?
A) $640,000.
B) $800,000.
C) $200,000.
D) $192,000.

8).  A company sells a product which has a unit sales price (SP) of $5, unit variable cost (V/C) of $3 and total fixed costs (F/C) of $150,000. The number of units the company must sell to break even is (BEP units)
A) 75,000 units.
B) 30,000 units.
C) 300,000 units.
D) 50,000 units.

9).  Fixed costs (F/C) are $900,000 and the variable costs (V/C) are 75% of the unit selling price. What is the break-even point in dollars (BEP $$)?
A) $2,100,000
B) $2,700,000
C) $3,600,000
D) $1,200,000

10).  Most Valuable Professor Winney Company sells MP3 players for (SP) $60 each. Variable costs (V/e) are $40 per unit, and fixed costs (F/C) total $60,000. How many MP3 players must MVP Mullen sell to earn net income (NI or TP) of $140,000?
A) 10,000.
B) 3,500.
C) 2,500.
D) 3,000.

11). Best French Wine Ever Made By Professor Winery has fixed costs (F/C) of $12,000 per year. Its warehouse sells wine with variable costs (V/C) of 80% of its unit selling price. How much in sales (BEP $$) does Best French Wine Ever Made By Professor Mullen need to break even per year?

A) $9,600

B) $2,400

C) $15,000

D) $60,000

12). A company requires $1,700,000 in total budgeted sales (SP) to meet its net income target. Its contribution margin (CM) is 30%, and fixed costs (F/C) are $300,000. What is the target net income (TP or NI) ?

A) $510,000

B) $390,000

C) $700,000

D) $210,000

13). The Best Professor of Accounting at UCLA, Inc. wants to sell a sufficient quantity of products to earn a profit (TP or NI) of $60,000. If the unit sales price (SP) is $10, unit variable cost (V/C) is $8, and total fixed costs (F/C) are $120,000, how many units must be sold (BEP $$with TP) to earn income of $60,000? (Hint: TP = $60,000)

A) 90,000 units

B) 60,000 units

C) 22,500 units

D) 900,000 units

14). Most Ingenious Games and Toys Made by the Talent, Inc has actual sales (SP) of $400,000 and a break-even point (BEP $$ Sales) of $280,000. How much is its margin of safety ratio (MS % )? (Hint: compute Margin of Safety in $$, then compute MS % )

A) 30%

B) 70%

C) 143%

D) 43%

Answer 1

1) contribution margin (CM) ratio =contribution margin/ Sales *100

Sales = contribution margin/ contribution margin (CM) ratio

= $ 300,000 /40%

= $ 750,000

Since Variable Cost + Contribution Margin = 100% and contribution margin (CM) ratio is 40%,

Hence, Variable Cost = 60%

Hence, Variable Cost = Sales *60%

= $ 750,000 * 60%

= $ 450,000

Hence, the correct answer is A) $ 450,000

2)

contribution margin (CM) ratio =contribution margin per unit / Sales per unit *100

Sales per unit= contribution margin per  unit/ contribution margin (CM) ratio

= $ 60 / 40%

= $ 150

Hence, the correct answer is B) $ 150

3)contribution margin = Selling Price Per Unit - Variable Cost Per Unit

= $ 200 - $ 110

= $ 90

contribution margin ratio = contribution margin / selling price *100

= $ 90 / $ 200 *100

= 45%

Hence, the correct answer is A) 45%

4)

contribution margin (CM) ratio =contribution margin/ Sales *100

Sales = contribution margin/ contribution margin (CM) ratio

= $ 210,000 /30%

= $ 700,000

Since Variable Cost + Contribution Margin = 100% and contribution margin (CM) ratio is 30%,

Hence, Variable Cost = 70%

Hence, Variable Cost = Sales *70%

= $ 700,000 * 70%

= $ 490,000

Hence, the correct answer is B) $490,000