Contribution margin, revenue per unit, operating income, break even point

1. TABLE 1

Total fixed costs-$10,000

Sales price per unit-$20

Variable costs per unit-$15

Refer to Table 1. Assuming 10,000 units are sold, what is the
contribution margin?

a. $150,000

b. $60,000

c. $50,000

d. $40,000

2. Refer to Table 1. If sales revenue per unit increase to $22 and
10,000 units are sold, what is the contribution margin?

a. $70,000

b. $60,000

c. $220,000

d. $80,000

3. Refer to Table 1. If sales revenue per unit decreases to $18 and
15,000 units are sold, what is the operating income or loss?

a. $(20,000)

b. $35,000

c. $65,000

d. none of the above

4. The sales level at which operating income is zero is called the:

a. margin of safety point

b. contribution margin point

c. break-even point

d. relevant point

5. The excess of expected sales over break-even sales is referred to as
the:

a. break-even sales in dollars

b. contribution margin ratio

c. relevant range

d. margin of safety

6. Gould Enterprise sells computer disks for $1.50 per disk. Unit
variable expenses total $.90. The break-even sales in units is 3,000 and
budgeted sales in units is 4,300. The margin of safety in dollars is:

a. $1,950

b. $780

c. $4,500

d. $2,580

7. Renting a car and paying $15 per day plus $.03 per mile driven is an
example of a

a. fixed cost

b. mixed cost

c. variable cost

d. conversion cost

8. A scope of activity in a which specific relationship exists between
cost and volume is known as:

a. the relevant range

b. cost-volume-profit analysis

c. a cost driver

d. variable costing

9. The income statement which groups variable and fixed expenses
separately, is called a(n):

a. gross profit income statement

b. conventional income statement

c. absorption costing income statement

d. contribution margin income statement

10. If the sales price per unit is $7, the unit contribution margin is
$3, and total fixed expenses are $19,500, the break-even sales in units
is:

a. 5,850

b. 2,786

c. 4,875

d. 6,500

11. If the sale price per unit is $75, variable expenses per unit are
$40, target operating income is $22,000, and total fixed expenses are
$16,500, the total number of units that must be sold to reach the target
operating income is:

a. 1,100

b. 963

c. 629

d. 513