1) Givenchy Company sells 100,000 wrenches for $12.00 per unit. Fixed costs are

Question

1) Givenchy Company sells 100,000 wrenches for $12.00 per unit. Fixed costs are $350,000 and net income is $250,000. What should be reported as variable expenses in the CVP income statement? A. $950,000 B. $600,000 C. $850,000 D. $540,000 2) Fields Corporation has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Fields incurs $3,330,000 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%. Reference: Ref 6-2 The break-even point in dollars is Answer A. $8,325,000. B. $9,000,000. C. $7,744,186. D. $1,232,100.

Explanation / Answer

Hi, Answers are as follows: Q.1. = 1200000 (Sales Value) - Variable Cost - 350000 (Fixed Cost) = 250000 (Net Income) = 600000 Option B is correct. *50 Q,2 = Fixed Cost/Contr Ratio = $3,330,000/.65*.30+.35*.50 = $9,000,000 Option B is correct. Thanks, Aman

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