2. Which of the following is true regarding the contribution margin ratio of a s

Question

2.
Which of the following is true regarding the contribution margin ratio of a single product company?
A) As fixed expenses decrease, the contribution margin ratio increases.
B) The contribution margin ratio multiplied by the variable expense per unit equals the contribution margin per unit.
C) If sales increase, the dollar increase in net operating income can be computed by multiplying the contribution margin ratio by the dollar increase in sales.
D) The contribution margin ratio increases as the number of units sold increases.


6.
Scott Company's variable expenses are 72% of sales. The company's break-even point in dollar sales is $2,450,000. If sales are $60,000 below the break-even point, the company would report a:
A) $43,200 loss
B) $60,000 loss
C) $16,800 loss
D) Cannot be determined from the data given.

7.
Aybar International Corporation's only product sells for $210.00 per unit and its variable expense is $75.60. The company's monthly fixed expense is $766,080 per month. The unit sales to attain the company's monthly target profit of $28,000 is closest to:
A) 5,908
B) 6,731
C) 10,504
D) 3,781

8.
Knell Corporation sells a product for $230 per unit. The product's current sales are 33,000 units and its break-even sales are 26,400 units. The margin of safety as a percentage of sales is closest to:
A) 25%
B) 75%
C) 20%
D) 80%

Explanation / Answer

2. Which of the following is true regarding the contribution margin ratio of a single product company? C) If sales increase, the dollar increase in net operating income can be computed by multiplying the contribution margin ratio by the dollar increase in sales. 6. Scott Company's variable expenses are 72% of sales. The company's break-even point in dollar sales is $2,450,000. If sales are $60,000 below the break-even point, the company would report a: C) $16,800 loss 7. Aybar International Corporation's only product sells for $210.00 per unit and its variable expense is $75.60. The company's monthly fixed expense is $766,080 per month. The unit sales to attain the company's monthly target profit of $28,000 is closest to: A) 5,908 8. Knell Corporation sells a product for $230 per unit. The product's current sales are 33,000 units and its break-even sales are 26,400 units. The margin of safety as a percentage of sales is closest to: A) 25%

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