20) 20) Hsu, Inc. sells a single product for $12. Variable costs are $8 per unit
ID: 2511941 • Letter: 2
Question
20) 20) Hsu, Inc. sells a single product for $12. Variable costs are $8 per unit and fixed costs total $360,000 at a volume level of 60,000 units. Assuming that fixed costs do not change, Hsu's break-even point would be: A) 45,000 units B) 90,000 units C) 30,000 units. D) negative because the company loses $2 on every unit sold. E) a positive amount other than the specific amounts given. 21) 21) The contribution-margin ratio is: A) fixed cost per unit divided by variable cost per unit. B) variable cost per unit divided by the selling price. C) the difference between the selling price and the variable cost per unit. D) unit contribution margin divided by fixed cost per unit. E) unit contribution margin divided by the selling price. 22) Which of the following expressions can be used to calculate break-even sales revenue 22) with the contribution-margin ratio (CMR)? A) CMR x fixed costs. B) (Sales revenue-variable costs) CMR. C) Fixed costs CMR. D) CMR fixed costs E) (Fixed costs+ variable costs) x CMR. 23) The difference between budgeted sales revenue and break-even sales revenue is the: 23) A) contribution-margin ratio. B) safety margin. C) contribution margin. D) operating leverage. E) target net profit.Explanation / Answer
20 )
Break Even Point = Fixed Cost / Contribution Margin Per Unit
= $ 360,000 / ( Selling Price Per Unit - Variable Cost Per Unit)
= $ 360,000 / ( $ 12 -$ 8)
= 90,000 Units
Hence the correct answer is B) 90,000 Units
21) The correct answer is :
E) Unit Contribution Margin divided by the selling price
The Contribution Margin is the part of the sales revenue left after contributing to the variable cost. The ratio is computed as a percentage of sale revenue.
22)
The correct answer is :
C) Fixed Costs / CMR
The Break Even Point in Units is calculated as Fixed Cost / Contribution Margin Per Unit
However to compute the Break Even Point in dollars, the fixed cost is divided by the CMR.
23 )
The correct answer is B) Safety Margin
Margin of Safety = Budgeted Sales Revenue - Break Even Sales Revenue
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