. On a CVP graph, the intersection of total revenue and total expenses is common

Question

. On a CVP graph, the intersection of total revenue and total expenses is commonly known by the accounting street name of: A. Contribution Margin B. Gross Margin C. Break Even Point D. Degree of Operating Leverage 16, A product sells for S20 per unit, and has a contribution margin ratio of 40%. Fixed expenses are $120,000. How many units must be sold to yield a profit of $30,000? A. 18,750 B. 20,000 C. 25,000 D. 12,500 17. HVCC Corporation sold 5,000 units in May. Sales were $400,000, variable expenses were $240,000, and fixed expenses were $120,000. If the com many units would have to be sold in June to generate a profit of $40,000? A. 4,200 B. 4,500 pany increases its sales by 10%, how C. 4,000 D. 5,000 18. Which of the following statements is true? A. When production exceeds sales, a manufacturing company's variable costing net operating income will usually be greater than its absorption costing net operating income. B. The variable costing method is usually not used for external reporting purposes. C. The absorption costing method treats fixed production costs as period costs. D. All of these. 19. Which of the following costs at a sofa manufacturing company would be treated as a period cost under the variable costing method? A. the cost of glue used to assemble the wood frame of each sofa produced (Indirect Materials) B. depreciation on sales vehicles C. the salary of a factory manager D. both B and C above

Explanation / Answer

Question 15 : C.Break even Point

Question No.19

Depreciation on sales vehicles and the salary of a factory manager

Question No.16 Desired Profit        30,000 Fixed Expenses     1,20,000 Required Contribution     1,50,000 Contribution Per unit 8 (20 X40%) Units must be sold        18,750 (150,000/8) Question No.17 5000 Units Per unit Sales     4,00,000 80 Variable Expenses     2,40,000 48 Contribution     1,60,000 32 Fixed Expenses     1,20,000 Profit        40,000 Units to be sold in June Desired Profit        40,000 Fixed Expenses     1,20,000 Required Contribution     1,60,000 Increased Contribution per unit 40 Units to be sold in June           4,000 (160,000/40) Increased Sale price per unit 88 (80*110%) Variable Expenses 48 Increased Contribution per unit 40 Question No.18 D . All of these

Question No.19

Depreciation on sales vehicles and the salary of a factory manager

D . Both B and C above

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