Question

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Managerial Accounting: ACC 401 1. Kelchner Corporation has provided the following contribution Assume that the following information is within the relevante the following contribution format income statement. Sales (3,000 units) Variable expenses Contribution margin Fixed expenses Net operating income 180,000 108,000 72,000 62,400 9,600 $ The contribution margin ratio is closest to: A) 67% B) 40% C) 33% D) 60% 2. Parwin Corporation plans to sell 23,000 units during August. If the company has 8,000 units on hand at the start of the month, and plans to have 9,000 units on hand at the end of the month, how many units must be produced during the month? A) 24,000 B) 22,000 C) 32,000 D) 31,000 3. Ploeger Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (4,000 units) Variable expenses Contribution margin Fixed expenses Net operating income 240,000 156.000 84,000 81,900 2,100 The break-even point in dollar sales is closest to: A) $234,000 B) $237,900 C) $156,000 D) $0

Answer 1

Answers

• Answer #1
  Correct Answer = Option ‘B’ 40%
  Contribution margin ratio = Contribution margin / Sales
  = ($ 72000 / $ 180000) x 100
  = 40%
• Answer #2
  Correct Answer = Option ‘A’ 24,000 units
  Units to be produced = Units to be sold + Desired ending inventory – Beginning inventory
  = 23000 + 9000 – 8000
  = 24000 units
• Answer #3
  Correct Answer = Option ‘A’ $ 234,000
  >First calculate CM ratio as ($ 84000 / $ 240000) x 100 = 35%
  >Break even point in dollars = Fixed cost / CM ratio
  = $ 81900 / 35%
  = $ 234,000