Contribution margin is the amount remaining after: variable expenses have been deducted from sales revenue. |
variable expenses have been deducted from sales revenue. |

If a company decreases the variable expense per unit while increasing the total fixed expenses, the total expense line relative to its previous position will: shift downward and have a steeper slope. |
shift upward and have a flatter slope. |

The contribution margin ratio is equal to: |
(Sales − Variable expenses)/Sales. |

Garth Corporation sells a single product. If the selling price per unit and the variable expense per unit both increase by 10% and fixed expenses do not change, then: A) CM per Unit Increases B) CM per unit: No change C) CM per unit: No change D) CM per unit: Increases |
D |

Assume a company sells a single product. If Q equals the level of output, P is the selling price per unit, V is the variable expense per unit, and F is the fixed expense, then the break-even point in sales dollars is: |
F/[(P-V)/P]. |

The break-even in units sold will decrease if there is an increase in: |
selling price. |

Which of the following is NOT a correct definition of the break-even point? |
the point where total profit equals total fixed expenses. |

Brees Inc., a company that produces and sells a single product, has provided its contribution format income statement for April. Sales (6,200 units) $136,400 If the company sells 5,800 units, its total contribution margin should be closest to: |
$52,200 |

Ofarrell Corporation, a company that produces and sells a single product, has provided its contribution format income statement for March.
Sales (5,000 units) $205,000
If the company sells 5,400 units, its net operating income should be closest to: |
$24,000 |

At a break-even point of 800 units sold, White Corporation’s variable expenses are $8,000 and its fixed expenses are $4,000. What will the Corporation’s net operating income be at a volume of 801 units? |
$5 |

The records of the Dodge Corporation show the following results for the most recent year:
Sales (16,000 units) $256,000
Given these data, the unit contribution margin was: |
$6 |

Florek Inc. produces and sells a single product. The company has provided its contribution format income statement for March.
Sales (5,700 units) $228,000
If the company sells 5,900 units, its net operating income should be closest to: |
$14,000 |

Sales (4,400 units) $211,200
If the company sells 4,700 units, its total contribution margin should be closest to: |
$89,300 |

Spartan Systems reported total sales of $300,000, at a price of $20 and per unit variable expenses of $12, for the sales of their single product. Total Per Unit
What is the amount of contribution margin if sales volume increases by 30%? |
$156,000 |

Maack Corporation’s contribution margin ratio is 16% and its fixed monthly expenses are $44,000. If the company’s sales for a month are $299,000, what is the best estimate of the company’s net operating income? Assume that the fixed monthly expenses do not change. |
$3,840 |

Bowe Corporation’s fixed monthly expenses are $21,000 and its contribution margin ratio is 61%. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company’s net operating income in a month when sales are $74,000? |
$24,140 |

Bolding Inc.’s contribution margin ratio is 61% and its fixed monthly expenses are $42,000. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company’s net operating income in a month when sales are $126,000? |
$34,860 |

Solen Corporation’s break-even-point in sales is $900,000, and its variable expenses are 75% of sales. If the company lost $32,000 last year, sales must have amounted to: |
$772,000 |

Minist Corporation sells a single product for $15 per unit. Last year, the company’s sales revenue was $225,000 and its net operating income was $18,000. If fixed expenses totaled $72,000 for the year, the break-even point in unit sales was: |
12,000 |

Last year Easton Corporation reported sales of $720,000, a contribution margin ratio of 30% and a net loss of $24,000. Based on this information, the break-even point was: |
$800,000 |

*Arthur Corporation has a margin of safety percentage of 25% based on its actual sales. The break-even point is $300,000 and the variable expenses are 45% of sales. Given this information, the actual profit is: |
$55,000 |

# Accounting 202 CONNECT Ch. 5

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