# Breakeven point in units

Question 1                                                                                                                         1.5 out of 1.5 points

During its first month of business in May, On-a-roll, Inc., purchased 100 rolls of wallpaper at \$12 per roll and sold 67 rolls for \$36 per roll. At the end of May, what is the amount of inventory reported on its balance sheet?

Question 2                                                                                                                         1.5 out of 1.5 points

Citizen Canine, Inc., sells deluxe dog houses:
Selling price per unit \$2,000
Variable cost per unit \$1,000
Annual fixed cost \$500,000
Assume that the selling price per unit increases by \$200, while variable cost per unit and total fixed cost stay the same. The breakeven point will:

Question 3                                                                                                                         1.5 out of 1.5 points

Total Per unit
Sales revenue (30,000 units) \$750,000 25
Variable costs 450,000 15
Contribution margin 300,000 ?
Fixed costs 150,000
Operating income \$150,000
Assume that selling price per unit and variable cost per unit stay the same, and there is no change in total fixed costs. If this company’s sales increase from 30,000 units to 40,000 units, this company’s breakeven point will:

Question 4                                                                                                                         1.5 out of 1.5 points

K-9 Company produces and sells 2,000 units of a single product, a deluxe dog house.
Selling price per unit \$2,000
Variable cost per unit \$1,000
Annual fixed cost \$500,000
Assume that selling price per unit is still \$2,000. Variable cost per unit increases by \$50, while total fixed cost stays the same. The breakeven point will:

Question 5                                                                                                                          1.5 out of 1.5 points

Buy the Pound, Inc., produces and sells specialty dog food. It produces and sells 200,000 pounds per year.
Selling price per unit \$20
Variable cost per unit \$10
Annual fixed cost \$100,000
Assume that selling price per unit is still \$20. Variable cost per unit increases by \$1, while total fixed cost stays the same. The contribution margin per unit will:

Question 6                                                                                                                          1.5 out of 1.5 points

If Nim Com Soup, Inc.’s, variable costs per unit decrease, while selling price per unit and total fixed costs remain the same, what will happen to the contribution margin per unit and the breakeven point?

Question 7                                                                                                                          1.5 out of 1.5 points

Par for the Course produces and sells 2,000 sets of golf clubs.
Selling price per unit \$5,000
Variable cost per unit \$1,000
Annual fixed cost \$500,000
What is the company’s contribution margin per unit? (Round to the nearest cent.)

Question 8                                                                                                                          1.5 out of 1.5 points

Grass is Greener, Inc., produces and sells golf clubs.
Sales \$60,000
Variable Costs \$30,000
Fixed Costs \$50,000
What is the company’s contribution margin ratio?

Question 9                                                                                                                         1.5 out of 1.5 points

Sea the World Cruises sells 4,000 tickets on its deluxe yacht:
Selling price per customer \$3,000
Variable cost per customer \$1,000
Annual fixed cost \$500,000
What is the company’s breakeven point in units, i.e., customers? Round to the nearest whole unit.

Question 10                                                                                                                       1.5 out of 1.5 points

Ducts Duck, Inc., produced and sold 2,000 units of its product.
Selling price per unit \$30
Variable cost per unit \$10
Annual fixed cost \$10,000
What is the company’s breakeven point in sales dollars?

Question 11                                                                                                                       1.5 out of 1.5 points

Applesoft, Inc.
Income Statement
For the year ended December 31
Sales Revenue \$74,000
Cost of Goods Sold \$58,000
Selling Expenses \$4,000
Depreciation and Amortization Expense \$4,000

Calculate Applesoft’s Gross Profit Margin for the year ended December 31. Round to the nearest WHOLE PERCENT and do not include the % sign in your answer.

Question 12                                                                                                                       1.5 out of 1.5 points

Identify each of the costs listed below.

Question 13                                                                                                                       1.5 out of 1.5 points

Show how each of these costs will behave as the volume of activity increases.

Question 14                                                                                                                                       0 out of 1.5 points

Daffy Duct, Inc., began operations on January 1. During the year, it made 50,000 rolls of duct tape and sold 40,000 of them. Daffy Duct incurred the following costs:
Raw materials \$5,000
Wages of production workers 1,000
Depreciation on manufacturing equipment 2,000
Commissions paid to sales people 4,000
Calculate the Inventory balance on the balance sheet at December 31.

Question 15                                                                                                                       1.5 out of 1.5 points

In its first year of business, Soles for Souls, Inc., produced 5,000 shoes and sold 4,000 during the year. Its cost for the year included:
Total Direct Materials and Labor \$1,000
Factory Rental \$3,000
Sales Manager’s Salary \$39,000

What is Soles for Soul’s Cost of Goods Sold for the year? \$_________

Question 16                                                                                                                       1.5 out of 1.5 points

Wok of Fame, Inc., makes and sells woks at a price of \$5.00 per unit. Variable cost is \$3.00 per unit. The company’s total fixed costs are \$52,500.
How much must total sales be if Wok of Fame wants to earn an operating income of \$17,500?

Question 17                                                                                                                       1.5 out of 1.5 points

A company’s operating leverage increases if a company:

Question 18                                                                                                                      1.5 out of 1.5 points

Boris’ Car Loft, Inc., began operations on January 1. It manufactures 10,000 automobiles and sold 8,000. It incurred the following costs during the year:
Factory worker wages \$ 40,000
Chief Financial Officer’s salary 600,000
Factory rent 80,000
Factory utilities 40,000
Calculate the total product cost for the year ended December 31.

Question 19                                                                                                                      1.5 out of 1.5 points

Identify on which financial statement these costs appear.

Question 20                                                                                                                                       0 out of 1.5 points

The two companies have the following financial information:
(dollar amounts are in millions)
Company A B
Sales \$20,561 \$2,627.3
Cost of Goods Sold 5,254 1,885.2
Gross Profit 15,307 742.1
—–
Net Income \$ 3,261 \$ 144.6
Average Accounts Receivable 4,750 0
Average Inventory 2,603 386.4
Total Assets 36,301 914.8
Analyze the account balances and calculate Inventory Turnover Ratio and Gross Profit Margin in order to identify which company is: