EME 2

68. In using the unit contribution method to calculate a target sales level

expressed in units, which of the following should be subtracted from

fixed costs in the numerator?

a. Predicted operating loss c. Unit contribution margin

b. Predicted operating profit d. Variable costs (AICPA adapted)

Answer- A

69. Korn Company sells two products, as follows:

Per Unit

Sales price Variable

casts

Product Y P120 P 70

Product Z 500 200

Fixed costs total P300,000 annually. The expected sales mix in units is

60% for product Y and 40% for product Z.

How much is Korn's expected breakeven sales in pesos?

a. P300.000 C.

b. P420.000 d.

Answer: D

Supporting Analysis/Computat

ion:

CM per unit P 50

x Sales mix x 0.6

P475,000

P544,000 (AICPA adapted)

T. Total

P300

x 0.4
Weighted CM P,JQ + q

BES = 300,000

150

(120 x 0.6) (500 x 0.4)

300,000

150

72 + 200

300,000

055147

U44.000

3A-31

el5P

10

knit 3-A

70.

1'he contribution margin ratio always increases when the

A. breakeven point increases.

h, breakeven point decreases.

c. variable costs as a percentage otf net sales decrease.

d. variable costs as a percentage of net sales increase.(AICPA adapted)

ewsnA

r. C

71. To obtain the breakeven point stated in terms of pesos of sales, total fixed

costs are divided by H hich of the following?

a. Variable cost per unit.

b. Variable cost per unit + sales per unit.

C. Fixed cost per unit.

d. (Sales price per unit - variable cost per unit) + sales price per unit.

(AICPA adapted)
Answer D

72. Breakevcn analysis assumes over the relevant range that

a. total costs are unchanged.

b. selling prices are unchanged.

c. variable costs are nonlinear.

d. fixed costs increase per unit. (AICPA adapted)

Answer: B

73. Kent Co.'s 2007 operating percentages were as follows:

Sales 100%

Cost of sales:

Variable 50%

Fixed 10 60

Gross profit 40

Other operating expenses:

Variable 20

Fixed 15

operating income -- % �

Kent's 2007 sales totaled P2,000,000. At what 2007 sales level would

Kent break even?

A. P1.900.000 C. P1,250,000

b. p1.666,667 d. P 833,333

3A-32

Cost-Volume-Profit Relationships

Answer: B

Supporting Analysls✓Computation:

BES= 500,000

30%