1.

If both the fixed and variable expenses associated

with a product decrease, what will be the effect on the contribution margin ratio and the break-even point, respectively? Contribution margin ratio Break-even point A) Decrease Increase B) Increase Decrease C) Decrease Decrease D) Increase Increase

2.

4. A company makes a single product that it sells for $16 per unit. Fixed costs are $76,800 per month and the product has a contribution margin ratio of 40%. If the company's actual sales are $224,000, its margin of safety is:

6. The Bronco Birdfeed Company reported the following information: Sales (400 cases)............................ Variable expenses.......................... Contribution margin...................... Fixed expenses.............................. Net operating income.................... $100,000 60,000 40,000 35,000 $5,000

How much will the sale of one additional case add to Bronco's net operating income? $250.00

$100.00

$150.00

$12.50

Current contribution margin Current sales in cases = Contribution margin per case $40,000 400 = $100 contribution margin per case If one additional case is sold, net operating income will increase by $100.

8.

10.

12. The costing method that treats all fixed costs as period costs is: a. absorption costing. b. job-order costing. c. variable costing. d. process costing. 13.

15. In its first year of operations, Bronfren Ltd.produced 800,000 sets and sold 780,000 sets of artificial tan lines. What would have happened to net operating income in this first year under the following costing methods if Bronfren Ltd.had produced 20,000 fewer sets? (Assume that Bronfren Ltd. has both variable and fixed production costs.) Variable costing Absorption costing Increase Increase Decrease Increase Decrease Decrease No effect Decrease

A) B) C) D)

16. A manufacturing company that produces a single product has provided the followingdata concerning its

most recent month of operations:S e l l i n g price.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$97 Units in beginning i n v e n t o r y . . . . . . . . . . . . . . . . . . . . . 0 Un i t s p roduced . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 , 200Un i t s so ld . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,100 U n i t s i n e n d i n g i n v e n t o r y . . . . . . . . . . . . . . . . . . . . . . . . . . 1 0 0 Variable costs per unit:D i r e c t ma t e r i a l s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3 2 Direct labor.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$25 V a r i a b l e manufacturing overhead..........$2Variable sell ing a n d a d m i n i s t r a t i v e . . . . . . . . $ 9 Fixed costs:F ixed manu fac tu r i ng over head . . . . . . . . . . . . . . . $8 , 800 Fixed selling and administrative.............$37,800What is the total period cost for the month under the absorption costing approach? A)$56,700 B)$65,500 C)$8,800 D)$37,800