Describing break-even point


1. Price Manufacturing assigns overhead based on machine hours. Milling Department logs 1,800 machine hours and Cutting Department shows 3,000 machine hours for the period. If overhead rate is $5 per machine hour, entry to assign overhead would show a:

A) debit to Work in Process for $15,000.
B) credit to Manufacturing Overhead for $24,000.
C) credit to Work in Process—Cutting Department for $15,000.
D) debit to Manufacturing Overhead for $24,000

2. Barnes and Miller Manufacturing is trying to determine the equivalent units for conversion costs with 10,000 units of ending work in process at 80% completion and 28,000 physical units. There are no beginning units in the department. Conversion costs occur evenly throughout the entire production period. What are the equivalent units for conversion costs for the current period?

A) 8,000.
B) 38,000.
C) 26,000.
D) 36,000.

3. Conversion cost per unit equals $7.00. Total materials costs are $60,000. Equivalent units are 20,000. How much is the total manufacturing cost per unit?

A) $7.00.
B) $4.00.
C) $3.00.
D) $10.00.

4. If 120,000 units are started into production and 40,000 units are in process at the end of the period, how many units were completed and transferred out?

A) 40,000.
B) 160,000.
C) 120,000.
D) 80,000.

5. Equivalent units are calculated by

A) dividing equivalent units by the percentage of work done.
B) multiplying the percentage of work done by the equivalent units of output.
C) dividing physical units by the percentage of work done.
D) multiplying the percentage of work done by the physical units.

6. In CVP analysis, the term "cost"

A) includes manufacturing costs plus selling and administrative expenses.
B) excludes all fixed manufacturing costs.
C) means cost of goods sold.
D) includes only manufacturing costs.

7. Fessler, Inc. has a product with a selling price per unit of $200, the unit variable cost is $90, and total monthly fixed costs are $300,000. How much is Fessler's contribution margin ratio?

A) 45%
B) 150%
C) 222%
D) 55%

8. The break-even point is where

A) total sales equal total fixed costs.
B) total sales equal total variable costs.
C) contribution margin equals total fixed costs.
D) total variable costs equal total fixed costs.

9. Norman Company sells MP3 players for $60 each. Variable costs are $40 per unit, and fixed costs total $90,000. How many MP3 players must Norman sell to earn net income of $210,000?

A) 3,750.
B) 4,500.
C) 5,250.
D) 15,000.

10. Casey Company has fixed costs of $2,500,000 and variable costs are 40% of sales. What are the required sales if Casey Company desires net income of $250,000?

A) $4,166,667
B) $6,875,000
C) $6,250,000
D) $4,583,333

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Accounting Basics: Describing break-even point
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