Q1. For Danks Company, sales is $500,000, variable expenses are $310,000, and fixed expenses are $140,000. Danks' contribution margin ratio is
10%.
28%.
38%.
62%.
Q2. Jenks Corporation reported sales of $2,000,000 last year (100,000 units at $20 each), when the break-even point was 80,000 units. Jenks' margin of safety ratio is
20%.
25%.
80%.
120%.
Q3. Margin of safety in dollars is
expected sales divided by break-even sales.
expected sales less break-even sales.
actual sales less expected sales.
expected sales less actual sales.
Q4. The margin of safety ratio is
expected sales divided by break-even sales.
expected sales less break-even sales.
margin of safety in dollars divided by expected sales.
margin of safety in dollars divided by break-even sales.
Q5. Iguchi Company sells 2,000 units of Product A annually, and 3,000 units of Product B annually. The sales mix for Product A is
40%.
60%.
67%.
cannot determine from information given.
Q6. Sales mix is
the relative percentage in which a company sells its multiple products.
the trend of sales over recent periods.
the mix of variable and fixed expenses in relation to sales.
a measure of leverage used by the company.
Q7. Dye Company can sell all the units it can produce of either Plain or Fancy but not both. Plain has a unit contribution margin of $96 and takes two machine hours to make and Fancy has a unit contribution margin of $120 and takes three machine hours to make. There are 2,400 machine hours available to manufacture a product. What should Dye do?
Make Fancy which creates $24 more profit per unit than Plain does.
Make Plain which creates $8 more profit per machine hour than Fancy does.
Make Plain because more units can be made and sold than Fancy.
The same total profits exist regardless of which product is made.
Q8. What is the key factor in determining sales mix if a company has limited resources?
Contribution margin per unit of limited resource
The amount of fixed costs per unit
Total contribution margin
The cost of limited resources
Q9. Cost structure
refers to the relative proportion of fixed versus variable costs that a company incurs.
generally has little impact on profitability.
cannot be significantly changed by companies.
refers to the relative proportion of operating versus nonoperating costs that a company incurs.
Q10. Small Fry Company has sales of $1,000,000, variable costs of $400,000, and fixed costs of $450,000. Small Fry's degree of operating leverage is
.80.
1.50.
1.67
4.00.