Question 1: On Company and Off Company report the following results:
Both companies increase sales next year by $500,000. Which company will have the higher profit next year?
A Neither; both companies will have the same profit.
B On will have higher profit ($100,000 greater than Off).
C Off will have higher profit ($100,000 greater than On).
D Off will have higher profit ($200,000 greater than On).
Question 2: Assume that 500,000 CDs are produced and 450,000 are sold in 2008. What is income under Full Costing?
A $50,000
B $500,000
C $150,000
D $1,850,000
Question 3: For O'Brien Company, selling price is $30 per unit and variable costs are $18 per unit. Fixed costs are $90,000. At the break-even point, O'Brien would report sales revenue of
A $7,500.
B $144,000.
C $150,000.
D $225,000.
Question 4: Assume that 500,000 CDs are produced and 450,000 are sold in 2008. What is ending inventory under variable costing?
A $150,000
B $200,000
C $250,000
D $300,000
Question 5: Last year, Bond Products had profits of $35,400. Sales of 70,800 units resulted in revenues of $354,000. Variable costs were $3.50 per unit. What is Bond's break-even point?
A 70,800 units
B 236,000 units
C 47,200 units
D 118,000 units
Question 6: Randy Company produces a single product that is sold for $85 per unit. If variable costs per unit are $26 and fixed costs total $47,500, how many units must Randy sell in order to earn a profit of $100,000?
A 1,735
B 618
C 890
D 2,500