Cost-Volume-Profit Analysis
Sport Caps Co. manufactures and sells caps for different sporting events. The fixed costs of operating the company are $160,000 per month, and the variable costs for caps are $7.50 per unit. The caps are sold for $10 per unit. The fixed costs provide a production capacity of up to 100,000 caps per month.
1. What is the contribution margin per cap?
A. $1.15
B. $1.50
C. $2.35
D. $2.50
2. What is the break-even point in terms of the number of caps produced and sold?
A. 75,000
B. 51,000
C. 55,000
D. 64,000
3. What is the amount of net income at 90,000 caps sold per month?
A. $65,000
B. $54,000
C. $72,000
D. $68,500
4. What is the contribution margin ratio?
A. .25
B. .17
C. .32
D. .45
5. What is the break-even point in terms of sales dollars?
A. $615,000
B. $640,000
C. $655,000
D. $675,000
6. What is the dollars of sales needed to provide $45,000 of after-tax income, assuming an income tax rate of 20%.
A. $825,000
B. $850,000
C. $865,000
D. $872,000