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Exam 6: Reporting and Analyzing Inventory

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Question 61

Multiple Choice

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A shift from high-margin sales to low-margin sales

A) may decrease net income, even though there is an increase in total units sold.
B) will always decrease net income.
C) will always increase net income.
D) will always increase units sold.

E) B) and C)
F) All of the above

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Question 62

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Use the following information for questions . Roosevelt Corporation has a weighted-average unit contribution margin of $30 for its two products, Standard and Supreme. Expected sales for Roosevelt are 40,000 Standard and 60,000 Supreme. Fixed expenses are $1,800,000. -At the expected sales level, Roosevelt's net income will be

A) $(300,000) .
B) $ - 0 -.
C) $1,200,000.
D) $3,000,000.

E) All of the above
F) None of the above

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Question 63

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Use the following information for questions . Roosevelt Corporation has a weighted-average unit contribution margin of $30 for its two products, Standard and Supreme. Expected sales for Roosevelt are 40,000 Standard and 60,000 Supreme. Fixed expenses are $1,800,000. -How many Standards would Roosevelt sell at the break-even point?

The break-even point in dollars is variable costs divided by the weighted-average contribution margin ratio.

In 2016, Teller Company sold 3,000 units at $600 each.Variable expenses were $420 per unit, and fixed expenses were $240,000.What was Teller's 2016 net income?

The degree of operating leverage

Use the following information for questions Swanson Company has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Swanson incurs $6,660,000 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%. -What will sales be for the Sporting Goods Division at the break-even point?

Warner Manufacturing reported sales of $2,000,000 last year (100,000 units at $20 each) , when the break-even point was 80,000 units.Warner's margin of safety ratio is

Use the following information for questions Nielson Corp. sells its product for $6,600 per unit. Variable costs per unit are: manufacturing, $3,600, and selling and administrative, $75. Fixed costs are: $18,000 manufacturing overhead, and $24,000 selling and administrative. There was no beginning inventory at 1/1/15. Production was 20 units per year in 2015-2017. Sales were 20 units in 2015, 16 units in 2016, and 24 units in 2017. -Income under absorption costing for 2017 is

When a company assigns the costs of direct materials, direct labor, and both variable and fixed manufacturing overhead to products, that company is using

The margin of safety ratio is

In 2016, Hagar Corp.sold 3,000 units at $500 each.Variable expenses were $350 per unit, and fixed expenses were $780,000.The same variable expenses per unit and fixed expenses are expected for 2017.If Hagar cuts selling price by 4%, what is Hagar's break-even point in units for 2017?

When production exceeds sales,

In CVP analysis, cost includes manufacturing costs but not selling and administrative expenses.

Net income under absorption costing is higher than net income under variable costing

Ramirez Corporation sells two types of computer hard drives.The sales mix is 30% (Q-Drive) and 70% (Q-Drive Plus) .Q-Drive has variable costs per unit of $90 and a selling price of $150.Q-Drive Plus has variable costs per unit of $105 and a selling price of $195.Ramirez's fixed costs are $891,000.How many units of Q-Drive would be sold at the break-even point?

When a company has limited resources to manufacture products, it should manufacture those products which have the highest unit contribution margin.

When units produced exceed units sold, income under absorption costing is higher than income under variable costing.

A shift from low-margin sales to high-margin sales

Operating leverage refers to the extent to which a company's net income reacts to a given change in fixed costs.