LO 3.1A company’s product sells for $150 and has variable costs of $60 associated with the product. What is its contribution margin per unit?

- $40
- $60
- $90
- $150

LO 3.1A company’s contribution margin per unit is $25. If the company increases its activity level from 200 units to 350 units, how much will its total contribution margin increase?

- $1,250
- $3,750
- $5,000
- $8,750

LO 3.2If a company has fixed costs of $6,000 per month and their product that sells for $200 has a contribution margin ratio of 30%, how many units must they sell in order to break even?

- 100
- 180
- 200
- 2,000

LO 3.2A company wants to earn an income of $60,000 after-taxes. If the tax rate is 32%, what must be the company’s pre-tax income in order to have $60,000 after-taxes?

- $88,235
- $19,200
- $79,200
- $143,000

LO 3.3When sales price increases and all other variables are held constant, the break-even point will ________.

- remain unchanged
- increase
- decrease
- produce a lower contribution margin

LO 3.3When variable costs increase and all other variables remain unchanged, the break-even point will ________.

- remain unchanged
- increase
- decrease
- produce a lower contribution margin

LO 3.3When fixed costs increase and all other variables remain unchanged, the contribution margin will ________.

- remain unchanged
- increase
- decrease
- increase variable costs per unit

LO 3.4If the sales mix in a multi-product environment shifts to a higher volume in low contribution margin products, the break-even point will ________.

- remain unchanged because all products are included in the calculation of break-even
- increase because the low contribution margin products have little effect on break-even
- increase because the per composite unit contribution margin will decrease
- decrease because the per composite unit contribution margin will increase

LO 3.4Break-even for a multiple product firm ________.

- can be calculated by dividing total fixed costs by the contribution margin of a composite unit
- can be calculated by multiplying fixed costs by the contribution margin ratio of a composite unit
- can only be calculated when the proportion of products sold is the same for all products
- can be calculated by multiplying fixed costs by the contribution margin ratio of the most common product in the sales mix

LO 3.4Beaucheau Farms sells three products (E, F, and G) with a sale mix ratio of 3:1:2. Unit sales price are shown. What is the sales price per composite unit?

- $28.00
- $20.00
- $59.00
- $41.00

LO 3.5Wallace Industries has total contribution margin of $58,560 and net income of $24,400 for the month of April. Wallace expects sales volume to increase by 5% in May. What are the degree of operating leverage and the expected percent change in income for Wallace Industries?

- 0.42 and 2.2%
- 0.42 and 5%
- 2.4 and 12%
- 2.5 and 13%

LO 3.5Macom Manufacturing has total contribution margin of $61,250 and net income of $24,500 for the month of June. Marcus expects sales volume to increase by 10% in July. What are the degree of operating leverage and the expected percent change in income for Macom Manufacturing?

- 0.4 and 10%
- 2.5 and 10%
- 2.5 and 25%
- 5.0 and 50%

LO 3.5If a firm has a contribution margin of $59,690 and a net income of $12,700 for the current month, what is their degree of operating leverage?

- 0.18
- 1.18
- 2.4
- 4.7