MAS REVIEW
Quiz 02
MAY 12, 2022
Instructor: John Bo S. Cayetano
Use the following information for the next two (2) questions:
Stairway Company sells a single product. The company’s most recent income statement is given below:
Less:
Less
Sales (5,000 units)
Variable expenses
Contribution margin
Fixed overhead
Operating income
200,000
120,000
80,000
48,000
32,000
1) What is the contribution margin per unit?
A. 16 per unit
B. 6.4 per unit
C. 40 per unit
D. 24 per unit
2) If sales are doubled to P400,000, how much is the total expected variable cost?
A. 240,000
B. 200,000
C. 360,000
D. 300,000
3) If sales are doubled to P400,000, how much is the expected total fixed cost?
A. 96,000
B. 48,000
C. 116,000
D. 57,500
4) If 100 more units are sold, how much increase in profit is expected?
A. 1,600
B. 33,600
C. 6,000
D.
640
5) Janet Company produces a game that sells for P17 per game. Variable expenses are P9 per game and fixed expenses total
P172,000 annually. The contribution margin ratio is closest to:
A.
B.
C.
D.
47.1%
2.1%
1.9%
52.9%
6) Double Dragon Company produced 500 units of a product and incurred the following costs:
Direct materials
Direct labor
Overhead (20% fixed)
P 8,000
10,000
45,000
If sales revenue of 500 units is P102,000, what is the contribution margin percentage?
A.
B.
C.
D.
44%
47%
53%
74%
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7) A recent income statement of Nixon Corporation reported the following data:
Sales revenue
Variable costs
Fixed costs
P 5,000,000
3,000,000
1,600,000
If these data are based on the sale of 10,000 units, the contribution margin per unit would be:
A.
40
B.
140
C.
200
D. 460
8) The following information pertains to Rica Company:
Manufacturing costs
Selling and administrative expenses
Variable
P340,000
10,000
Fixed
P 70,000
60,000
During the year, the company sold 50,000 units for P1,000,000. How much is Rica's break-even point in number of units?
A.
B.
C.
D.
9,848
10,000
26,000
18,571
9) DEF Company is a retailer for video disks. The projected net income for the current year is P200,000 based on sales volume of
200,000 video disks. DEF has been selling the disk for P16 each. The variable cost consist of P10 unit purchase price of the
disks and handling cost of P2 per disk.
DEF’s annual fixed costs are P600,000. What is the company’s break-even point for the current year in number of video disks?
A.
B.
C.
D.
152,000
150,000
155,000
140,000
10) Asher Company manufactures fans with direct material costs of P10 per unit and direct labor of P7 per unit. A local carrier
charges Asher P5 per unit to make deliveries. Sales commissions are paid at 10% of the selling price. Fans are sold for P100
each. Indirect factory costs and administrative costs are P6,800 and P37,200 per month, respectively.
How many fans must Asher produce to break even?
A.
B.
C.
D.
1,375
647
564
530
11) Given the selling price at P120 per unit; contribution margin ratio at 25% and fixed costs of P250,000, the total variable
expenses at the break-even point would be:
A.
B.
C.
D.
350,000
750,000
450,000
250,000
12) The following information pertains to Mete Company:
Sales
Variable costs
Fixed costs
P400,000
80,000
20,000
Mete’s breakeven point in peso sales is
A. 20,000
B. 25,000
C. 80,000
D. 100,000
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Use the following information for the next two (2) questions:
Swift, Inc., produces only two products, AAA and BBB. These account for 60% and 40% of the total sales of Swift, respectively.
Variable costs (as a percentage of sales peso) are 60% for AAA and 85% for BBB. Total fixed costs are P150,000. There are no
other costs.
13) What is Swift’s breakeven point in peso?
A. 150,000
B. 214,286
C. 300,000
D. 500,000
14) Assume that the total fixed costs of Swift increase by 30%, what amount of total sales would be necessary to generate a net
income of P9,000?
A. 204,000
B. 464,000
C. 659,000
D. 680,000
15) John Jordan, a sole proprietor, had the following projected figures for next year:
Variable cost per unit
Total fixed costs
P30.00
P210,000
What selling price per unit is needed to obtain a before-tax profit of P90,000 at a volume of 4,000 units?
A.
B.
C.
D.
75.00
52.50
100.00
105.00
16) For a profitable company, the amount by which sales can decline before losses occur is known as the
A. Sales volume variance
C. Contribution margin
B. Margin of error
D. Margin of safety
17) Margin of Safety
A. Is the amount of actual or expected sales which can still be decreased without resulting into a loss.
B. May be expressed in terms of pesos or in terms of a per unit figures.
C. May be increased by increasing either the expected sales or break even sales.
D. Shows how much sales volume can be reduced without sustaining losses.
18) For its most recent fiscal year, Corn Company reported that its contribution margin was equal to 40 percent of sales and that its
net income amounted to 10 percent of sales. If its fixed cost for the year were P60,000, how much was the margin of safety?
A 150,000
B. 200,000
C. 600,000
D. 50,000
.
19) Black Corporation breakeven point was P780,000. Variable expenses averaged 60% of sales, and the margin of safety was
P130,000. What was Black’s contribution margin?
A 364,000
B. 546,000
C. 910,000
D. 1,300,000
.
20) Worthy Company has sales of P200,000, a contribution margin of 20% and a margin of safety of P80,000. What is Worthy’s
fixed cost?
A. 16,000
B. 24,000
C. 80,000
D. 96,000
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21) The following information pertains to Clove Company for the year ending December 31, 2021:
Budgeted sales
Breakeven sales
Budgeted contribution margin
P 1,000,000
700,000
600,000
Clove’s margin of safety is
A. 300,000
B. 400,000
C. 500,000
D. 800,000
22) The following information relates to Knight Company:
Sales revenue
Contribution margin
Net income
Knight's operating leverage factor is:
A 0.25
B. 0.40
.
P5,000,000
2,000,000
500,000
C.
2.50
D.
4.00
23) Kendall Company has sales of 1,000 units at P60 a unit. Variable expenses are 30% of the selling price. If total fixed expenses
are P30,000, the degree of operating leverage is:
A. 1.50
B. 5.00
C. 1.67
D. 3.50
24) Brown Company has sales of 2,000 units at P70 per unit. Variable expenses are 40% of the selling price. If total fixed expenses
are P44,000, the degree of operating leverage is:
A. 0.79
B. 1.40
C. 3.50
D. 2.10
25) The Oregano Watch Company manufactures a line of ladies’ watches which are sold through discount houses. Each watch is
sold for P1,500; the fixed costs are P3,600,000 for 30,000 watches or less; variable cost is P900 per watch. What is Oregano’s
degree of operating leverage at sales of 12,000 watches?
A. 2.0 times
B. 5.0 times
C. 0.5 times
D. 0.2 times
26) Chris Brown Company sells two products with the following per unit data:
Selling price
Variable cost
Contribution margin
Apple
P 75
45
30
Orange
P 120
60
60
Sales mix
3 units
2 units
If fixed costs are P630,000, the number of Apple and Orange units that Chris Brown must sell to break even is
A. 1,800 Apple and 1,200 Orange
B. 9,000 Apple and 6,000 Orange
C. 3,600 Apple and 2,400 Orange
D. 21,000 Apple and 14,000 Orange
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27) Look At You is a company with P280,000 of fixed costs has the following data:
Sales price per unit
Variable cost per unit
Product Sword
P5
P3
Product Shield
P6
P5
Assume three units of Product Sword are sold for each unit of Product Shield sold. How much will sales be in peso of Product
Shield at the breakeven point?
A. 200,000
B. 240,000
C. 280,000
D. 840,000
28) Wren Co. manufactures and sells two products with selling prices and variable costs as follows:
Selling price
Variable costs
Product A
P18.00
12.00
Product B
P22.00
14.00
Wren's total annual fixed costs are P38,400. Wren sells four units of A for every unit of B. If operating income last year was
P28,800, what was the number of units Wren sold?
A.
5,486
B.
6,000
C.
9,600
D. 10,500
29) Ace Manufacturing plans to produce two products, Gold and Silver, during the next year, with the following characteristics:
Selling price
Variable cost per unit
Expected sales
Gold
P 10
8
Silver
P 15
10
20,000 units
5,000 units
Total projected fixed costs for the company are P30,000. Assume that the product mix would be the same at the breakeven
point as at the expected level of sales of both products. What is the projected number of units (rounded) of the Product Gold to
be sold at the breakeven point?
A. 2,308 units
B. 9,231 units
C. 11,538 units
D. 15,000 units
30) The following revenues and cost budget for two products, Sakit Company sells are made available:
Sales price
Direct materials
Direct labor
Fixed overhead
Net income per unit
Plastic Product
P 50
10
15
15
10
Glass Product
P 75
15
25
20
15
Budgeted unit sales
150,000 units
300,000 units
The budgeted unit sales equal the current unit demand, and total fixed overhead for the year is budgeted at P4,875,000. Assume
that the company plans to maintain the same proportional mix. In numerical calculations, the company rounds to the nearest
centavos and units.
The total number of units Sakit Company needs to produce and sell to breakeven is
A. 102,632 units
B. 153,947 units
C. 171,959 units
D. 418,455 units
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