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76. A firm selling three products has the following data: Unit Unit Variable Product Sales Mix Price Cost 60,000 units $40 S20 40,000 units 60 30 20,000 units 30 5 If the firm can change the sales mix from 60,000 P, 40,000 Q, and 20,000 R to 60,000 P, 20,000 Q, and 40,000 R, pre-tax income will be a) Lower b) Higher c) Unchanged d) Cannot be determined Answer: a Difficulty: Medium Learning Objective: Apply CVP calculations for multiple products. CPA: Management Accounting 77. Grady, Inc. produces a single product and projects the following costs for a normal month in which 100 units are produced and sold Manufacturing Non- manufacturing Fixed costs Total variable costs $8,000 $5,000 7,700 6,050 The selling price per unit is $300. What volume, in units, must Grady sell to break even? a) 36 b) 58 c) 80 d) 90 Answer: Difficulty: Easy Learning Objective: Apply CVP calculations for a single product. CPA: Management Accounting 78. When sales are $1,000, the contribution margin is $600 and a pre-tax loss of $60 occurs. What is the breakeven point in dollars?
77. Grady, Inc. produces a single product and projects the following costs for a normal month in which 100 units are produced and sold Non- manufacturing Fixed costs Total variable costs $8,000 $5,000 7,700 6,050 The selling price per unit is $300. What volume, in units, must Grady sell to break even? a) 36 b) 58 c) 80 d) 90 Answer: C Difficulty: Easy Learning Objective: Apply CVP calculations for a single product. CPA: Management Accounting 78. When sales are $1,000, the contribution margin is $600 and a pre-tax loss of $60 occurs. What is the breakeven point in dollars? a) $833 b) $1,100 c) $1,167 d) $1,750 Answer: b Difficulty: Medium Learning Objective: Apply CVP calculations for a single product. 79. Ruben, Inc. is a management consulting firm specializing in pension plans. Its billing rate to clients is $120 per hour, and variable costs average $80 per hour. Fixed costs are $24,000 per month. The income tax rate is 20%. If variable costs increase by 10% and management increases its billing rate by 8%, what is the effect on the breakeven point, in billable hours? a) It increases the breakeven point b) The breakeven point will not change c) It decreases the breakeven point
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