. Traditional income statements organize costs by:

A. function. B. behavior.

C. discretionary vs. committed. D. no particular manner.

11. The contribution margin is equal to:

A. sales minus cost of goods sold.

B. sales minus variable expenses.

C. sales minus fixed expenses.

D. sales minus operating expenses.

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12. A Store buys portable generators for $500 & sells them for $800. He pays a sales commission of 5% of sales revenue to his sales staff. Toby pays $2,000 a month rent for his store, & also pays $1,800 a month to his staff in addition to the commissions. Toby sold 200 generators in June. If Toby prepares a contribution margin income statement for the month of June, what would be his contribution margin?

A. $268,000 B. $160,000

C. $52,000 D. $108,000

1. To compute the unit contribution margin, __________ should be subtracted from the sales price per unit.

A. only variable period costs

B. only variable inventoriable product costs

C. all variable costs

D. all fixed costs

2. Managers can quickly forecast the total contribution margin by multiplying the projected:

A sales rev. by the CM ratio. B.sales units by the CM ratio.

C. sales revenue by the unit CM. D.sales units by the VC ratio.

3. Anthony Office Supplies sells refills on printer ink cartridges for $16 per refill. Variable costs are $4 per refill. Fixed costs are $2,000 per month. What is the contribution margin ratio for the printer ink cartridge refills?

A. 133% B. 12%

C. 25% D. 75%

4. If the sale price per unit is $38, variable expenses per unit are $21, & total fixed expenses are $56,950, what will the breakeven sales in units be?

A. 1,499 B. 968,150

C. 2,712 D. 3,350

5. If the contribution margin ratio is 32%, target operating income is $60,000, & the sales revenue needed to achieve the target operating income is $400,000, what are total fixed expenses?

A. $ 68,000 B. $128,000

C. $ 19,200 D. $188,000

6. Healthy Greetings Corporation produces & sells fruit baskets for special events. The unit selling price is $60, unit variable costs are $45, & total fixed costs are $2,670. What are breakeven sales in dollars?

A. $ 8,010 B. $ 1,526

C. $ 178 D. $ 10,680

7. Which of the following statements is TRUE if the fixed costs increase while the sales price per unit & variable costs per unit remain constant?

A. The CM increases & the breakeven point decreases.

B. The CM decreases & the breakeven point increases.

C. CM stays the same & the breakeven point decreases.

D. The CM stays the same & the breakeven point increases.

8. Which of the following will decrease the breakeven point in units assuming no other changes in the cost-volume-profit relationship?

A. An Increase in the sale price per unit

B. A decrease in the sale price per unit

C. An increase in total fixed costs

D. An increase in the variable costs per unit

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