Question

35. A.

1. Flying Cloud Co. has the following operating data for its manufacturing operations:

   Unit selling price	$235
   Unit variable cost	$117
   Total fixed costs	$754,000

   The company has decided to increase the wages of hourly workers which will increase the unit variable cost by 10%. Increases in the salaries of factory supervisors and property taxes for the factory will increase fixed costs by 4%. If sales prices are held constant, the next break-even point for Flying Cloud Co. will be

   a. decreased by 987 units

   b. increased by 1,184 units

   c. increased by 790 units

   d. increased by 987 units

35. B.

1. Production and sales estimates for May for the Cardinal Co. are as follows:

   Estimated inventory (units), May 1	18,300
   Desired inventory (units), May 31	20,000
   Expected sales volume (units):
   Area W	6,100
   Area X	10,000
   Area Y	7,500
   Unit sales price	$13.00

   The number of units expected to be sold in May is

   a. 21,240

   b. 23,600

   c. 28,320

   d. 13,600

35. C.

1. Reynold's Grocery has fixed costs of $346,000, the unit selling price is $25, and the unit variable costs are $20. What is the break-even sales (units) if the variable costs are decreased by $5?

   a. 17,300 units

   b. 23,067 units

   c. 69,200 units

   d. 34,600 units

Answer 1

35. A.

	Old	New
Unit selling price	235	235
Unit variable cost	117	128.7
Total fixed costs	754,000	784,160
/ Unit Contribution Margin	/ 118	/ 106.3
Break-Even Point	6,390 units	7,377 units

d. increased by 987 units

.

35. B.

Area W	6,100
Area X	10,000
Area Y	7,500
Total	23,600

b. 23,600

.

35. C

	Old	New
Unit selling price	25	25
Unit variable cost	20	15
Total fixed costs	346,000	346,000
/ Unit Contribution Margin	/ 5	/ 10
Break-Even Point	69,200 units	34,600 units

d. 34,600 units