Question

Answer all these questions with the right answer letter next to each question number

12-Jasper Enterprises had the following cost and production information for April:

Units Produced				20,000
Units Sold				16,000
Unit Sales Price			$	190
Manufacturing Cost Per Unit
Direct Material			$	20
Direct Labor			$	20
Variable Manufacturing Overhead			$	16
Fixed Manufacturing Overhead	($360,000/20,000)	=	$	18
Full Manufacturing Cost Per Unit			$	74
Nonmanufacturing Costs
Variable Selling Expenses			$	104,000
Fixed General and Administrative Costs			$	92,000

What is Jasper Enterprise's income under variable costing?

A_$1,588,000

B_$1,660,000

C_$1,231,000

D_$1,184,000

17-Dancer Corp. has a selling price of $15 per unit, and variable costs of $10 per unit. When 12,000 units are sold, profits equaled $35,000. How many units must be sold to break-even?

A_5,000

B_14,333

C_12,000

D_19,000

24-Frontier Corp. sells units for $46, has unit variable costs of $24, and fixed costs of $137,000. If Frontier sells 10,000 units, what is its degree of operating leverage?

rev: 12_17_2019_QC_CS-194118

A_0.38

B_3.27

C_4.34

D_2.65

Answer 1

12. Option A

Sales revenue (16,000*190)	3,040,000
Variable cost (20+20+16)*16000 + 104,000	1,000,000
Contribution margin	2,040,000
Fixed cost (360,000+92,000)	452,000
Net income	1,588,000

17. Option A

Contribution margin - Fixed cost = Profit

(15-10)*12,000 - Fixed cost = 35,000

Fixed cost = 25,000

Breakeven point = Fixed cost /Contribution margin per unit

= 25,000/5 = 5,000

.

24. Option D

Contribution margin = (46-24)*10,000 = 220,000

Net operating income = Contribution margin - Fixed cost

= 220,000 - 137,000 = 83,000

Degree of operating leverage = Contribution margin/Net operating income

= 220,000/83,000

= 2.65