Question

1.

DEF sells its shirts for $50 a piece. If fixed costs are $300,000 and variable costs are $20 per unit, what is break-even in sales dollars?

		$500,000
		$750,000
		$3,000,000
		$187,500

2.

ABC sells its shirts for $50 a piece. If fixed costs are $300,000 and variable costs are $30 per unit , and they want $100,000 in profit, what is break-even in units?

		65000
		20000
		15000
		8750

3.

JH company had the following data: 1.) Sales $2160000 2.) cost of goods sold $1123200 3.) selling expense-$180000 4.) Administrative expense_$144,000. On a piece of scrap paper do an absorption costing income statement. What is net income?

		$576,000
		$712,800
		$324,000
		$1,036,800

4.

Type of costing that is used for financial reporting

		absorption
		mixed cost
		variable
		mixed

Answer 1

Answer :-

Break-even in sales dollars = Fixed Cost/Contribution margin ratio

= 300,000/60% = $500,000

Contribution margin ratio = (Selling Price-Variable Cost)/Selling Price

= (50-20)/50 = 60%

Answer :-

Break-even in units = Fixed Cost/Contribution Margin

= 300,000/20 = 15,000 Units

Answer :-

Particulars	Amount($)
Sales Revenue	2,160,000
Less :- Cost of goods sold	1,123,200
Gross Profit	1,036,800
Less :- SG&A
Selling Expense	180,000
Administrative Expense	144,000
Net Income	712,800

Answer :- Variable Costing is used for financial reporting.