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 units?

		60000
		15000
		3750
		10000

2.

Which of the following products would probably be manufactured using a job order costing system?

		Company letterhead
		paper
		heating oil
		gasoline

3.

Timy, inc. had $1,100,000 in invested assets, sales of $1,210,000, income from operations of $302,500 and minimum return of 15%. What is the residual income?

		$137,500
		$190,300
		$302,000
		$165,000

4.

Which would you find on a variable costing income statement?

		gross profit
		Contribution margin
		total general and administrative expenses
		total operating expenses

Answer 1

Answers

1)10000

2) Company letter heads

3) $137,500

4) Contribution Margin

1) Break Even Units = Fixed Cost / ( Selling price- Variale cost )

= ( 300,000/ (50-20) = 300,000/30 = 10,000 Units

2) Company letter heads preparing company uses the job order costing system

3) Residual income = Income from operations - ( Minimum REquired Return * Invested Assets )

= 302,500- ( 1,100,000*15%)

= $ 137,500

4) From the Variabel costing Income Statement, We will find the Contribution Margin