# Accounting Exam 3

Question 1 (2 points)

If variable costs increase, fixed costs increase, and sales remain the same, what is expected to happen to the Contribution Margin (CM) and to the Break-even Point (BE) respectively?

Question 1 options:

 CM: Decrease BE: Increase CM: Increase BE: Decrease CM: Decrease BE: Decrease CM: Decrease BE: Can’t be determined

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Question 2 (3 points)

The break-even point is the point at which

Question 2 options:

 fixed costs equal variable costs fixed costs equal sales total contribution margin equals fixed costs sales equals variable costs

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Question 3 (3 points)

Singer Co. reported sales of \$416,000, a contribution margin of \$5 per unit, fixed costs of \$80,000, and a net income of \$24,000. Determine the selling price per unit?

Question 3 options:

 \$26 \$20 \$86.70 \$5

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Question 4 (3 points)

Use the following information to answer questions 4 & 5
Projected cost information for a new product is as follows:

 Variable manufacturing costs: \$8 per unit Variable selling costs: \$2 per unit Fixed manufacturing costs: \$25,000 Fixed selling costs: \$45,000

The product is to be sold at \$18 per unit.

Determine the break-even point for this product (in \$)

Question 4 options:

 \$45,000 \$126,000 \$157,500 \$8,750

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Question 5 (3 points)

Use the following information to answer questions 4 & 5
Projected cost information for a new product is as follows:

 Variable manufacturing costs: \$8 per unit Variable selling costs: \$2 per unit Fixed manufacturing costs: \$25,000 Fixed selling costs: \$45,000

The product is to be sold at \$18 per unit.

What price would the company have to sell this product for if they wish to sell 10,000 units and realize a profit of \$50,000?

Question 5 options:

 \$18 \$22 \$12 \$5

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Question 6 (3 points)

Gastone Inc. has estimated the following forecasted sales for a 3-month period:

 Month Estimated sales \$ August 33,000 September 29,000 October 30,000

On average, 60% of sales are collected in the month of sale, 39% in the following month, and the remaining 1% is never collected. Determine the budgeted cash receipts for September.

Question 6 options:

 \$29,000 \$30, 270 \$31,110 \$29,100

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Question 7 (3 points)

 \$45,000 and \$10,000

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