Chapter 12 Determining the Financing Mix

30) Based on the data contained in Table A, what is the break-even point in units produced and sold?

TABLE A

Average selling price per unit $18.00

Variable cost per unit $13.00

Units sold 400,000

Fixed costs $650,000

Interest expense $ 50,000

A) 130,000

B) 140,000

C) 150,000

D) 180,000

31) Based on the data contained in Table A, what is the break-even point in sales dollars?

TABLE A

Average selling price per unit $18.00

Variable cost per unit $13.00

Units sold 400,000

Fixed costs $650,000

Interest expense $ 50,000

A) $2,340,000

B) $1,850,000

C) $1,775,500

D) $700,000

32) Rogue Tire Masters has fixed costs of $220,000. Tires sell for $95 each and have a unit variable cost of $45. What is Rogue's break-even point in units?

A) 4,000

B) 4,400

C) 5,200

D) 5,500

33) The break-even point in sales dollars is convenient if

A) the firm sells a large amount of one product.

B) the firm deals with more than one product.

C) the price per unit is very low.

D) depreciation expense is high.

34) Which of the following would be considered a fixed cost in a manufacturing setting?

A) depreciation

B) direct labor

C) sales commissions

D) direct materials

35) Which of the following would be considered a variable cost in a manufacturing setting?

A) rent

B) administrative salaries

C) insurance

D) direct labor

36) Mix Sweet Shop bakes and sells pies. Mix has annual fixed costs of $880,000 and a variable cost per pie of $7.50. Each pie sells for $15.50 each. The firm expects to sell 500,000 pies annually. What is the break-even point in pies?

A) 190,440

B) 280,000

C) 200,000

D) 110,000

37) Mix Sweet Shop bakes and sells pies. Mix has annual fixed costs of $880,000 and a variable cost per pie of $7.50. Each pie sells for $15.50 each. The firm expects to sell 500,000 pies annually. What is the break-even point in sales dollars?

A) $3,100,000

B) $2,875,000

C) $1,705,000

D) $1,625,000

38) All of the following will make the break-even point increase, other things equal, EXCEPT

A) fixed costs increase.

B) the sales price per unit is decreased due to competition.

C) variable costs increase due to higher direct labor cost.

D) the number of units sold for the year decreased.

39) Voellers Upholstery Co. produces inexpensive leather chairs. The average selling price for one of the chairs is $400. The variable cost per chair is $250. Voellers' has average fixed costs per year of $450,000.

a. What is the break-even point in units?

b. What is the break-even point in dollar sales?

c. What would be the operating profit or loss associated with the production and sale of (1) 3,000 chairs, (2) 4,000 chairs?