Acct116 Final
CHAPTERS 6-12
Use the following to answer question 1:
Wright Corporation's contribution format income statement for last month appears below.
Sales $45,000
Less variable expenses 27,000
Contribution margin 18,000
Less fixed expenses 12,000
Net income $6,000
There were no beginning or ending inventories. The company produced and sold 3,000 units during the month. Ch. 9 1. If sales decrease by 500 units by next month, by how much would fixed expenses have to be reduced to maintain the current net income?
A) $2,000
B) $3,000
C) $6,000
D) $7,500
Ch 6
2. The break‑even point in sales for Rice Company is $360,000 and the company's contribution margin ratio is 30%. If Rice Company desires an income of $84,000, sales would have to total
A) $280,000.
B) $560,000.
C) $640,000.
D) $480,000.
Ch 6
3. The margin of safety in the Flaherty Company is $24,000. If the company's sales are $120,000 and its variable expenses are $80,000, its fixed expenses must be:
A) $32,000.
B) $16,000.
C) $8,000.
D) $24,000.
Ch 6
4. Last year, Perry Company reported profits of $4,200. It's variable expenses totaled $66,000 or $6 per unit. The unit contribution margin was $3.00. The break‑even point in units for Perry Company is:
A) 12,400.
B) 11,000.
C) 22,000.
D) 9,600.
Use the following to answer questions 5‑6:
The LaGrange Company had the following budgeted sales for the first half of the current year:
Cash Sales Credit Sales
January $70,000 $340,000
February 50,000 190,000
March 40,000 135,000
April 35,000 120,000
May 45,000 160,000
June 40,000 140,000
The company is in the process of preparing a cash budget and must determine the expected cash collections by month. To this end, the following information has been assembled:
Collections on sales: 60% in month of sale 30% in month following sale 10% in second month following sale
The accounts receivable balance on January I of the current year was $70,000, of which $50,000 represents uncollected December sales and
Use the following to answer question 1:
Wright Corporation's contribution format income statement for last month appears below.
Sales $45,000
Less variable expenses 27,000
Contribution margin 18,000
Less fixed expenses 12,000
Net income $6,000
There were no beginning or ending inventories. The company produced and sold 3,000 units during the month. Ch. 9 1. If sales decrease by 500 units by next month, by how much would fixed expenses have to be reduced to maintain the current net income?
A) $2,000
B) $3,000
C) $6,000
D) $7,500
Ch 6
2. The break‑even point in sales for Rice Company is $360,000 and the company's contribution margin ratio is 30%. If Rice Company desires an income of $84,000, sales would have to total
A) $280,000.
B) $560,000.
C) $640,000.
D) $480,000.
Ch 6
3. The margin of safety in the Flaherty Company is $24,000. If the company's sales are $120,000 and its variable expenses are $80,000, its fixed expenses must be:
A) $32,000.
B) $16,000.
C) $8,000.
D) $24,000.
Ch 6
4. Last year, Perry Company reported profits of $4,200. It's variable expenses totaled $66,000 or $6 per unit. The unit contribution margin was $3.00. The break‑even point in units for Perry Company is:
A) 12,400.
B) 11,000.
C) 22,000.
D) 9,600.
Use the following to answer questions 5‑6:
The LaGrange Company had the following budgeted sales for the first half of the current year:
Cash Sales Credit Sales
January $70,000 $340,000
February 50,000 190,000
March 40,000 135,000
April 35,000 120,000
May 45,000 160,000
June 40,000 140,000
The company is in the process of preparing a cash budget and must determine the expected cash collections by month. To this end, the following information has been assembled:
Collections on sales: 60% in month of sale 30% in month following sale 10% in second month following sale
The accounts receivable balance on January I of the current year was $70,000, of which $50,000 represents uncollected December sales and