Horngren, Cost Accounting 10/E Chapter 3 -- Multiple Choice

Chapter 3: Cost-Volume-Profit Analysis
Multiple Choice

A firm, ACME Cleaning Supply, wishes to sell a single cleaning solution called VeryKleen. The cleaner costs $4.50 per bottle to produce and package. The firm will sell the product using door to door salespeople. A selling price of $9.00 per bottle is expected and the firm anticipates fixed costs of $50,000 per year.

What is the contribution margin percentage?

200%

50%

$9.00

$4.50

What is the breakeven quantity?

3,023 bottles

11,112 bottles

9,999 bottles

100,008 bottles

What is the breakeven revenue?

$1,000,000

$11,112

$100,008

$3,055

With a corporate tax rate of 40%, what quantity of cleaner must be sold to generate $25,000 in net income?

20,371 bottles

11,112 bottles

183,339 bottles

none of the above

If VeryKleen adds a second product called KleenSkrub that costs $3.00 and sells for $7.00 and if they sell 3,000 bottles of KleenSkrub for every 10,000 bottles of VeryKleen. What is the sales mix?

3:13

2:10

500:750

3:10

What are the breakeven quantities of the two products assuming this sales mix remains?

8,772 VeryKleen and 2,632 KleenSkrub

11,112 VeryKleen and 4,321 KleenSkrub

10,000 VeryKleen and 3,000 KleenSkrub

none of the above