Break-even Point #1 Quick Test

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1. Sales minus variable costs equals the __________ margin.
2. The sales in excess of the amount of sales necessary to breakeven is referred to as the margin of __________.
3. The break-even point in dollars is calculated by dividing the total amount of fixed costs by the contribution margin __________.
4. The relative proportion of a company’s various products that were sold or were planned to be sold is referred to as the company’s sales __________.
5. Within a reasonable range after the break-even point, each additional unit sold should increase the pretax profit by the amount of the __________ __________ per unit.
6. When calculating the break-even point, it is assumed that the selling price per unit will __________ as additional units are sold.
7. The break-even point is where revenues are equal to the total of __________ expenses.
8. Calculating the break-even point of a manufacturer will be easier if the manufacturer uses __________ costing.
9. When graphing the break-even point, the number of units sold will be indicated by the __________-axis.
10. In calculating the break-even point, it is assumed that the total amount of __________ costs will not change.
11. When calculating the break-even point, it is assumed that the __________ costs per unit will remain the same.
12. The total amount of fixed costs divided by the contribution margin per unit is the break-even point in __________ .
Use the following information for answering Questions 13 - 17:
A manufacturer sells only one product for $30 per unit. Its variable costs are $8 for manufacturing and $2 for selling expenses. The fixed costs per year are $100,000 for manufacturing and $80,000 for selling and administrative expenses. The company does not carry any inventory.
13. The company’s contribution margin per unit is $__________.
14. In order to break even, the company must sell __________ units.
15. The dollars of sales needed in order to break even is $__________.
16. If the company sells 10,000 units, its net income before tax will be $__________.
17. If the company wants to earn $60,000 of net income before income taxes, it must sell __________ units of product.
Use the following information for answering Questions 18 - 21:
A consulting firm has a billing rate of $100 per hour. Its variable expenses are $20 per hour and its fixed expenses are $150,000 per year.
18. The contribution margin ratio is __________%.
19. In order to break even the annual revenues must be $__________.
20. For the firm to have a net income of $50,000 before income taxes, the number of hours it must bill at $100 per hour is __________ hours.
21. For the firm to have a net income of $90,000 before income taxes, its revenues for the year must be $__________.
Use the following information for answering Questions 22 - 25:
A company sells three types of products with the following information for the upcoming year:
22. If the units sold are in the same proportion as the units shown above, the total number of units to be sold to break even is __________ units.
23. At the break-even point, the expected number of units of Type 1 that would be sold is __________ units.
24. If the company’s sales mix remains the same, the total number of units required to be sold in order to earn a profit of $93,000 is __________ units.
25. If a company’s sales mix remains constant and a total of 105,000 units are sold, the company’s net income before tax will be $__________.

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Break-even Point(Quick Test #1)

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