Q. If a company has a contribution margin of $30 per unit and fixed costs of $90,000, how many units must be sold to break even?
A.
3,000 units
B.
2,000 units
C.
1,500 units
D.
4,000 units
Show solution
Solution
To calculate the break-even point in units, divide total fixed costs by the contribution margin per unit: $90,000 / $30 = 3,000 units.
Correct Answer:
A
— 3,000 units
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Q. If a company has a contribution margin of $30 per unit and fixed costs of $90,000, how many units must it sell to break even?
A.
1,000 units
B.
3,000 units
C.
2,000 units
D.
4,000 units
Show solution
Solution
Break-even units = Fixed Costs / Contribution Margin = 90,000 / 30 = 3,000 units.
Correct Answer:
B
— 3,000 units
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Q. If a company has a contribution margin ratio of 40% and fixed costs of $50,000, what is the sales revenue needed to achieve a target profit of $10,000?
A.
$150,000
B.
$100,000
C.
$125,000
D.
$200,000
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Solution
Required sales = (Fixed costs + Target profit) / Contribution margin ratio = ($50,000 + $10,000) / 0.4 = $150,000.
Correct Answer:
A
— $150,000
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Q. If a company has a customer retention rate of 80% and loses 20% of its customers, what is the remaining customer base if it started with 1,000 customers?
A.
800
B.
900
C.
1,000
D.
1,200
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Solution
Remaining Customers = Initial Customers x Retention Rate = 1,000 x 80% = 800.
Correct Answer:
A
— 800
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Q. If a company has a customer retention rate of 80% and starts with 1,000 customers, how many customers will remain after one year?
A.
800
B.
900
C.
750
D.
850
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Solution
Remaining Customers = Initial Customers x Retention Rate = 1,000 x 0.80 = 800.
Correct Answer:
A
— 800
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Q. If a company has a debt to equity ratio of 1.5, what does this indicate?
A.
The company has more equity than debt
B.
The company has more debt than equity
C.
The company is fully financed by equity
D.
The company has no debt
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Solution
A debt to equity ratio of 1.5 indicates that the company has more debt than equity.
Correct Answer:
B
— The company has more debt than equity
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Q. If a company has a debt-to-equity ratio of 2:1 and total equity of $300,000, what is the total debt?
A.
$600,000
B.
$300,000
C.
$150,000
D.
$900,000
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Solution
Debt-to-Equity Ratio = Debt/Equity = 2/1. Total Debt = 2 * Total Equity = 2 * 300,000 = $600,000.
Correct Answer:
A
— $600,000
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Q. If a company has a flexible budget for 10,000 units at $5 per unit, what is the total budgeted revenue?
A.
$50,000
B.
$100,000
C.
$25,000
D.
$75,000
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Solution
Total budgeted revenue = 10,000 units * $5/unit = $50,000.
Correct Answer:
A
— $50,000
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Q. If a company has a gross profit of $300,000 and total sales of $1,000,000, what is the gross profit margin?
A.
20%
B.
25%
C.
30%
D.
35%
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Solution
Gross Profit Margin = (Gross Profit / Total Sales) x 100 = ($300,000 / $1,000,000) x 100 = 30%.
Correct Answer:
B
— 25%
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Q. If a company has a margin of safety of $10,000 and its break-even sales are $50,000, what are its actual sales?
A.
$40,000
B.
$60,000
C.
$50,000
D.
$70,000
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Solution
Actual sales = Break-even sales + Margin of safety = $50,000 + $10,000 = $60,000.
Correct Answer:
B
— $60,000
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Q. If a company has a margin of safety of $20,000 and its total sales are $100,000, what is the break-even sales?
A.
$80,000
B.
$60,000
C.
$40,000
D.
$20,000
Show solution
Solution
Break-even sales = Total sales - Margin of safety = $100,000 - $20,000 = $80,000
Correct Answer:
A
— $80,000
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Q. If a company has a margin of safety of $5,000 and its total sales are $25,000, what is the break-even sales level?
A.
$20,000
B.
$25,000
C.
$30,000
D.
$15,000
Show solution
Solution
Break-even sales = Total sales - Margin of safety = $25,000 - $5,000 = $20,000.
Correct Answer:
A
— $20,000
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Q. If a company has a margin of safety of 20% and its break-even sales are $50,000, what are its actual sales?
A.
$60,000
B.
$50,000
C.
$40,000
D.
$70,000
Show solution
Solution
Actual Sales = Break-even Sales / (1 - Margin of Safety) = $50,000 / (1 - 0.20) = $60,000.
Correct Answer:
A
— $60,000
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Q. If a company has a marginal cost of $15 per unit and sells each unit for $25, what is the contribution margin per unit?
A.
$10
B.
$15
C.
$25
D.
$5
Show solution
Solution
Contribution margin per unit is calculated as Selling Price ($25) minus Marginal Cost ($15), which equals $10.
Correct Answer:
A
— $10
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Q. If a company has a net income of $250,000 and total revenue of $1,000,000, what is the profit margin?
A.
25%
B.
20%
C.
30%
D.
15%
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Solution
Profit Margin = (Net Income / Total Revenue) * 100 = (250,000 / 1,000,000) * 100 = 25%.
Correct Answer:
A
— 25%
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Q. If a company has a sales price of $50, variable costs of $30, and fixed costs of $100,000, what is the contribution margin ratio?
A.
40%
B.
20%
C.
30%
D.
50%
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Solution
Contribution Margin = Sales Price - Variable Costs = $50 - $30 = $20. Contribution Margin Ratio = Contribution Margin / Sales Price = $20 / $50 = 40%.
Correct Answer:
A
— 40%
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Q. If a company has a selling price of $15 per unit, variable cost of $9 per unit, and fixed costs of $30,000, what is the contribution margin per unit?
A.
$6
B.
$9
C.
$15
D.
$30
Show solution
Solution
Contribution margin = Selling price - Variable cost = $15 - $9 = $6
Correct Answer:
A
— $6
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Q. If a company has a selling price of $80, variable costs of $50, and fixed costs of $10,000, what is the margin of safety in dollars if they expect to sell 300 units?
A.
$2,000
B.
$4,000
C.
$6,000
D.
$8,000
Show solution
Solution
Expected sales = 300 units * $80 = $24,000. Break-even sales = Fixed costs + (Variable costs * Units) = $10,000 + ($50 * 200) = $20,000. Margin of safety = Expected sales - Break-even sales = $24,000 - $20,000 = $4,000.
Correct Answer:
C
— $6,000
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Q. If a company has a standard cost of $5 per unit and the actual cost is $6 per unit, what type of cost variance is this?
A.
Favorable Variance
B.
Unfavorable Variance
C.
No Variance
D.
Standard Variance
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Solution
This is an unfavorable variance as the actual cost exceeds the standard cost.
Correct Answer:
B
— Unfavorable Variance
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Q. If a company has a standard cost of $50 per unit and produces 1,000 units, what is the total standard cost?
A.
$50,000
B.
$5,000
C.
$500
D.
$1,000
Show solution
Solution
Total standard cost is calculated as standard cost per unit multiplied by the number of units: $50 * 1,000 = $50,000.
Correct Answer:
A
— $50,000
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Q. If a company has a static budget of $100,000 for 10,000 units and actual production is 12,000 units, what is the flexible budget amount for actual production?
A.
$120,000
B.
$100,000
C.
$80,000
D.
$150,000
Show solution
Solution
The flexible budget is calculated by adjusting the static budget based on actual production. Therefore, $100,000 / 10,000 units = $10 per unit; for 12,000 units, it is $10 * 12,000 = $120,000.
Correct Answer:
A
— $120,000
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Q. If a company has a total revenue of $500,000 and total expenses of $300,000, what is its net profit?
A.
$200,000
B.
$300,000
C.
$500,000
D.
$100,000
Show solution
Solution
Net profit is calculated as total revenue minus total expenses. Therefore, $500,000 - $300,000 = $200,000.
Correct Answer:
A
— $200,000
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Q. If a company has a total revenue of $500,000 and total variable costs of $300,000, what is the total contribution margin?
A.
$200,000
B.
$300,000
C.
$400,000
D.
$100,000
Show solution
Solution
Total Contribution Margin = Total Revenue - Total Variable Costs = $500,000 - $300,000 = $200,000.
Correct Answer:
A
— $200,000
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Q. If a company has a total sales of $200,000 and total variable costs of $120,000, what is the contribution margin ratio?
A.
40%
B.
60%
C.
20%
D.
80%
Show solution
Solution
Contribution margin = Total sales - Total variable costs = $200,000 - $120,000 = $80,000. Contribution margin ratio = Contribution margin / Total sales = $80,000 / $200,000 = 0.4 or 40%.
Correct Answer:
B
— 60%
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Q. If a company has a total sales revenue of $50,000 and total variable costs of $30,000, what is the total contribution?
A.
$20,000
B.
$30,000
C.
$50,000
D.
$10,000
Show solution
Solution
Total contribution = Total sales revenue - Total variable costs = $50,000 - $30,000 = $20,000.
Correct Answer:
A
— $20,000
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Q. If a company has a total variable cost of $80,000 for producing 4,000 units, what is the variable cost per unit?
A.
$15
B.
$20
C.
$25
D.
$30
Show solution
Solution
Variable Cost per Unit = Total Variable Cost / Number of Units = $80,000 / 4,000 = $20.
Correct Answer:
B
— $20
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Q. If a company has a trial balance showing $10,000 in Sales Revenue and $2,000 in Cost of Goods Sold, what is the gross profit?
A.
$8,000
B.
$10,000
C.
$2,000
D.
$12,000
Show solution
Solution
Gross profit is calculated as Sales Revenue - Cost of Goods Sold, which is $10,000 - $2,000 = $8,000.
Correct Answer:
A
— $8,000
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Q. If a company has a trial balance showing total debits of $150,000 and total credits of $145,000, what is the amount of the discrepancy?
A.
$5,000
B.
$10,000
C.
$15,000
D.
$20,000
Show solution
Solution
Discrepancy = Total Debits - Total Credits = $150,000 - $145,000 = $5,000.
Correct Answer:
A
— $5,000
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Q. If a company has a trial balance showing total debits of $50,000 and total credits of $48,000, what does this indicate?
A.
The accounts are balanced
B.
There is an error in the accounts
C.
The company is profitable
D.
The company has a cash surplus
Show solution
Solution
A trial balance showing total debits of $50,000 and total credits of $48,000 indicates that there is an error in the accounts, as they should be equal.
Correct Answer:
B
— There is an error in the accounts
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Q. If a company has a trial balance that does not balance, what is the first step to identify the error?
A.
Recalculate the totals
B.
Check for missing entries
C.
Review the journal entries
D.
Verify account balances
Show solution
Solution
The first step to identify the error in a trial balance that does not balance is to recalculate the totals to ensure that the addition was done correctly.
Correct Answer:
A
— Recalculate the totals
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