- ____Willy has fixed costs of $30,000. The price of their product is $10 and the variable costs = $4 per unit. What is the breakeven point in units?
Ans. Breakeven point (units):-5000 units
- ____Tommie Co. has fixed costs of $250,000 and a CM ratio of .35. How much revenue would Tommie need to generate to make a profit of $60,000?
Ans: Profit = Contribution Margin Ratio X Revenue – Fixed Costs
$60000= 0.35 x Revenue – $250000
$310000 = 0.35 Revenue
Desired Revenue = $310000/0.35= $885,714.29
- When creating a master budget, the first budget to be prepared is which one?
Ans. The first budget is to be prepared is the sales budget.
- ____Bob computed the net present value of a project and found that the NPV was $2,000 when he discounted the future cash flows using a 6% discount rate. Was the IRR 6%, less than 6% or greater than 6%?
Answer: Less than 6% as Present Value is greater than 0
- Billie computed the NPV for a project and found that NPV=0. Is the investment acceptable or unacceptable.
Ans. It adds no value, hence it should be Unacceptable.
- Barney invests $1,000 today. What is the future value of this investment at the end of 5 years if the money is invested at 8%?
- ___Klingon is considering an investment which costs $13,337. The investment is for 8 years and generates cash flows of $2500 per year. The internal rate of return for this investment would be about…?
- ___Donna sets a price of $10 per unit on her product. The variable cost per unit is $8. What is the contribution margin ratio?
Ans. Contribution margin ratio= sale price- variable cost/ sale price per unit
10-8/10 = 0.2
- ___When goods get finished, the Finished Goods account is debited, but which account gets credited
Ans. Work in progress account gets credited.
- ___Johnson Company has fixed costs of $1,000,000. The contribution margin per unit is $4.00 and the contribution margin ratio is .40. The break-even point in units would be…?
Ans: $1,000,000/4 = 250,000 units