71.A shift from low-margin sales to high-margin sales
a.may increase net income, even though there is a decline in total units sold.
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b.will always increase net income.
c.will always decrease net income.
d.will always decrease units sold.
72.A shift from high-margin sales to low-margin sales
a.may decrease net income, even though there is an increase in total units sold.
b.will always decrease net income.
c.will always increase net income.
d.will always increase units sold.
Use the following information for questions 73 and 74.
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MacCloud Industries has two divisions—Standard and Premium. Each division has hundreds of different types of tennis racquets and tennis products. The following information is available:
Standard DivisionPremium Division Total
Sales$400,000$600,000$1,000,000
Variable costs 280,000 360,000
Contribution margin$120,000$240,000
Total fixed costs$270,000
73.What is the weighted-average contribution margin ratio?
a.34%
b.35%
c.36%
d.50%
74.What is the break-even point in dollars?
a.$97,200
b.$750,000
c.$771,429
d.$794,118
75.The sales mix percentages for Novotna’s Boston and Seattle Divisions are 70% and 30%. The contribution margin ratios are: Boston (40%) and Seattle (30%). Fixed costs are $888,000. What is Novotna’s break-even point in dollars?
a.$310,800
b.$2,400,000
c.$2,537,142
d.$2,690,909
76.A company can sell all the units it can produce of either Product A or Product B but not both. Product A has a unit contribution margin of $16 and takes two machine hours to make and Product B has a unit contribution margin of $30 and takes three machine hours to make. If there are 2,000 machine hours available to manufacture a product, income will be
a.$4,000 more if Product A is made.
b.$4,000 less if Product B is made.
c.$4,000 less if Product A is made.
d.the same if either product is made.
77.Brooks Corporation can sell all the units it can produce of either Plain or Fancy but not both. Plain has a unit contribution margin of $120 and takes two machine hours to make and Fancy has a unit contribution margin of $150 and takes three machine hours to make. There are 2,400 machine hours available to manufacture a product. What should Brooks do?
a.Make Fancy which creates $30 more profit per unit than Plain does.
b.Make Plain which creates $10 more profit per machine hour than Fancy does.
c.Make Plain because more units can be made and sold than Fancy.
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d.The same total profits exist regardless of which product is made.
78.What is the key factor in determining sales mix if a company has limited resources?
a.Contribution margin per unit of limited resource
b.The amount of fixed costs per unit
c.Total contribution margin
d.The cost of limited resources
79. Greg’s Breads can produce and sell only one of the following two products:
OvenContribution
Hours RequiredMargin Per Unit
Muffins0.2$3
Coffee Cakes0.3$4
The company has oven capacity of 900 hours. How much will contribution margin be if it produces only the most profitable product?
a.$9,000
b.$12,000
c.$13,500
d.$18,000
80.Curtis Corporation’s contribution margin is $15 per unit for Product A and $18 for Product B. Product A requires 2 machine hours and Product B requires 4 machine hours. How much is the contribution margin per unit of limited resource for each product?
