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#### Cornell Corporation gathered the following information for the year just ended: Fixed costs: Manufacturing \$125,000 Marketing 48,000 Administrative 25,000 Variable costs: Manufacturing \$120,000 Marketing 32,000 Administrative 38,000 During the year, Cornell produced and sold 60,000 units of product at a sale price of \$8

###### Management

1. Cornell Corporation gathered the following information for the year just ended:

Fixed costs:

Manufacturing
\$125,000
Marketing
48,000
25,000

Variable costs:

Manufacturing
\$120,000
Marketing
32,000
38,000

During the year, Cornell produced and sold 60,000 units of product at a sale price of \$8.00 per unit. There was no beginning inventory of product at the start of the year.

What is the contribution margin for the year?
2. The Sweet Factory produces and sells specialty fudge. The selling price per pound is \$20, variable costs are \$12 per pound, and total fixed costs are \$6,000. How many pounds of fudge must The Sweet Factory sell to breakeven?
750
300
15,000
188
3. If the sale price per unit is \$26, the variable expense per unit is \$19.50, and the breakeven sales in dollars is \$47,320, what are total fixed expenses?
\$11,830
\$15,773
\$1,820
\$280
4. Healthy Greetings Corporation produces and sells fruit baskets for special events. The unit selling price is \$60, unit variable costs are \$45, and total fixed costs are \$2,670. What are breakeven sales in dollars?
\$1,526
\$8,010
\$178
\$10,680
5. Vango Industries sells two products, Basic models and Deluxe models. Basic models sell for \$40 per unit with variable costs of \$30 per unit. Deluxe models sell for \$48 per unit with variable costs of \$40 per unit. Total fixed costs for the company are \$76,000. Vango Industries typically sells three Basic models for every Deluxe model. What is the breakeven point in total units?
4,000 units
13,818 units
6,909 units
8,000 units
6. Julia's Catering has a monthly target operating income of \$6,000. Variable expenses are 40% of sales and monthly fixed expenses are \$3,600. What is the monthly margin of safety in dollars if the business achieves its operating income goal?
\$4,000
\$16,000
\$10,000
\$22,000
7. Relevant information is future data that differs among alternatives.
8. One cost that is irrelevant in decision making is a sunk cost.
9. Fixed costs that exist even after a product is dropped are called avoidable fixed costs.
10. Managers' decisions are based on qualitative as well as quantitative factors.

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