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

1. 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 $8.00 per unit. There was no beginning inventory of product at the start of the year.
   
   What is the contribution margin for the year?

d

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

a

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

a

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

d

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

d

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

c

7. Relevant information is future data that differs among alternatives.

t

8. One cost that is irrelevant in decision making is a sunk cost.

t

9. Fixed costs that exist even after a product is dropped are called avoidable fixed costs.

f

10. Managers' decisions are based on qualitative as well as quantitative factors.

t