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Practice Exam
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1
A company has provided the following data:

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If the dollar contribution margin per unit is increased by 10%, total fixed cost is decreased by 20%, and all other factors remain the same, net income will:
A)decrease by $30,000.
B)increase by $30,000.
C)increase by $60,000.
D)increase by $210,000.
2
Cappa Company sells a single product. The product has a selling price of $50 per unit and variable expenses of 80% of sales. If the company's fixed expenses total $75,000 per year, then it will have a break-even of:
A)$1,875.
B)$7,500.
C)$93,750.
D)$375,000.
3
The following is Delta Corporation's contribution format income statement for last month:

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The company has no beginning or ending inventories. A total of 40,000 units were produced and sold last month. How many units would the company have to sell to attain target profits of $300,000?
A)44,000
B)50,000
C)53,334
D)75,000
4
The following is Delta Corporation's contribution format income statement for last month:

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The company has no beginning or ending inventories. A total of 40,000 units were produced and sold last month. What is the company's degree of operating leverage?
A)0.12
B)0.4
C)2.5
D)3.3





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