120.Swisher, Incorporated reports the following annual cost data for its single product:
Normal production level30,000 units
Direct materials$6.40 per unit
Direct labor$3.93 per unit
Variable overhead$5.80 per unit
Fixed overhead$150,000 in total
This product is normally sold for $48 per unit. If Swisher increases its production to 50,000 units, while sales remain at the current 30,000 unit level, by how much would the company's gross margin increase or decrease under absorption costing?
A. $60,000 decrease.
B. $90,000 decrease.
C. There is no change in gross margin.
D. $90,000 increase.
E. $60,000 increase.
121.Swisher, Incorporated reports the following annual cost data for its single product:
Normal production level30,000 units
Direct materials$6.40 per unit
Direct labor$3.93 per unit
Variable overhead$5.80 per unit
Fixed overhead$150,000 in total
This product is normally sold for $48 per unit. If Swisher increases its production to 50,000 units, while sales remain at the current 30,000 unit level, by how much would the company's gross margin increase or decrease under variable costing?
A. $60,000 decrease.
B. $90,000 decrease.
C. There is no change in gross margin.
D. $90,000 increase.
E. $60,000 increase.
122.Swola Company reports the following annual cost data for its single product.
Normal production level75,000 units
Direct materials$1.25 per unit
Direct labor$2.50 per unit
Variable overhead$3.75 per unit
Fixed overhead$300,000 in total
This product is normally sold for $25 per unit. If Swola increases its production to 200,000 units, while sales remain at the current 75,000 unit level, by how much would the company's gross marginA. $187,500 increase.
B. $112,500 increase.
C. There will be no change in gross margin.
D. $112,500 decrease.
E. $187,500 decrease.
123.Swola Company reports the following annual cost data for its single product.
Normal production level75,000 units
Direct materials$1.25 per unit
Direct labor$2.50 per unit
Variable overhead$3.75 per unit
Fixed overhead$300,000 in total
This product is normally sold for $25 per unit. If Swola increases its production to 200,000 units, while sales remain at the current 75,000 unit level, by how much would the company's gross margin increase or decrease under variable costing?
A. $187,500 increase.
B. $112,500 increase.
C. There will be no change in gross margin.
D. $112,500 decrease.
E. $187,500 decrease.
124.What is the Red and White's contribution margin for this month if 980 units were sold?
A. $38,000
B. $18,620
C. $24,500
D. $50,000
E. $21,560
125.What is Red and White's net income under absorption costing if 980 units are sold and operating expenses are $12,000?
A. ($1,380)
B. ($2,000)
C. $2,700
D. $6,620
E. $10,620
126.What is Red and White's net income under variable costing if 980 units are sold and operating expenses are $12,000?
A. ($1,380)
B. ($2,000)
C. $2,700
D. $6,620
E. $10,620
127.Decko Industries reported the following monthly data:
Units produced52,000 units
Sales price$33 per unit
Direct materials$1.50 per unit
Direct labor$2.50 per unit
Variable overhead$3.50 per unit
Fixed overhead$234,000 in total
What is the company's contribution margin for this month if 50,000 units were sold?
A. $1,326,000
B. $1,716,000
C. $1,275,000
D. $1,650,000
E. $1,450,000
128.Assume that the following information was available for Guy Brown Company. How would Maria Teresa Vazquez and the other owners evaluate this information based on contribution margin ratio?
Recycled Toner CartridgesOffice SuppliesFurniture
Sales$500,000$700,000$900,000
Variable expenses
Variable production$50,000$140,000$270,000
Variable advertising$5,000$14,000$36,000
Variable shipping$10,000$28,000$72,000
A. Recycled toner cartridges has the lowest contribution margin ratio.
B. Furniture has the highest contribution margin ratio.
C. Office supplies has the highest contribution margin ratio.
D. Recycled toner cartridges has the highest contribution margin ratio.
E. Based on contribution margin ratio, the owners should consider expanding the furniture line and scaling back on office supplies and recycled toner cartridges.
129.Assume that the following information was available for Daylight Enterprises, Inc. Which of the following statements is(are) true with regard to contribution margin ratio?
Ceiling LightsTabletop LightsStand-Alone Lights
Sales$350,000$175,000$440,000
Variable expenses
Variable production$70,000$19,250$90,000
Variable advertising$10,500$3,500$22,000
Variable shipping $12,000 $14,000 $28,000
A. Tabletop lights has the lowest contribution margin ratio.
B. Ceiling lights has the highest contribution margin ratio.
C. Ceiling lights has the lowest contribution margin ratio.
D. Stand-alone lights has the highest contribution margin ratio.
E. Tabletop lights has the highest contribution margin ratio.