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Free CMA Exam Braindumps (page: 101)

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Based on potential sales of 1.000 units per year, a new product has estimated mated costs of $600.000. Vat is the target price to obtain a 20% return on sales?

  1. $720
  2. $750
  3. $1080
  4. $3,000

Answer(s): B

Explanation:

It the company wants a 20% return on sales, the $600,000 of costs represent 80% of the 1selling price. Dividing $600,000 by .8 results in a total selling price of $750,000, or $750 per un.



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Pontotoc Industries manufactures a product that is used as a subcomponent by other manufacturers. It has the following price and cost structure;



What will the contribution margin per unit be if the company sells 10,000 units?

  1. $206
  2. $200
  3. $140
  4. $120

Answer(s): B

Explanation:

Contribution margin is the excess of sales over variable costs Sales will be at $300 per unit. Variable costs are $100. consisting of $40 of direct materials, $30 of direct labor, $24 of variable overhead. and $6 of variable selling costs. Thus, the contribution margin will be $200 per unit ($300 --$100)



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Pontotoc industries manufactures a product that is used as a subcomponent by other manufacturers It has the following price and cost structure


During the next year, sales are expected to be 10.000 units all costs will remain the same except for fixed manufacturing overhead, which will increase 20%. and direct materials. which will increase 10%. The selling price per unit for next year will be $320. Based on this information, Pontotoc's contribution margin for next year will be

  1. $1,240,000
  2. $1,360,000
  3. $2,160,000
  4. $2,200,000

Answer(s): C

Explanation:

Contribution margin is the excess of sales over variable costs. Sales of 10,000 units at $320 each will produce total revenue of $3,200,000. Variable costs will be $104 per Unit, consisting of $44 for direct maternal, $30 for direct labor. $24 for variable overhead, and $6 for selling costs. At $104 per unit, the 10,000 units will have total variable costs of $1,040,000, resulting in a contribution margin of $2,160,000 ($3,200,000 -- $1,040,000).



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Exhibit


The percentage difference between the actual and the budgeted breakeven point in units was that actual was

  1. 500% above budget
  2. 6.67% below budget.
  3. 6.67% above budget
  4. 5.00% below budget.

Answer(s): A

Explanation:

According to the budget, sales of 250 units would produce a contribution margin of $700, or $2.80 per unit. Dividing the $448 of budgeted fixed costs by $2.80 gives a breakeven point of 160 units. The 260 actual units sold produced a contribution margin of $650, or $2.50 per unit. Dividing the $420 of fixed costs by $2.50 gives a breakeven point of 168 units. Consequenty, the actual breakeven point is 5% (8 ÷ 160) above the budget.






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