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Free CMA Exam Braindumps (page: 103)

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Oradell Company sells its single product at a price of $60 per unit and incurs the following variable costs per unit of product


Oradell's annual fixed costs are $880.000, and Oradell is subject to a 30% income tax rate. The number of units of product that Oradell Company must sell annual' to break even is?

  1. 22,000 units
  2. 44,000 units.
  3. 35.200 units.
    0. 30,800 units.

Answer(s): B

Explanation:

The breakeven point in units equals fixed costs divided by the contribution margin per unit at a selling price of $60 per unit and with variable costs of $40 per unit, the unit contribution margin is $20. Thus, the breakeven point is 44,000 units ($880,000 $20).



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Oradell Company sells its single product at a price of $60 per unit and incurs me following variable costs per unit of product


Oradell's annual fixed costs are $880,000. and Oradell is subject to a 30% income tax rate The annual sales revenue required by Oradell Company in order to achieve after- tax net income of $224,000 for the year is

  1. $3,600,000
  2. $3,312,000
  3. $1,656,000
  4. $3,110,400

Answer(s): A

Explanation:

The $224.000 of after-tax net income is equal to 70% (the complement of the tax rate) of pie-tax income. Thus, pre-tax net income must equal $320,000 ($224.000 ÷ .7), and taxes must be $96,000. If sales equal $60 times X units and variable costs are $40 times X units, the following is the equation to solve for units sold (X):


At a selling price of $60 each, the total revenue is $3,600,000 (60,000 units x $60).



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Oradell Company sells its single product at a price of $60 per unit and incurs the following van able costs per unit of product:


Oradell's annual fixed costs are $880.000, and Oradell is subject to a 30% income tax rate. If prime costs increased by 20% and all other values remained the same. Oradell Company's contribution margin (to the nearest whole percent) is?

  1. 30
  2. 76
  3. 20
  4. 24

Answer(s): D

Explanation:

Prime costs are direct materials and direct labor because these two elements totaled $28 ($16 + $12) before the increase, the new total is $33.60 ($28 x 1.2). In other words, prime costs increases by $5.60, and total variable costs increase to $4560. Subtracting $45.60 from the $60 selling price leaves a contribution margin of $14.40.The contribution margin percentage thus becomes 24% ($14.40. $60).



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The budget data for the Bid well Company appear below.


Budgeted operating income $ 90,000. The Bid well Company's breakeven sales in units are?

  1. 30,000 units.
  2. 91,000 units
  3. B0,000units
  4. 70,000 units.

Answer(s): D

Explanation:

The breakeven point in units is found by dividing the fixed costs ($210,000) by contribution margin per unit ($3). Variable costs are $700,000 at 100,000 units, or $7 per Unit. Selling price is $10 per unit. Dividing $210,000 by $3 per unit results in a breakeven point of 70,000 units






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