Question 1
Wasson Whatsit Company is contemplating the production and sale of a new product. Projected sales are $300,000 (or 75,000 units) and desired profit is $36,000. What is the target cost per unit?
◦ $4.00
◦ $4.80
◦ $3.52
◦ $4.48
Question 2
Match the following terms to the appropriate statement by placing the letter to the left of each statement.
| a. | Break-even graph | f. | Markup |
| b. | Break-even point | g. | Margin of safety |
| c. | Cost-plus pricing | h. | Operating leverage |
| d. | Cost-volume-profit analysis | i. | Sales mix |
| e. | Degree of operating leverage | j. | Target costing |
| ______ | 1 | .Sales revenue is exactly equal to total costs, and there is no profit or loss. |
| ______ | 2 | .The difference between current sales and break-even sales. |
| ______ | 3 | .Analysis that helps managers assess the impact of various business decisions |
| ______ | 4 | .The change in operating income relative to a change in sales. |
| ______ | 5 | .The sales of each product relative to total sales |
| ______ | 6 | .Adds an amount to the cost of the product or service to cover the company's |
| | operating costs and contribute to its profit. |
| ______ | 7 | .Computes the desired markup and the maximum cost the company can incur |
| | to deliver a product or service at the market price. |
| ______ | 8 | .Illustrates the relationship between sales and costs, allowing managers to |
view
| | a range of results in a single glance. |
| ______ | 9 | .The difference between the selling price and the cost of the product. |
| ______ | 10. | A way to compute the expected change in operating income due to a change |
| | in sales volume at a given level of sales. |
Bay (left) and chestnut (sometimes called "sorrel") are two of the most common coat colors
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