# Malachite Company & American Chemical Company (ACC)

Malachite Company produces a single product. The selling price is

$30 per unit, and variable costs amount to $21 per unit. Malachite's

fixed costs per month total $45,000.

1. Refer to the above information. What is the contribution margin

ratio of Malachite's product?

a. 70%.

b. 42.9%.

c. 30%.

d. 18%.

2. Refer to the above information. What is the monthly sales volume

in dollars necessary to break even?

a. $150,000.

b. $13,500.

c. $64,286.

d. $45,000.

3. Refer to the above information. How many units must be sold each

month to earn a monthly operating income of $18,000?

a. 420,000.

b. 2,000.

c. 2,100.

d. 7,000.

4. Refer to the above information. What will be the monthly margin of

safety (in dollars) if 6,000 units are sold each month?

a. $54,000.

b. $30,000.

c. $135,000.

d. $126,000.

5. Refer to the above information. What will be Malachite's monthly

operating income if 8,000 units are sold each month?

a. $90,000.

b. $72,000.

c. $195,000.

d. $27,000.

American Chemical Company (ACC) manufactures two products as part of

a joint process: A1 and B1. Joint costs up to the split-off point total

$10,000. The joint cost is allocated to A1 and B1 in proportion to their

relative sales values. At the split-off point, product A1 can be sold for

$30,000, whereas product B1 can be sold for $50,000. Product A1 can be

processed further to make product A2, at an incremental cost of $30,000.

A2 can be sold for $75,000. Product B1 can be processed further to make

product B2, at an incremental cost of $35,000. B2 can be sold for $70,000.

6. Refer to the information above. The net change in operating income

resulting from a decision to manufacture product A2 is:

a. $11,250 (increase).

b. $11,250 (decrease).

c. $15,000 (decrease).

d. $18,750 (increase).

7. Refer to the information above. The net change in operating income

resulting from a decision to manufacture product B2 is:

a. $16,250 (decrease).

b. $10,000 (decrease).

c. $3,750 (decrease).

d. $3,750 (increase).

https://brainmass.com/business/accounting/malachite-company-american-chemical-company-acc-36364

#### Solution Preview

Malachite Company produces a single product. The selling price is

$30 per unit, and variable costs amount to $21 per unit. Malachite's

fixed costs per month total $45,000.

1. Refer to the above information. What is the contribution margin

ratio of Malachite's product?

c. 30%.

=(30-21)/30

2. Refer to the above information. What is the monthly sales volume

in dollars necessary to break even?

a. $150,000.

=$45000/30%

3. Refer to the above information. How many units must be sold each

month to earn a monthly operating income of $18,000?

d. 7,000.

=(45000+18000)/9

4. Refer to the above information. What will be the monthly margin of

safety (in dollars) if 6,000 units ...

#### Solution Summary

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