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# Profit, Income, Sales Revenue, Ending Inventory, and Break-Even Point

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Question 7: On Company and Off Company report the following results:

Both companies increase sales next year by \$500,000. Which company will have the higher profit next year?

A Neither; both companies will have the same profit.
B On will have higher profit (\$100,000 greater than Off).
C Off will have higher profit (\$100,000 greater than On).
D Off will have higher profit (\$200,000 greater than On).

Question 8:

Assume that 500,000 CDs are produced and 450,000 are sold in 2008. What is income under Full Costing?

A \$50,000
B \$500,000
C \$150,000
D \$1,850,000

Question 9: For O'Brien Company, selling price is \$30 per unit and variable costs are \$18 per unit. Fixed costs are \$90,000. At the break-even point, O'Brien would report sales revenue of

A \$ 7,500.
B \$144,000.
C \$150,000.
D \$225,000.

Question 10:

Assume that 500,000 CDs are produced and 450,000 are sold in 2008. What is ending inventory under variable costing?

A \$150,000
B \$200,000
C \$250,000
D \$300,000

Question 11: Last year, Bond Products had profits of \$35,400. Sales of 70,800 units resulted in revenues of \$354,000. Variable costs were \$3.50 per unit. What is Bond's break-even point?

A 70,800 units
B 236,000 units
C 47,200 units
D 118,000 units

Question 12: Randy Company produces a single product that is sold for \$85 per unit. If variable costs per unit are \$26 and fixed costs total \$47,500, how many units must Randy sell in order to earn a profit of \$100,000?

A 1,735
B 618
C 890
D 2,500

#### Solution Preview

Question 7: On Company and Off Company report the following results:

Both companies increase sales next year by \$500,000. Which company will have the higher profit next year?

A Neither; both companies will have the same profit.
B On will have higher profit (\$100,000 greater than Off).
C Off will have higher profit (\$100,000 greater than On).
D Off will have higher profit (\$200,000 greater than On).

The company having lower Variable costs

B) On will have higher profit (\$100,000 greater than Off).

Difference in Profit = Difference in CM ratio * Increase in ...

#### Solution Summary

This solution provides step-by-step calculations and answers for profit, income, sales revenue, ending inventory and break-even point.

\$2.19

## Variable Cost, Break-Even, Net Income, Inventory Calculations

1. During 2005, the Latrex Corporation had cash and credit sales of \$47,000 and \$45,500 respectively. The company also collected accounts receivable of \$26,700 and incurred expenses of \$68,500, 80 percent of which were paid during the year. In addition, Latrex paid \$24,000 for a 12-month building rental, beginning on July 1, 2005. What was Latrex's accrual-basis net income (loss) for 2005?

2. If a firm's beginning inventory is \$70,000, goods purchased during the period cost \$260,000, and the cost of goods sold is \$300,000, what is the ending inventory?

3. During the year, Samson Company earned revenues of \$228,000 and incurred \$196,000 for various operating expenses. There are 2,500 shares of stock outstanding. What is Earnings per share?

4. Goliath Company had the following account balances: Sales Revenue, \$150,000; Sales Returns and Allowances, \$3,000; Sales Discounts, \$3,600; and Bad Debts, \$600. Given these balances, what is the amount of net sales?

5. If variable costs are \$20 per unit, revenues are \$40 per unit, and fixed costs are \$10,000, what is the break-even point in units?

6. During June, Bezold Corporation produced 12,000 units and sold them for \$20 per unit. Total fixed costs for the period were \$154,000, and the operating profit was \$26,000.What was the variable cost per unit in June?

7. If demand is 10,000 units, cost of carry is \$2 per unit, and cost of placing an order is \$100, what is the EOQ?

8. What is the economic order quantity for an automobile dealer selling 2,000 cars per year, at a cost of \$750 per order, and a carrying cost of \$300 per automobile?

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