Acct. 505

282 Words2 Pages
Use the following to answer questions 4-5: The following information has been provided by the Evans Retail Stores, Inc., for the first quarter of the year: Sales $350,000 Variable selling expense 35,000 Fixed selling expenses 25,000 Cost of goods sold (variable) 160,000 Fixed administrative expenses 55,000 Variable administrative expenses 15,000 4. The gross margin of Evans Retail Stores, Inc. for the first quarter is: A) $210,000. B) $140,000. C) $220,000. D) $190,000. 5. The contribution margin of Evans Retail Stores, Inc. for the first quarter is: A) $300,000. B) $140,000. C) $210,000. D) $190,000. 6. The total contribution margin decreases if sales volume remains the same and: A) fixed expenses increase. B) fixed expenses decrease. C) variable expense per unit increases. D) variable expense per unit decreases. 7. A company has provided the following data: Sales 3,000 units Sales price $70 per unit Variable cost $50 per unit Fixed cost $25,000 If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and all other factors remain the same, net income will: A) decrease by $31,875. B) decrease by $15,000. C) increase by $20,625. D) decrease by $3,125. Sales (3,000 * 70)……………………. $210,000 Variable Expenses (3,000 * 50)………$150,000 Contribution Margin…………………..$60,000 Fixed Cost……………… …………....$25,000 Net Operating Income………………. $35,000 25% Decrease in Sales and 15% Increase in Variable Cost Sales (2,250 * 70)……………………. $157,500 Variable Expenses (32,250 * 57.5)…...$129,375 Contribution Margin…………………..$28,125 Fixed Cost……………… …………....$25,000 Net Operating Income………………. $3,125 $35,000 - $3,125 =

More about Acct. 505

Open Document