Business Mathematics in Canada 9Th Edition By Jerome - Test Bank

Business Mathematics in Canada 9Th Edition By Jerome – Test Bank

Instant Download – Complete Test Bank With Answers

Sample Questions Are Posted Below

Chapter 05

Applications of Linear Equations

Multiple Choice Questions

Kuldip’s factory manufactures toys that sell for $29.95 each. The variable cost per toy is $11, and the total fixed costs for the month are $45,000. Calculate the unit contribution margin.
A.$18.95
B. $17.95
C. $19.00
D. $17.50
E. $11.00

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Kuldip’s factory manufactures toys that sell for $29.95 each. The variable cost per toy is $11, and the total fixed costs for the month are $45,000. What is the break-even point in units per month?
A.2100 units
B. 2375 units
C. 2300 units
D. 2450 units
E. 2575 units

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Kuldip’s factory manufactures toys that sell for $29.95 each. The variable cost per toy is $11, and the total fixed costs for the month are $45,000. To the nearest dollar, what is the break-even point in revenue per month?
A.$70,000
B. $75,480
C. $71,121
D. $73,215
E. $71,500

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Kuldip’s factory manufactures toys that sell for $29.95 each. The variable cost per toy is $11, and the total fixed costs for the month are $45,000. What would unit sales have to be to attain a net income over $8000?
A.2700 units
B. 2650 units
C. 2756 units
D. 2797 units
E. 2765 units

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Kuldip’s factory manufactures toys that sell for $29.95 each. The variable cost per toy is $11, and the total fixed costs for the month are $45,000. What would unit sales have to be to attain a net income over $12,000?
A.3050 units
B. 2900 units
C. 2950 units
D. 2996 units
E. 3008 units

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

A manufacturing company is considering producing a new product. The variable cost of the new product is $60 per unit, and the total fixed costs are $75,000 for a month. The company could produce 1500 units per month, and sell the product for $125 each. Calculate the unit contribution margin.
A.$65
B. $50
C. $60
D. $125
E. $80

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

A manufacturing company is considering producing a new product. The variable cost of the new product is $60 per unit, and the total fixed costs are $75,000 for a month. The company could produce 1500 units per month, and sell the product for $125 each. To the nearest 0.1%, what is the break-even point as a percent of capacity?
A.81.2%
B. 76.9%
C. 75.0%
D. 72.4%
E. 63.0%

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

A manufacturing company is considering producing a new product. The variable cost of the new product is $60 per unit, and the total fixed costs are $75,000 for a month. The company could produce 1500 units per month, and sell the product for $125 each. What would be the net income at 90% capacity?
A.$10,000
B. $15,000
C. $12,750
D. $12,225
E. $16,000

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

A manufacturing company is considering producing a new product. The variable cost of the new product is $60 per unit, and the total fixed costs are $75,000 for a month. The company could produce 1500 units per month, and sell the product for $125 each. What would be the net income at 75% capacity?
A.A loss of $3500
B. A loss of $250
C. A loss of $1800
D. A loss of $1875
E. A loss of $2025

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

A manufacturing company is considering producing a new product. The variable cost of the new product is $60 per unit, and the total fixed costs are $75,000 for a month. The company could produce 1500 units per month, and sell the product for $125 each. What unit sales would result in a net income of $16,000?
A.1200 units
B. 1250 units
C. 1300 units
D. 1375 units
E. 1400 units

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

M Studios retails their own brand of camera that they manufacture in their plant for $500. The plant capacity is 1000 units per month and variable costs are $225 per camera. Total fixed costs for the year are $2.16 million. Calculate the contribution margin per camera.
A.$275
B. $250
C. $225
D. $300
E. $325

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

M Studios retails their own brand of camera that they manufacture in their plant for $500. The plant capacity is 1000 units per month and variable costs are $225 per camera. Total fixed costs for the year are $2.16 million. To the nearest 0.1%, calculate the break-even point as a percentage of capacity.
A.34.5%
B. 65.5%
C. 50.0%
D. 60.0%
E. 62.5%

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

M Studios retails their own brand of camera that they manufacture in their plant for $500. The plant capacity is 1000 units per month and variable costs are $225 per camera. Total fixed costs for the year are $2.16 million. How many cameras must be sold per month to have a net income of $40,000?
A.850
B. 900
C. 800
D. 750
E. 825

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

M Studios retails their own brand of camera that they manufacture in their plant for $500. The plant capacity is 1000 units per month and variable costs are $225 per camera. Total fixed costs for the year are $2.16 million. If fixed costs increase by 10%, what will be the net income at full capacity?
A.$85,000
B. $75,000
C. $80,000
D. $77,000
E. $75,500

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

M Studios retails their own brand of camera that they manufacture in their plant for $500. The plant capacity is 1000 units per month and variable costs are $225 per camera. Total fixed costs for the year are $2.16 million. If fixed costs increase by 10%, how many cameras per month would have to be sold to maintain a net income of $49,500?
A.950
B. 875
C. 850
D. 925
E. 900

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

A manufacturer produces a product which it sells for $60 per unit. The variable cost per unit is $20 and the fixed cost per month is $10,000.

How many units must be sold per month to break even?
A.167
B. 500
C. 400
D. 250
E. 300

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Determine the monthly profit (loss) if it sells 325 units per month.
A.$1500
B. ($1500)
C. $3000
D. $0
E. ($3000)

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

How many units must be sold per month to earn a profit of $7000?
A.342
B. 425
C. 675
D. 575
E. 525

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the contribution margin per unit.
A.$24
B. $9
C. $8
D. $6
E. $5

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the break-even point in units per month.
A.320
B. 533
C. 800
D. 200
E. 400

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the revenue per month required to break-even.
A.$4,800
B. $7,200
C. $12,000
D. $14,400
E. $16,000

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the contribution margin rate.
A.30%
B. 40%
C. 50%
D. 60%
E. 70%

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the number of units that must be sold to return a net income of $2,100 per month.
A.1,400
B. 1,150
C. 767
D. 533
E. 350

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the net income on sales of 850 units per month.
A.$12,750
B. $7,950
C. $5,100
D. $1,150
E. $300

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the net income on revenue of $10,000 per month.
A.$4,000 profit
B. $5,200 profit
C. $1,200 profit
D. $800 loss
E. $1,200 loss

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate the contribution rate.
A.20%
B. 40%
C. 50%
D. 70%
E. 80%

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate the budgeted net income.
A.$6,400,000 profit
B. $2,400,000 profit
C. $1,200.000 profit
D. $800,000 profit
E. $4,000,000 loss

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate break-even revenue per year.
A.$7,200,000
B. $7,000,000
C. $5,600,000
D. $3,200,000
E. $8,000,000

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate the net income if total revenue for the year exceeds the budget by $1,000,000.
A.$2,400,000
B. $2,200,000
C. $2,000,000
D. $1,800,000
E. $1,600,000

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate the net income if total revenue for the year falls below the budget by $1,000,000.
A.$400,000 profit
B. $0
C. $200,000 loss
D. $220,000 loss
E. $800,000 loss

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate the total sales revenue for the year that would be needed for a profit of $2,750,000.
A.$10,437,500
B. $9,387,500
C. $8,250,000
D. $9,750,000
E. $10,750,000

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Ace Corporation’s variable costs are equal to 43% of sales revenue. Their fixed costs per month are $600,000. Calculate the contribution rate.
A.22%
B. 34%
C. 43%
D. 53%
E. 57%

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Ace Corporation’s variable costs are equal to 43% of sales revenue. Their fixed costs per month are $600,000. To the nearest dollar, calculate total revenue at the break-even point.
A.$1,395,349
B. $858,000
C. $942,000
D. $1,052,632
E. $1,355,400

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Ace Corporation’s variable costs are equal to 43% of sales revenue. Their fixed costs per month are $600,000. Calculate the net income on sales of $2,000,000 per month.
A.$540,000
B. $260,000
C. $798,000
D. $1,140,000
E. $280,000

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Weiner’s Hot Dog Stand sells hot dogs for $2.50 each. The variable cost per hot dog is $1.75 and fixed costs per month are $1,800. How many hot dogs must Weiner sell in a month to break even?
A.1,800
B. 2,000
C. 2,400
D. 2,750
E. 720

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Weiner’s Hot Dog Stand sells hot dogs for $2.50 each. The variable cost per hot dog is $1.75 and fixed costs per month are $1,800. How much profit should Weiner realize on the sale of 3000 hot dogs?
A.$7,500
B. $1,500
C. $1,016
D. $850
E. $450

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Weiner’s Hot Dog Stand sells hot dogs for $2.50 each. The variable cost per hot dog is $1.75 and fixed costs per month are $1,800. If Weiner’s fixed cost per month was to increase to $2,880, to what level would he have to reduce his variable cost per hot dog in order to maintain the current break-even point in units?
A.$1.20
B. $1.30
C. $1.40
D. $1.50
E. $1.60

Difficulty: Hard
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

At this time, Weiner’s Hot Dog Stand sells hot dogs for $2.50 each. The variable cost per hot dog is $1.75 and fixed costs per month are $1,800. Weiner is considering some changes. If Weiner increases his selling price to $2.75 per hot dog, and reduces his variable cost per hot dog to $1.15, what level of fixed cost per month would reduce his break-even point in units by 50% from what it is now?
A.$900
B. $1,050
C. $1,450
D. $1,920
E. $2,400

Difficulty: Hard
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

What is the range of for in the range to for the equation
A. 0 to 24
B. 6 to 30
C. 24 to 30
D. -6 to -3.3
E. 0 to 30

Difficulty: Medium
Learning Objective: 05-01 Graph a linear equation in two variables.
Topic: 05-02 Graphing a Linear Equation in Two Unknowns

A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9000 per week. What is the break-even point expressed in dollars of revenue?
A.$12,000
B. $10,000
C. $15,000
D. $12,500
E. $14,750

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9000 per week. What is the break-even point expressed as a percent of capacity?
A.75%
B. 80%
C. 70%
D. 85%
E. 65%

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9000 per week. How many dolls must be sold each week to produce a net income of $1125?
A.400 dolls
B. 425 dolls
C. 450 dolls
D. 475 dolls
E. 375 dolls

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9000 per week. How many dolls must be sold each week to produce a net income of $2250?
A.375 dolls
B. 400 dolls
C. 425 dolls
D. 500 dolls
E. 525 dolls

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9000 per week. If fixed costs are increased by 10% per week, by how much will this lower the net income?
A.$750
B. $1000
C. $1250
D. $800
E. $900

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2000 meals per month. At full capacity, what is Cliff’s net income?
A.$12,000
B. $10,000
C. $15,000
D. $7,500
E. $14,500

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2000 meals per month. At 75% capacity, what is Cliff’s net income?
A.$4800
B. $6000
C. $7200
D. $7800
E. $8400

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2000 meals per month. What is the break-even point expressed as a percent of capacity?
A.75%
B. 80%
C. 50%
D. 60%
E. 70%

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2000 meals per month. What number of meals must be sold to break-even?
A.1200 meals
B. 1400 meals
C. 1500 meals
D. 1000 meals
E. 1250 meals

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2000 meals per month. What number of meals must be sold to generate a net income of $7800?
A.1550 meals
B. 1600 meals
C. 1700 meals
D. 1750 meals
E. 1650 meals

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2000 lamps per month. What is the break-even volume per month?
A.750 lamps
B. 800 lamps
C. 900 lamps
D. 1000 lamps
E. 600 lamps

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2000 lamps per month. What is the monthly net income at a volume of 1800 lamps per month?
A.$76,000
B. $84,000
C. $80,000
D. $88,000
E. $72,000

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2000 lamps per month. What is the monthly net income if Cando operates at 60% capacity?
A.$44,000
B. $84,000
C. $36,000
D. $52,000
E. $28,000

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2000 lamps per month. At what percent utilization would the monthly net income be $44,000?
A.60%
B. 55%
C. 50%
D. 65%
E. 70%

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2000 lamps per month. At what percent utilization would the monthly net income be $52,000?
A.55%
B. 65%
C. 75%
D. 80%
E. 70%

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Solve:

x = 30; y = 10
B. x = -10; y = 30
C. x = -30; y = -10
D. x = -60; y = 20
E. x = -60; y = -20

Difficulty: Easy
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve:
A.x = 6; y = 2
B. x = -2; y = 1
C. x = -2; y = -1
D. x = 2; y = 1
E. x = 2; y = -1

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

The difference between two numbers is 42. If one-half of the larger number is three more than twice the smaller number, what are the two numbers?
A.-12 and -54
B. 12 and 54
C. 16 and 58
D. 11 and 31
E. -12.5 and 29.5

Difficulty: Hard
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve:
A.x = 11; y = 2
B. x = 2; y = 11
C. x = 11; y = 6.4
D. x = 6.45; y = 2.9
E. x = 6.4; y = 11

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Stavros sells gold and green fabric in his drapery store. Each quarter he buys the same quantities from his supplier. On his last order he paid $18 per metre for the gold fabric and $20 per metre for the green fabric, totalling $2290. The supplier has advised Stavros that the price of the gold fabric will increase by 20% and the price of the green fabric will increase by 25%. His new order total will become $2813. How many metres of gold fabric does Stavros order each quarter?
A.65m
B. 56m
C. 85m
D. 55m
E. 25m

Difficulty: Hard
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Short Answer Questions

Graph the following equation:

(-3, -6), (0, 0), (6, 12)

Difficulty: Easy
Learning Objective: 05-01 Graph a linear equation in two variables.
Topic: 05-02 Graphing a Linear Equation in Two Unknowns

Graph the following equation:

(-3, -2), (0, 4), (6, 16)

Difficulty: Easy
Learning Objective: 05-01 Graph a linear equation in two variables.
Topic: 05-02 Graphing a Linear Equation in Two Unknowns

Graph the following equation:

(-3, 10), (0, 4), (6, -8)

Difficulty: Easy
Learning Objective: 05-01 Graph a linear equation in two variables.
Topic: 05-02 Graphing a Linear Equation in Two Unknowns

Graph the following equation:

(-3, 4), (0, 4), (6, 4)

Difficulty: Easy
Learning Objective: 05-01 Graph a linear equation in two variables.
Topic: 05-02 Graphing a Linear Equation in Two Unknowns

Graph the following equation:

(-8, -3), (0, 3), (12, 12)

Difficulty: Easy
Learning Objective: 05-01 Graph a linear equation in two variables.
Topic: 05-02 Graphing a Linear Equation in Two Unknowns

Graph the following equation:

(0, 6000), (25, 7500), (50, 9000)

Difficulty: Easy
Learning Objective: 05-01 Graph a linear equation in two variables.
Topic: 05-02 Graphing a Linear Equation in Two Unknowns

Graph the following equation:

(0, 5000), (3000, 18,500), (6000, 32,000)

Difficulty: Easy
Learning Objective: 05-01 Graph a linear equation in two variables.
Topic: 05-02 Graphing a Linear Equation in Two Unknowns

Determine the slope and y-intercept of each of the following equations.
a)
b)
c)
d)
a) slope =   ; y-intercept =
b) slope =   ; y-intercept = 4
c) slope = 4; y-intercept =
d) slope =   ; y-intercept = 0

Difficulty: Easy
Learning Objective: 05-02 Graph a linear equation in two variables.
Topic: 05-03 The Slope-Intercept Form of a Linear Equation

Determine the slope and b-intercept of each of the following equations.
a)
b)
c)
d)
a) slope =   ; b-intercept =
b) slope =   ; b-intercept = -3
c) slope =   ; b-intercept = 480
d) slope =   ; b-intercept = 0

Difficulty: Easy
Learning Objective: 05-02 Graph a linear equation in two variables.
Topic: 05-03 The Slope-Intercept Form of a Linear Equation

A plumber charges a flat $50 for a home service call plus $10 per 15 minutes of labour. Write an equation for calculating the total charges, C, in terms of the hours of labour, H. If you were to plot a graph of C vs. H, what would be the slope and C-intercept of the line?

C = 40H + 50
slope = 40
C-intercept = 50

Difficulty: Easy
Learning Objective: 05-02 Graph a linear equation in two variables.
Topic: 05-03 The Slope-Intercept Form of a Linear Equation

In his sales job, Ehud earns a base salary of $1500 per month plus a commission of 5% on sales revenue. Write an equation for calculating his gross earnings, E, for a month in terms of his sales revenue, R. If you were to plot a graph of E vs. R, what would be the slope and E-intercept of the line?

E = 0.05R + 1500
slope = 0.05
E-intercept = 1500

Difficulty: Easy
Learning Objective: 05-02 Graph a linear equation in two variables.
Topic: 05-03 The Slope-Intercept Form of a Linear Equation

The formula for converting from Celsius temperatures, , to Fahrenheit temperatures, , is
a) If you were to plot a graph of F vs. C, what would be the slope and F-intercept of the line?
b) The slope represents the change in F per unit change in C. Use the value of the slope to determine the increase in Fahrenheit temperature corresponding to a 10 Celsius-degree rise.
c) Rearrange the given formula to obtain a formula for converting from Fahrenheit temperatures to Celsius temperatures. What would be the slope and C-intercept if C vs. F were plotted on a graph?
a) slope = ; F-intercept = 32
b) 18F
c)
slope =
C-intercept =

Difficulty: Medium
Learning Objective: 05-02 Graph a linear equation in two variables.
Topic: 05-03 The Slope-Intercept Form of a Linear Equation

Randolph runs a home appliance repair business and charges a service call fee of $85 plus $15 per half hour for his labour. Write an equation for calculating the total charges, C, in terms of hours of labour, H. Plot the graph of C vs. H and define the slope and C-intercept of the line.

C = 30H + 85
slope = 30
C-intercept = 85

Difficulty: Medium
Learning Objective: 05-01 Graph a linear equation in two variables.
Learning Objective: 05-02 Graph a linear equation in two variables.
Topic: 05-03 The Slope-Intercept Form of a Linear Equation

Use the graphical method to solve the following pair of equations.

The solution is (x, y) = (5, -3)

Difficulty: Easy
Learning Objective: 05-03 Solve two equations in two unknowns by a graphical method.
Topic: 05-04 Graphical Method for Solving Two Equations in Two Unknowns

Use the graphical method to solve the following pair of equations.

The solution is (x, y) = (-3, -2)

Difficulty: Easy
Learning Objective: 05-03 Solve two equations in two unknowns by a graphical method.
Topic: 05-04 Graphical Method for Solving Two Equations in Two Unknowns

Use the graphical method to solve the following pair of equations.

The solution is (x, y) = (0.5, 1)

Difficulty: Easy
Learning Objective: 05-03 Solve two equations in two unknowns by a graphical method.
Topic: 05-04 Graphical Method for Solving Two Equations in Two Unknowns

Use the graphical method to solve the following pair of equations.

The solution is (x, y) = (-3, -1)

Difficulty: Easy
Learning Objective: 05-03 Solve two equations in two unknowns by a graphical method.
Topic: 05-04 Graphical Method for Solving Two Equations in Two Unknowns

Use the graphical method to solve the following pair of equations.

The solution is (x, y) = (4, 0)

Difficulty: Easy
Learning Objective: 05-03 Solve two equations in two unknowns by a graphical method.
Topic: 05-04 Graphical Method for Solving Two Equations in Two Unknowns

Use the graphical method to solve the following pair of equations.

The solution is (x, y) = (-2, 5)

Difficulty: Easy
Learning Objective: 05-03 Solve two equations in two unknowns by a graphical method.
Topic: 05-04 Graphical Method for Solving Two Equations in Two Unknowns

Use the graphical method to solve the following pair of equations.

The solution is (a, b) = (3, 5)

Difficulty: Easy
Learning Objective: 05-03 Solve two equations in two unknowns by a graphical method.
Topic: 05-04 Graphical Method for Solving Two Equations in Two Unknowns

Use the graphical method to solve the following pair of equations.

The solution is (p, q) = (2, -3)

Difficulty: Easy
Learning Objective: 05-03 Solve two equations in two unknowns by a graphical method.
Topic: 05-04 Graphical Method for Solving Two Equations in Two Unknowns

Below is a list of costs. Classify each of them as variable, fixed, or mixed (a combination of variable and fixed components.)
a) Cost of raw materials used in producing a firm’s products.
b) Property taxes.
c) Wages of sales staff paid on a salary plus commission basis.
d) Wages of hourly paid production-line workers.
e) Site licence for software.
f) Leasing costs for a delivery truck ($600 per month plus $0.40 per km.)
g) Packaging materials for products.
h) Insurance.
a) Variable cost
b) Fixed cost
c) Mixed cost
d) Variable cost
e) Fixed cost
f) Mixed cost
g) Variable cost
h) Fixed cost

Difficulty: Easy
Learning Objective: 05-05 Distinguish between fixed costs and variable costs.
Topic: 05-07 Fixed Costs and Variable Costs

Triax Corp. produced 50,000 gizmos at a total cost of $1,600,000 (including $400,000 of fixed costs) in the fiscal year just completed. If fixed costs and unit variable costs do not change next year, how much will it cost to produce 60,000 gizmos?

$1,840,000

Difficulty: Easy
Learning Objective: 05-05 Distinguish between fixed costs and variable costs.
Topic: 05-07 Fixed Costs and Variable Costs

Dynacan Ltd. manufactured 10,000 units of product last year and identified the following manufacturing and overhead costs. (V denotes “variable cost” and F denotes “fixed cost.”)

Materials used in manufacturing (V)	$50,400,000
Wages paid to production workers (V)	93,000,000
Wages paid to management and salaried employees (F)	22,200,000
Other materials and supplies (V)	16,000,000
Power to run plant equipment (V)	14,200,000
Other utilities (F)	19,200,000
Depreciation (straight line) on plant and equipment (F)	9,600,000
Property taxes (F)	5,000,000

If unit variable costs and fixed costs remain unchanged, calculate the total cost to produce 9700 units this year.

$224,392,000

Difficulty: Easy
Learning Objective: 05-05 Distinguish between fixed costs and variable costs.
Topic: 05-07 Fixed Costs and Variable Costs

Use the graphical approach to CVP analysis to solve the following problem.
CD Solutions Ltd. manufactures and replicates CDs for software and music recording companies. CD Solutions sells each disc for $2.50. The variable costs per disc are $1.00.

a) To just break even, how many CDs must be sold per month if the fixed costs are $60,000 per month?
b) What must unit sales be in order to have a profit of $7500 per month?
a) 40,000 CDs
b) 45,000 CDs

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-09 Graphical Approach to CVP Analysis

Use the graphical approach to CVP analysis to solve the following problem.
Clone Computers assembles and packages personal computer systems from brand-name components. Its Home Office PC System is assembled from components costing $1400 per system and sells for $2000. Labour costs for assembly are $100 per system. This product line’s share of overhead costs is $10,000 per month.

a) How many Home Office Systems must be sold each month to break even on this product line?
b) What will be the profit or loss for a month in which 15 Home Office Systems are sold?
a) 20 systems per month
b) $2500 loss

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-09 Graphical Approach to CVP Analysis

Use the graphical approach to CVP analysis to solve the following problem.
Huntsville Office Supplies (HOS) is evaluating the profitability of leasing a photocopier for its customers to use on a self-serve basis at 10¢ per copy. The copier may be leased for $300 per month plus 1.5¢ per copy on a full-service contract. HOS can purchase paper at $5 per 500-sheet ream. Toner costs $100 per bottle, which in normal use will last for 5000 pages. HOS is allowing for additional costs (including electricity) of 0.5¢ per copy.

a) How many copies per month must be sold in order to break even?
b) What will be the increase in monthly profit for each 1000 copies sold above the break-even point?
a) 6000 copies
b) $50

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-09 Graphical Approach to CVP Analysis

Use the graphical approach to CVP analysis to solve the following problem.
Jordan is developing a business plan for a residential building inspection service he may start. Rent and utilities for an office would cost $1000 per month. The fixed costs for a vehicle would be $450 per month. He estimates that the variable office costs (word processing and supplies) will be $50 per inspection and variable vehicle costs will be $25 per inspection. Jordan would also spend $200 per month to lease a computer, and $350 per month for advertising.

a) If he charges $275 per inspection, how many inspections per month are required before he can “pay himself?”
b) How many inspections per month are required for Jordan to be able to draw a salary of $4000 per month?
a) 10 inspections
b) 30 inspections

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-09 Graphical Approach to CVP Analysis

Use the graphical approach to CVP analysis to solve the following problem.
A small manufacturing operation can produce up to 250 units per week of a product that it sells for $20 per unit. The variable cost per unit is $12, and the fixed cost per week is $1200.

a) How many units must it sell per week to break even?
b) Determine the firm’s weekly profit or loss if it sells:

(i) 120 units per week (ii) 250 units per week

c) At what level of unit sales will the net income be $400 per week?
a) 150 units per week
b) i) loss of $240 per week ii) profit of $800 per week
c) 200 units per week

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-09 Graphical Approach to CVP Analysis

Use the graphical approach to CVP analysis to solve the following problem.
Valley Peat Ltd. sells peat moss for $10 per bag. Variable costs are $7.50 per bag and annual fixed costs are $100,000.

a) How many bags of peat must be sold to break even?
b) What will be the net income for a year in which 60,000 bags of peat are sold?
c) How many bags must be sold for a net income of $60,000 in a year?
d) What volume of unit sales would produce a loss of $10,000 in a year?
a) 40,000 bags per year
b) $50,000
c) 64,000 bags
d) 36,000 bags

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-09 Graphical Approach to CVP Analysis

Use the graphical approach to CVP analysis to solve the following problem.
Reflex Manufacturing Corp. manufactures composters at a unit variable cost of $43. It sells them for $70 each. It can produce a maximum of 3200 composters per month. Annual fixed costs total $648,000.

a) What is the break-even volume per month?
b) What is the monthly net income at a volume of 2500 composters per month?
c) What is the monthly net income if Reflex operates at 50% of capacity during a recession?
a) 2000 composters per month
b) $13,500 per month
c) A loss of $10,800 per month

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-09 Graphical Approach to CVP Analysis

Toys-4-U manufactures a toy that it sells for $30 each. The variable cost per toy is $10 and the fixed costs for this product line are $100,000 per year. They estimate they can produce 8000 toys per production period.
a) What is the break-even point in units?
b) What is the break-even sales revenue?
c) What is the break-even volume as a percent of capacity?
d) What would their net income be if they sold 6200 toys?
e) What level of unit sales is required to have a net income of $10,000?
a) 5000 toys per year
b) $150,000 per year
c) 62.5% of capacity
d) $24,000 profit
e) 5500 toys per year

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

Reliable Plastics makes containers that it sells for $2.55 each. Its fixed costs for this product are $2000 per month and the variable cost per unit is $1.30.
a) What is the break-even point in units?
b) What is the break-even sales revenue?
a) 1600 containers per month
b) $4080 per month

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

Ingrid processes and bottles jam in her home-based business. Her fixed costs are $250 per month and the variable cost per jar is $1.20. She sells the jam to local grocery stores for $3.20 each.
a) How many jars must she sell per year to break even?
b) What will be her profit if she sells 3000 jars in a year?
c) How many jars must she sell per year to have a loss of no more than $1200?
a) 1500 jars
b) $3000
c) 900 jars

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

ChildCare Industries manufactures infant car seats that it sells to retailers for $155 each. The costs to manufacture each additional seat are $65, and the monthly fixed costs are $18,000.
a) How many seats must be sold per year to break even?
b) What will ChildCare’s loss be if it sells 2000 seats in a year?
a) 2400 seats
b) $36,000

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

CD Solutions Ltd. manufactures and replicates CDs for software and music recording companies. CD Solutions sells each disc for $2.50. The variable costs per disc are $1.00.
a) To just break even, how many CDs must be sold per month if the fixed costs are $60,000 per month?
b) What must unit sales be in order to have a profit of $7500 per month?
c) What will their profit be if they have total revenue of $130,000 per month?
d) How many CDs would have to be sold per month to break even if they increased their selling price to $3.50 each?
a) 40,000 CDs
b) 45,000 CDs
c) $18,000 profit per month
d) 24,000 CDs

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

Clone Computers assembles and packages personal computer systems from brand-name components. Its Home Office PC System is assembled from components costing $1400 per system and sells for $2000. Labour costs for assembly are $100 per system. This product line’s share of overhead costs is $10,000 per month.
a) How many Home Office Systems must be sold each month to break even on this product line?
b) What will be the profit or loss for a month in which 15 Home Office Systems are sold?
a) 20 systems per month
b) $2500 loss

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

Huntsville Office Supplies (HOS) is evaluating the profitability of leasing a photocopier for its customers to use on a self-serve basis at 10¢ per copy. The copier may be leased for $300 per month plus 1.5¢ per copy on a full-service contract. HOS can purchase paper at $5 per 500-sheet ream. Toner costs $100 per bottle, which in normal use will last for 5000 pages. HOS is allowing for additional costs (including electricity) of 0.5¢ per copy.
a) How many copies per month must be sold in order to break even?
b) What will be the increase in monthly profit for each 1000 copies sold above the break-even point?
a) 6000 copies
b) $50

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

Jordan is developing a business plan for a residential building inspection service he may start. Rent and utilities for an office would cost $1000 per month. The fixed costs for a vehicle would be $450 per month. He estimates that the variable office costs (word processing and supplies) will be $50 per inspection and variable vehicle costs will be $25 per inspection. Jordan would also spend $200 per month to lease a computer, and $350 per month for advertising.
a) If he charges $275 per inspection, how many inspections per month are required before he can “pay himself?”
b) How many inspections per month are required for Jordan to be able to draw a salary of $4000 per month?
a) 10 inspections
b) 30 inspections

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

A small manufacturing operation can produce up to 250 units per week of a product that it sells for $20 per unit. The variable cost per unit is $12, and the fixed cost per week is $1200.
a) How many units must it sell per week to break even?
b) Determine the firm’s weekly profit or loss if it sells:

(i) 120 units per week (ii) 250 units per week

c) Determine the firm’s weekly profit or loss if it has revenue of:

(i) $4900 per week (ii) $1960 per week

d) At what level of unit sales will the net income be $400 per week?
a) 150 units per week
b) i) loss of $240 per week ii) profit of $800 per week
c) i) $760 profit per week ii) $416 loss per week
d) 200 units per week

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

Alpha Corp. expects to operate at 80% of capacity next year. Its forecast operating budget is:

Sales revenue		$1,200,000
Fixed costs	$300,000
Total variable costs	$800,000
Total costs		$1,100,000
Net income		$100,000

a) What is Alpha’s break-even revenue?
b) What would be Alpha’s net income if it operates at full capacity?
a) $900,000
b) $200,000

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

Beta Inc. has based its budget forecast for next year on the assumption it will operate at 90% of capacity. The budget is:

Sales revenue		$18,000,000
Fixed costs	$10,000,000
Total variable costs	$6,000,000
Total costs		$16,000,000
Net income		$2,000,000

a) At what percentage of capacity would Beta break even?
b) What would be Beta’s net income, to the nearest dollar, if it operates at 70% of capacity?
a) 75% capacity
b) $666,667 loss

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

Valley Peat Ltd. sells peat moss for $10 per bag. Variable costs are $7.50 per bag and annual fixed costs are $100,000.
a) How many bags of peat must be sold to break even?
b) What will be the net income for a year in which 60,000 bags of peat are sold?
c) How many bags must be sold for a net income of $60,000 in a year?
d) What annual sales in terms of bags and in terms of dollars would produce a loss of $10,000?
e) How much do the break-even unit sales and break-even revenue increase per $1000 increase in annual fixed costs?
a) 40,000 bags per year
b) $50,000
c) 64,000 bags
d) 36,000 bags ($360,000)
e) 400 bags ($4000)

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

Reflex Manufacturing Corp. manufactures composters at a unit variable cost of $43. It sells them for $70 each. It can produce a maximum of 3200 composters per month. Annual fixed costs total $648,000.
a) What is the break-even volume per month?
b) What is the monthly net income at a volume of 2500 composters per month?
c) What is the monthly net income if Reflex operates at 50% of capacity during a recession?
d) At what percent utilization would the annual net income be $226,800? Round to the nearest 0.1%
e) If fixed and variable costs remain the same, how much do the monthly break-even unit sales change for a $1 increase in the selling price?
a) 2000 composters per month
b) $13,500 per month
c) A loss of $10,800 per month
d) 84.4% of capacity
e) The monthly break-even unit sales decrease by 71 composters

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

Bentley Plastics Ltd. has annual fixed costs of $450,000 and variable costs of $15 per unit. The selling price per unit is $25.
a) What annual revenue is required to break even?
b) What annual unit sales are required to break even?
c) What will be the annual net income at annual sales of:

(i) 50,000 units? (ii) $1,000,000?

d) What minimum annual unit sales are required to limit the annual loss to $20,000?
e) If the unit selling price and fixed costs remain the same, what are the changes in break-even unit sales and break-even revenue for a $1 increase in variable costs?
a) $1,125,000
b) 45,000 units per year
c) i) Profit of $50,000 ii) Loss of $50,000
d) 43,000 units per year
e) The break-even unit sales increases by 5000 units and break-even revenue increases by $125,000

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

The Woodstock plant of Goodstone Tires manufactures a single line of automobile tires. In its first fiscal quarter, the plant had total revenue of $4,500,000 and net income of $900,000 from the production and sale of 60,000 tires. In the subsequent quarter, the net income was $700,000 from the production and sale of 50,000 tires. Calculate the unit selling price, the total revenue in the second quarter, the variable costs per tire, and the total fixed costs per calendar quarter.

S = $75 per tire
TR = $3,750,000 in second quarter
VC = $55 per tire
FC = $300,000 per quarter

Difficulty: Hard
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

The Kelowna division of Windstream RVs builds the Wanderer model. The division had total revenue of $4,785,000 and a profit of $520,000 on the sale of 165 units in the first half of its financial year. Sales declined to 117 units in the second half of the year, resulting in a profit of only $136,000. Determine the selling price per unit, the total revenue in the second half, the unit variable costs, and the annual fixed costs.

S = $29,000 per unit
TR = $3,393,000 in second half
VC = $21,000 per unit
FC = $1,600,000 per year

Difficulty: Hard
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

In the past year, the Greenwood Corporation had sales of $1,200,000, fixed costs of $400,000, and total variable costs of $600,000.
a) At what sales figure would Greenwood have broken even last year?
b) If sales increase by 15% in the year ahead (but all prices remain the same), how much (in $) will the net income increase?
c) If fixed costs are 10% lower in the year ahead (but sales and variable costs remain the same as last year), how much (in $) will the net income increase?
d) If variable costs are 10% higher in the year ahead (but sales and fixed costs remain the same as last year), how much (in $) will the net income decrease?
a) $800,000
b) $90,000
c) $40,000
d) $60,000

Difficulty: Hard
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

The Morgan Company produces two products, G and H, with the following characteristics:

	Product G	Product H
Selling price per unit	$5	$6
Variable costs per unit	$3	$2
Forecast sales (units)	100,000	150,000

Total fixed costs for the year are expected to be $700,000.

a) What will be the net income if the forecast sales are realized?
b) Determine the break-even volumes of the two products. Assume that the product mix (that is, the ratio of the unit sales for the two products) remains the same at the break-even point.
c) If it turns out that Morgan sells twice as many units of H as of G, what will be the break-even volumes of the two products?

a) $100,000
b) 87,500 units of G and 131,250 units of H
c) 70,000 units of G and 140,000 units of H

Difficulty: Hard
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

A college ski club is planning a weekend package for its members. The members will each be charged $270. For a group of 15 or more, the club can purchase a 2-day downhill pass and 2 nights’ accommodation for $220 per person. A 36-passenger capacity bus can be chartered for $1400.
a) How many must sign up for the package for all costs to be covered?
b) If the bus is filled, how much profit will the club make?
c) If the student government agrees to cover any loss up to $400, what is the minimum number of participants required?
a) 28 participants
b) $400
c) 20 participants

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

Genifax reported the following information for September:

Sales revenue	$180,000
Fixed manufacturing costs	22,000
Fixed marketing and overhead costs	14,000
Total variable costs	120,000
Unit price	9

a) Determine the unit sales required to break even.
b) What unit sales would generate a net income of $30,000?
c) What unit sales would generate a profit of 20% of the sales dollars?
d) What sales dollars are required to produce a profit of $20,000?
e) If unit variable costs are reduced by 10% with no change in the fixed costs, what will the break-even point become (in unit sales)?
a) 12,000 units
b) 22,000 units
c) 30,000 units
d) $168,000
e) 10,000 units

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

The social committee of a college’s student government is planning the annual graduation dinner and dance. The preferred band can be signed for $1000 plus 10% of ticket revenues. A hall can be rented for $4400. Fire regulations limit the hall to 400 guests plus the band and caterers. A food caterer has quoted a price of $24 per person for the dinner.
The committee thinks that the event will be a sellout if ticket prices are set at $46 per person. Some on the committee are in favour of less crowding at the dance and argue for a ticket price of $56. They estimate that 300 will attend at the higher price.

a) Calculate the number of tickets that need to be sold at each price to break even.
b) What will the profit be at the predicted sales at each ticket price?
a) $46 tickets: 311
$56 tickets: 205
b) $46 tickets: $1560
$56 tickets: $2520

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

In the year just ended, a small appliance manufacturer sold its griddle at the wholesale price of $37.50. The unit variable costs were $13.25, and the monthly fixed costs were $5600.
a) If unit variable costs are expected to rise to $15.00 and fixed costs to $6000 per month for the next year, at what amount should the griddle be priced in order to have the same break-even volume as last year?
b) What should be the griddle’s price in order to have the same profit as last year on sales of 300 griddles per month in both years?
a) $40.97 (+/- $0.01)
b) $40.58 (+/- $0.01)

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

Mickey’s Restaurant had a net income last year of $40,000 after fixed costs of $130,000 and total variable costs of $80,000.
a) What was the restaurant’s break-even point in sales dollars? Round to the nearest dollar.
b) If fixed costs in the current year rise to $140,000 and variable costs remain at the same percentage of sales as for last year, what will be the break-even point in sales dollars? Round to the nearest dollar.
c) What sales in the current year will result in a profit of $50,000? Round to the nearest dollar.
a) $191,176
b) $205,882
c) $279,412

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

A farmer is trying to decide whether to rent his neighbour’s land to grow additional hay for sale to feedlots at $180 per delivered tonne. The land can be rented at $400 per hectare for the season. Cultivation and planting will cost $600 per hectare; spraying and fertilizer will cost $450 per hectare. It will cost $42 per tonne to cut, condition, and bale the hay, and $24 per tonne to transport it to the feedlots.
a) How many tonnes per hectare must be produced to break even? Round to the nearest 0.01 tonne.
b) How much is the break-even tonnage lowered if the selling price is $10 per tonne higher? Round to the nearest 0.01 tonne.
c) What is the profit or loss at the $180 per tonne price if the crop yield is:

(i) 15 tonnes per hectare? (ii) 10 tonnes per hectare?
a) 12.72 tonnes per hectare
b) 1.03 tonnes per hectare
c) i) A profit of $260 per hectare, ii) A loss of $310 per hectare

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

A sporting goods manufacturer lost $400,000 on sales of $3 million in a year during the last recession. The production lines operated at only 60% of capacity during the year. Variable costs represent one-third of the sales dollars.
a) At what percent of capacity must the firm operate in order to break even?
b) To the nearest dollar, what would its net income be at 80% of capacity?
c) What dollar sales would generate a net income of $700,000?
a) 72%
b) $266,667
c) $4,650,000

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-10 Revenue and Cost Function Approach to CVP Analysis

Solve the following problem using the Contribution Margin Approach.
Toys-4-U manufactures a toy that it sells for $30 each. The variable cost per toy is $10 and the fixed costs for this product line are $100,000 per year. They estimate they can produce 8000 toys per production period.

a) What is the break-even point in units?
b) What is the break-even sales revenue?
c) What is the break-even volume as a percent of capacity?
d) What would their net income if they sold 6200 toys?
e) What level of unit sales is required to have a net income of $10,000?
a) 5000 toys per year
b) $150,000 per year
c) 62.5% of capacity
d) $24,000 profit
e) 5500 toys per year

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
Reliable Plastics makes containers that it sells for $2.55 each. Its fixed costs for this product are $2000 per month and the variable cost per unit is $1.30.

a) What is the break-even point in units?
b) What is the break-even sales revenue?
a) 1600 containers per month
b) $4080 per month

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
Ingrid processes and bottles jam in her home-based business. Her fixed costs are $250 per month and the variable cost per jar is $1.20. She sells the jam to local grocery stores for $3.20 each.

a) How many jars must she sell per year to break even?
b) What will be her profit if she sells 3000 jars in a year?
c) How many jars must she sell per year to have a loss of no more than $1200?
a) 1500 jars
b) $3000
c) 900 jars

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
ChildCare Industries manufactures infant car seats that it sells to retailers for $155 each. The costs to manufacture each additional seat are $65, and the monthly fixed costs are $18,000.

a) How many seats must be sold per year to break even?
b) What will ChildCare’s loss be if it sells 2000 seats in a year?
a) 2400 seats
b) $36,000

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
CD Solutions Ltd. manufactures and replicates CDs for software and music recording companies. CD Solutions sells each disc for $2.50. The variable costs per disc are $1.00.

a) To just break even, how many CDs must be sold per month if the fixed costs are $60,000 per month?
b) What must unit sales be in order to have a profit of $7500 per month?
c) What will their profit be if they have total revenue of $130,000 per month?
d) How many CDs would have to be sold per month to break even if they increased their selling price to $3.50 each?
a) 40,000 CDs
b) 45,000 CDs
c) $18,000 profit per month
d) 24,000 CDs

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
Clone Computers assembles and packages personal computer systems from brand-name components. Its Home Office PC System is assembled from components costing $1400 per system and sells for $2000. Labour costs for assembly are $100 per system. This product line’s share of overhead costs is $10,000 per month.

a) How many Home Office Systems must be sold each month to break even on this product line?
b) What will be the profit or loss for a month in which 15 Home Office Systems are sold?
a) 20 systems per month
b) $2500 loss

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
Huntsville Office Supplies (HOS) is evaluating the profitability of leasing a photocopier for its customers to use on a self-serve basis at 10¢ per copy. The copier may be leased for $300 per month plus 1.5¢ per copy on a full-service contract. HOS can purchase paper at $5 per 500-sheet ream. Toner costs $100 per bottle, which in normal use will last for 5000 pages. HOS is allowing for additional costs (including electricity) of 0.5¢ per copy.

a) How many copies per month must be sold in order to break even?
b) What will be the increase in monthly profit for each 1000 copies sold above the break-even point?
a) 6000 copies
b) $50

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
Jordan is developing a business plan for a residential building inspection service he may start. Rent and utilities for an office would cost $1000 per month. The fixed costs for a vehicle would be $450 per month. He estimates that the variable office costs (word processing and supplies) will be $50 per inspection and variable vehicle costs will be $25 per inspection. Jordan would also spend $200 per month to lease a computer, and $350 per month for advertising.

a) If he charges $275 per inspection, how many inspections per month are required before he can “pay himself?”
b) How many inspections per month are required for Jordan to be able to draw a salary of $4000 per month?
a) 10 inspections
b) 30 inspections

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
A small manufacturing operation can produce up to 250 units per week of a product that it sells for $20 per unit. The variable cost per unit is $12, and the fixed cost per week is $1200.

a) How many units must it sell per week to break even?
b) Determine the firm’s weekly profit or loss if it sells:

(i) 120 units per week (ii) 250 units per week

c) Determine the firm’s weekly profit or loss if it has revenue of:

(i) $4900 per week (ii) $1960 per week

d) At what level of unit sales will the net income be $400 per week?
a) 150 units per week
b) i) loss of $240 per week ii) profit of $800 per week
c) i) $760 profit per week ii) $416 loss per week
d) 200 units per week

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
Alpha Corp. expects to operate at 80% of capacity next year. Its forecast operating budget is:

Sales revenue		$1,200,000
Fixed costs	$300,000
Total variable costs	$800,000
Total costs		$1,100,000
Net income		$100,000

a) What is Alpha’s break-even revenue?
b) What would be Alpha’s net income if it operates at full capacity?
a) $900,000
b) $200,000

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
Beta Inc. has based its budget forecast for next year on the assumption it will operate at 90% of capacity. The budget is:

Sales revenue		$18,000,000
Fixed costs	$10,000,000
Total variable costs	$6,000,000
Total costs		$16,000,000
Net income		$2,000,000

a) At what percentage of capacity would Beta break even?
b) What would be Beta’s net income, to the nearest dollar, if it operates at 70% of capacity?
a) 75% capacity
b) $666,667 loss

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
Valley Peat Ltd. sells peat moss for $10 per bag. Variable costs are $7.50 per bag and annual fixed costs are $100,000.

a) How many bags of peat must be sold to break even?
b) What will be the net income for a year in which 60,000 bags of peat are sold?
c) How many bags must be sold for a net income of $60,000 in a year?
d) What annual sales in terms of bags and in terms of dollars would produce a loss of $10,000?
e) How much do the break-even unit sales and break-even revenue increase per $1000 increase in annual fixed costs?
a) 40,000 bags per year
b) $50,000
c) 64,000 bags
d) 36,000 bags ($360,000)
e) 400 bags ($4000)

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
Reflex Manufacturing Corp. manufactures composters at a unit variable cost of $43. It sells them for $70 each. It can produce a maximum of 3200 composters per month. Annual fixed costs total $648,000.

a) What is the break-even volume per month?
b) What is the monthly net income at a volume of 2500 composters per month?
c) What is the monthly net income if Reflex operates at 50% of capacity during a recession?
d) At what percent utilization would the annual net income be $226,800? Round to the nearest 0.1%
e) If fixed and variable costs remain the same, how much do the monthly break-even unit sales change for a $1 increase in the selling price?
a) 2000 composters per month
b) $13,500 per month
c) A loss of $10,800 per month
d) 84.4% of capacity
e) The monthly break-even unit sales decrease by 71 composters

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
Bentley Plastics Ltd. has annual fixed costs of $450,000 and variable costs of $15 per unit. The selling price per unit is $25.

a) What annual revenue is required to break even?
b) What annual unit sales are required to break even?
c) What will be the annual net income at annual sales of:

(i) 50,000 units? (ii) $1,000,000?

d) What minimum annual unit sales are required to limit the annual loss to $20,000?
e) If the unit selling price and fixed costs remain the same, what are the changes in break-even unit sales and break-even revenue for a $1 increase in variable costs?
a) $1,125,000
b) 45,000 units per year
c) i) Profit of $50,000 ii) Loss of $50,000
d) 43,000 units per year
e) The break-even unit sales increases by 5000 units and break-even revenue increases by $125, 000

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
The Woodstock plant of Goodstone Tires manufactures a single line of automobile tires. In its first fiscal quarter, the plant had total revenue of $4,500,000 and net income of $900,000 from the production and sale of 60,000 tires. In the subsequent quarter, the net income was $700,000 from the production and sale of 50,000 tires. Calculate the unit selling price, the total revenue in the second quarter, the variable costs per tire, and the total fixed costs per calendar quarter.

S = $75 per tire
TR = $3,750,000 in second quarter
VC = $55 per tire
FC = $300,000 per quarter

Difficulty: Hard
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
The Kelowna division of Windstream RVs builds the Wanderer model. The division had total revenue of $4,785,000 and a profit of $520,000 on the sale of 165 units in the first half of its financial year. Sales declined to 117 units in the second half of the year, resulting in a profit of only $136,000. Determine the selling price per unit, the total revenue in the second half, the unit variable costs, and the annual fixed costs.

S = $29,000 per unit
TR = $3,393,000 in second half
VC = $21,000 per unit
FC = $1,600,000 per year

Difficulty: Hard
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
In the past year, the Greenwood Corporation had sales of $1,200,000, fixed costs of $400,000, and total variable costs of $600,000.

a) At what sales figure would Greenwood have broken even last year?
b) If sales increase by 15% in the year ahead (but all prices remain the same), how much (in $) will the net income increase?
c) If fixed costs are 10% lower in the year ahead (but sales and variable costs remain the same as last year), how much (in $) will the net income increase?
d) If variable costs are 10% higher in the year ahead (but sales and fixed costs remain the same as last year), how much (in $) will the net income decrease?
a) $800,000
b) $90,000
c) $40,000
d) $60,000

Difficulty: Hard
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
The Morgan Company produces two products, G and H, with the following characteristics:

	Product G	Product H
Selling price per unit	$5	$6
Variable costs per unit	$3	$2
Forecast sales (units)	100,000	150,000

Total fixed costs for the year are expected to be $700,000.

a) $100,000
b) 87,500 units of G and 131,250 units of H
c) 70,000 units of G and 140,000 units of H

Difficulty: Hard
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
A college ski club is planning a weekend package for its members. The members will each be charged $270. For a group of 15 or more, the club can purchase a 2-day downhill pass and 2 nights’ accommodation for $220 per person. A 36-passenger capacity bus can be chartered for $1400.

a) How many must sign up for the package for all costs to be covered?
b) If the bus is filled, how much profit will the club make?
c) If the student government agrees to cover any loss up to $400, what is the minimum number of participants required?
a) 28 participants
b) $400
c) 20 participants

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
Genifax reported the following information for September:

Sales revenue	$180,000
Fixed manufacturing costs	22,000
Fixed marketing and overhead costs	14,000
Total variable costs	120,000
Unit price	9

a) Determine the unit sales required to break even.
b) What unit sales would generate a net income of $30,000?
c) What unit sales would generate a profit of 20% of the sales dollars?
d) What sales dollars are required to produce a profit of $20,000?
e) If unit variable costs are reduced by 10% with no change in the fixed costs, what will the break-even point become (in unit sales)?
a) 12,000 units
b) 22,000 units
c) 30,000 units
d) $168,000
e) 10,000 units

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
The social committee of a college’s student government is planning the annual graduation dinner and dance. The preferred band can be signed for $1000 plus 10% of ticket revenues. A hall can be rented for $4400. Fire regulations limit the hall to 400 guests plus the band and caterers. A food caterer has quoted a price of $24 per person for the dinner.
The committee thinks that the event will be a sellout if ticket prices are set at $46 per person. Some on the committee are in favour of less crowding at the dance and argue for a ticket price of $56. They estimate that 300 will attend at the higher price.

a) Calculate the number of tickets that need to be sold at each price to break even.
b) What will the profit be at the predicted sales at each ticket price?
a) $46 tickets: 311
$56 tickets: 205
b) $46 tickets: $1560
$56 tickets: $2520

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
In the year just ended, a small appliance manufacturer sold its griddle at the wholesale price of $37.50. The unit variable costs were $13.25, and the monthly fixed costs were $5600.

a) If unit variable costs are expected to rise to $15.00 and fixed costs to $6000 per month for the next year, at what amount should the griddle be priced in order to have the same break-even volume as last year?
b) What should be the griddle’s price in order to have the same profit as last year on sales of 300 griddles per month in both years?
a) $40.97 (+/- $0.01)
b) $40.58 (+/- $0.01)

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
Mickey’s Restaurant had a net income last year of $40,000 after fixed costs of $130,000 and total variable costs of $80,000.

a) What was the restaurant’s break-even point in sales dollars? Round to the nearest dollar.
b) If fixed costs in the current year rise to $140,000 and variable costs remain at the same percentage of sales as for last year, what will be the break-even point in sales dollars? Round to the nearest dollar.
c) What sales in the current year will result in a profit of $50,000? Round to the nearest dollar.
a) $191,176
b) $205,882
c) $279,412

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
A farmer is trying to decide whether to rent his neighbour’s land to grow additional hay for sale to feedlots at $180 per delivered tonne. The land can be rented at $400 per hectare for the season. Cultivation and planting will cost $600 per hectare; spraying and fertilizer will cost $450 per hectare. It will cost $42 per tonne to cut, condition, and bale the hay, and $24 per tonne to transport it to the feedlots.

a) How many tonnes per hectare must be produced to break even? Round to the nearest 0.01 tonne.
b) How much is the break-even tonnage lowered if the selling price is $10 per tonne higher? Round to the nearest 0.01 tonne.
c) What is the profit or loss at the $180 per tonne price if the crop yield is:

(i) 15 tonnes per hectare? (ii) 10 tonnes per hectare?
a) 12.72 tonnes per hectare
b) 1.03 tonnes per hectare
c) i) A profit of $260 per hectare, ii) A loss of $310 per hectare

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Solve the following problem using the Contribution Margin Approach.
A sporting goods manufacturer lost $400,000 on sales of $3 million in a year during the last recession. The production lines operated at only 60% of capacity during the year. Variable costs represent one-third of the sales dollars.

a) At what percent of capacity must the firm operate in order to break even?
b) To the nearest dollar, what would its net income be at 80% of capacity?
c) What dollar sales would generate a net income of $700,000?
a) 72%
b) $266,667
c) $4,650,000

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Memex Corp. manufactures memory expansion boards for microcomputers. The average selling price of its finished product is $180 per unit. The average variable cost per unit is $110. Memex incurs fixed costs of $1,260,000 per year.
a) What is the break-even point in unit sales?
b) What sales revenue must Memex achieve in order to break even?
c) What will be the company’s profit or loss at the following levels of sales for a year:

(i) 20,000 units? (ii) 17,500 units?

d) How many units must they sell to have a net profit of $315,000?
e) What level of output would they have to sustain a loss of no more than $124,250?
f) What would be the new break even number of units if fixed costs were reduced by 10%?
a) 18,000 units
b) $3,240,000
c) (i) profit of $140,000
(ii) loss of $35,000
d) 22,500 units
e) 16,225 units
f) 16,200 units

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-09 Graphical Approach to CVP Analysis

The Armour Company had the following revenue and costs in the most recently completed fiscal year:

Total revenue	$10,000,000
Total fixed costs	$2,000,000
Total variable costs	$6,000,000
Total units produced and sold	1,000,000

a) What is the unit sales volume at the break-even point?
b) How many units must be produced and sold for the company to have a net income of $1,000,000 for the year?
a) 500,000 units
b) 750,000 units

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Fisher Publishing Inc. is doing a financial feasibility analysis for a new book. Editing and preproduction costs are estimated at $45,000. The printing costs are a flat $7000 for setup plus $8.00 per book. The author’s royalty is 8% of the publisher’s net price to bookstores. Advertising and promotion costs are budgeted at $8000.
a) If the price to bookstores is set at $35, to the nearest book, how many books must be sold to break even?
b) The marketing department is forecasting sales of 4800 books at the $35 price. What will be the net income from the project at this volume of sales?
c) The marketing department is also forecasting that, if the price is reduced by 10%, unit sales will be 15% higher. Which price should be selected?
d) In a highest cost scenario, fixed costs might be $5000 higher and the printing costs might be $9.00 per book. By how many books would the break-even volume be raised?
a) 2479 books (+/- 1 book)
b) $56,160
c) $35 per book
d) 323 books (+/- 1 book)

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Durable Toys Inc. wants to calculate from recent production data the monthly fixed costs and unit variable costs on its Mountain Trike product line. In the most recent month, it produced 530 Trikes at a total cost of $24,190. In the previous month, it produced 365 Trikes at a total cost of $18,745. What are the fixed costs per month and the unit variable costs? Hint: Recall that Total costs = Fixed costs + (Unit variable costs) ´ (Number of units produced)

VC = $33.00 per Trike
FC = $6700 per month

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

During an economic slowdown, an automobile plant lost $12,000,000 on the production and sale of 9000 cars. Total revenue for the year was $270,000,000. If the break-even volume for the plant is 10,000 cars per year, calculate:
a) The plant’s total fixed costs for a year.
b) The net income if unit sales for the year had been equal to the 5-year average of 12,000.
a) $120 million per year
b) $24 million

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Norwood Industries has annual fixed costs of $1.8 million. Unit variable costs are currently 55% of the unit selling price.
a) What annual revenue is required to break even?
b) What revenue would result in a loss of $100,000 in a year? Round to the nearest dollar.
c) What annual revenue would produce an operating profit of $300,000? Round to the nearest dollar.
a) $4 million
b) $3,777,778
c) $4,666,667

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Cambridge Manufacturing is evaluating the introduction of a new product that would have a unit selling price of $100. The total annual fixed costs are estimated to be $200,000 and the unit variable costs are projected at $60. Forecast sales volume for the first year is 8000 units.
a) What sales volume (in units) is required to break even?
b) What volume is required to generate a net income of $100,000?
c) What would be the net income at the forecast sales volume?
d) At the forecast sales volume, what will be the change in the net income if fixed costs are: (i) 5% higher than expected? (ii) 10% lower than expected?
e) At the forecast sales volume, what will be the change in the net income if unit variable costs are: (i) 10% higher than expected? (ii) 5% lower than expected?
f) At the forecast sales volume, what will be the change in the net income if the unit selling price is: (i) 5% higher? (ii) 10% lower?
g) At the forecast sales volume, what will be the change in the net income if unit variable costs are 10% higher than expected and fixed costs are simultaneously 10% lower than expected?
a) 5000 units
b) 7500 units
c) $120,000
d) (i) $10,000 lower (ii) $20,000 higher
e) (i) $48,000 lower (ii) $24,000 higher
f) (i) $40,000 higher (ii) $80,000 lower
g) $28,000 lower

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

M Studios estimates that it can sell 1500 camera lenses at $150 each. Total fixed costs are $120,000, and variable costs are $30 per lens. What unit sales are required to break even? What is the profit generated if all units are sold?

1000 units
$60,000 profit

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

A company expects to sell 30,000 hats at $35 each. The estimated variable cost of each hat is $12.50, and the fixed costs are estimated to be $450,000. Calculate the contribution margin per unit and the break-even point in units and revenue.

$22.50
20,000 units
$700,000

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-11 Contribution Margin Approach To CVP Analysis

Enrique is studying the feasibility of producing a new product. His existing facilities could be expanded to manufacture 2000 new units per month. The unit cost is $75. Estimated fixed costs are $3.36 million per year and variable costs are $25 per unit. Competitors sell a similar product for $350 each.
a) What is the break-even point as a percent of capacity?
b) What would the net income be at 80% capacity?
c) What would unit sales have to be to attain a net income of $100,000?
d) If sales dropped to 60% of capacity, what would the resulting net income be?
a) 56%
b) $120,000
c) 1520 units
d) $20,000

Difficulty: Hard
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Samantha manufactures rings which sell in her boutique for $60 each. For 100 rings, the material cost is $15 each, and estimated fixed costs are $900. How many rings must Samantha sell to beak-even?

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

A company makes gadgets selling for $15 each. For 20,000 gadgets, the cost is $3 each, and the estimated fixed costs are $150,000. What is the break-even volume and revenue?

12,500 units; $187,500

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Sam manufactures a product that is selling so well, he has decided to expand his operation to 50,000 units per month. The unit cost is $7, estimated fixed costs are $1.8 mil per year and variable costs are $5 per unit. The product currently sells for $20.
a) What is the break-even point as a percent of capacity?
b) What would the net income be at 75% capacity?
c) What would unit sales have to be to attain a net income of $100,000?
d) If sales dropped to 50% of capacity, what would the resulting net income be?
a) 37.5%
b) $150,000
c) 31,250 units
d) $50,000

Difficulty: Hard
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-08 Cost-Volume-Profit (CVP) Analysis

Solve the following set of equations graphically:

The solution is (x, y) = (3, 2)

Difficulty: Easy
Learning Objective: 05-03 Solve two equations in two unknowns by a graphical method.
Topic: 05-04 Graphical Method for Solving Two Equations in Two Unknowns

Solve the following set of equations graphically:

The solution is (x, y) = (1, 6)

Difficulty: Easy
Learning Objective: 05-03 Solve two equations in two unknowns by a graphical method.
Topic: 05-04 Graphical Method for Solving Two Equations in Two Unknowns

Solve the following set of equations graphically:

The solution is (x, y) = (-2, -5)

Difficulty: Medium
Learning Objective: 05-03 Solve two equations in two unknowns by a graphical method.
Topic: 05-04 Graphical Method for Solving Two Equations in Two Unknowns

Solve the following set of equations graphically:

The solution is (x, y) = (-3, 5)

Difficulty: Medium
Learning Objective: 05-03 Solve two equations in two unknowns by a graphical method.
Topic: 05-04 Graphical Method for Solving Two Equations in Two Unknowns

Solve the following set of equations graphically:

The solution is (x, y) = (0, -4)

Difficulty: Medium
Learning Objective: 05-03 Solve two equations in two unknowns by a graphical method.
Topic: 05-04 Graphical Method for Solving Two Equations in Two Unknowns

Solve the following set of equations graphically:

The solution is (x, y) = (3, 0)

Difficulty: Medium
Learning Objective: 05-03 Solve two equations in two unknowns by a graphical method.
Topic: 05-04 Graphical Method for Solving Two Equations in Two Unknowns

Solve the following set of equations graphically:

The solution is (x, y) = (1, -2)

Difficulty: Medium
Learning Objective: 05-03 Solve two equations in two unknowns by a graphical method.
Topic: 05-04 Graphical Method for Solving Two Equations in Two Unknowns

M Studios estimates that it can sell 1500 camera lenses at $150 each. Total fixed costs are $120,000, and variable costs are $30 per lens. What unit sales are required to break even? What is the revenue generated if all units are sold? Use the graphical approach to CVP analysis to solve.

1000 units (+/- 50 units)
$225,000 (+/- $10,000)

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-09 Graphical Approach to CVP Analysis

A company expects to sell 30,000 hats at $35 each. The estimated variable cost of each hat is $12.50, and the fixed costs are estimated to be $450,000. Calculate the break-even point in units and revenue. Use the graphical approach to CVP analysis to solve.

20,000 units (+/- 500 units)
$700,000 (+/- $50,000)

Difficulty: Medium
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-09 Graphical Approach to CVP Analysis

Enrique is studying the feasibility of producing a new product. His existing facilities could be expanded to manufacture 2000 new units per month. The unit cost is $75. Estimated fixed costs are $3.36 million per year and variable costs are $25 per unit. Competitors sell a similar product for $350 each. Use the graphical approach to CVP analysis to solve the following:
a) What would the net income be at 80% capacity?
b) What would unit sales have to be to attain a net income of $100,000?
c) If sales dropped to 60% of capacity, what would the resulting net income be?

$120,000 (+/- $10,000)
1520 units (+/- 100 units)
$20,000 (+/- $10,000)

Difficulty: Hard
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-09 Graphical Approach to CVP Analysis

Larissa manufactures rings which sell in her boutique for $60 each. For 100 rings, the material cost is $15 each, and estimated fixed costs are $900. How many rings must Larissa sell to break even? Use the graphical approach to CVP analysis to solve.

20 rings (+/- 1 ring)

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-09 Graphical Approach to CVP Analysis

A company makes gadgets selling for $15 each. For 20,000 gadgets, the cost is $3 each, and the estimated fixed costs are $150,000. What is the break-even volume and revenue? Use the graphical approach to CVP analysis to solve.

12,500 units (+/- 500 units)
$187,500 (+/- $15,000)

Difficulty: Easy
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-09 Graphical Approach to CVP Analysis

Sam manufactures a product that is selling so well, he has decided to expand his operation to 50,000 units per month. The unit cost is $7, estimated fixed costs are $1.8 million per year and variable costs are $5 per unit. The product currently sells for $20. Use the graphical approach to CVP analysis to solve the following:
a) What is the break-even point as a percent of capacity?
b) What would the net income be at 75% capacity?
c) What would unit sales have to be to attain a net income of $100,000?
d) If sales dropped to 50% of capacity, what would the resulting net income be?
a) 37.5% (+/- 2%)
b) $150,000 (+/- $10,000)
c) 31,250 units (+/- 2000 units)
d) $50,000 (+/- $10,000)

Difficulty: Hard
Learning Objective: 05-06 Perform cost-volume-profit analysis employing.
Topic: 05-09 Graphical Approach to CVP Analysis

Mr. and Mrs. Chudnowski paid $1050 to fly with their three children from Winnipeg to Regina. Mrs. Ramsey paid $610 for herself and two children on the same flight. What were the airfares per adult and per child?

$270 per adult and $170 per child

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Budget Truck Rentals offers short-term truck rentals consisting of an hourly rate plus a per-kilometre charge. Vratislav paid $54.45 for a two-hour rental during which he drove 47 km. Bryn paid $127.55 for five hours and 93 km driven. What rate did Budget charge per hour and per km?

$19.00 per hour and $0.35 per km

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Colby inherited a small savings-bond portfolio consisting of four $1000 face-value Canada Savings Bonds and six $1000 face-value Ontario Savings Bonds. In the first year, the portfolio earned $438 interest. At the end of the first year, Colby cashed in one of the Canada Savings Bonds and two of the Ontario Savings Bonds. In the following year, the remaining bonds earned $306 interest. What annual rate of interest did each type of bond earn?

CSB: 4.2%
OSB: 4.5%

Difficulty: Hard
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Mr. LeClair and Ms. Bartoli own adjacent hobby farms. They have just received their property tax notices providing the following assessment and tax information:

Owner	Assessment on residence	Assessment on land and farm buildings	Total property tax
Mr. LeClair	$400,000	$300,000	$3870
Ms. Bartoli	$350,000	$380,000	$3774

The regional government applies one tax rate to residences, and a lower tax rate to land with farm buildings. What are these property tax rates (expressed in percent to the nearest 0.01%)?

0.72% on residences and 0.33% on land with farm buildings

Difficulty: Hard
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Marichka bought 5 litres of milk and 4 dozen eggs for $19.51. Lonnie purchased 9 litres of milk and 3 dozen eggs for $22.98. What were the prices for a litre of milk and a dozen eggs?

$1.59 per litre and $2.89 per dozen

Difficulty: Easy
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

TinyTot School purchases the same amount of milk and orange juice each week. After price increases from $1.50 to $1.60 per litre of milk and from $1.30 to $1.37 per can of frozen orange juice, the weekly bill rose from $57.00 to $60.55. How many litres of milk and cans of orange juice are purchased every week?

25 litres of milk and 15 cans of orange juice

Difficulty: Easy
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

In the first week of July a beer and wine store sold 871 cases of beer and paid refunds on 637 cases of empty bottles, for a net revenue of $12,632.10. For the following week the net revenue was $13,331.70 from the sale of 932 cases and the return of 805 cases of empties. What refund did the store pay per case of empty bottles?

$1.50 per case

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

A partnership in a public accounting practice has 7 partners and 12 accounting technicians. Each partner draws the same salary, and each technician is paid the same salary. The partners calculate that if they give the technicians a raise of 8% and if they increase their own salaries by 5%, the gross annual salaries for all accounting personnel will rise from the current $1,629,000 to $1,734,750. What are the current annual salaries of a partner and an accounting technician?

Partner salary: $117,000
Technician salary: $67,500

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

A manufacturing firm pays monthly salaries of $5100 to each production worker and $4200 to each assembly worker. As the economy drops into a recession, the firm decides to reduce its total monthly manufacturing payroll from $380,700 to $297,000 by laying off 20% of its production workers and 25% of its assembly workers. How many layoffs will there be from each of the assembly and production divisions?

9 production workers and 9 assembly workers will be laid off

Difficulty: Hard
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve the following pair of equations.

x = 4; y = 2

Difficulty: Easy
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve the following pair of equations.

x = -2; y = 5

Difficulty: Easy
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve the following pair of equations.

a = 3; b = 5

Difficulty: Easy
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve the following pair of equations.

p = 2; q = -3

Difficulty: Easy
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve the following pair of equations.

x = 7; y = 14

Difficulty: Easy
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve the following pair of equations.

g = 9; h = -8

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve the following pair of equations.

c = 500; d = 1000

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve the following pair of equations.

x = 700; y = 600

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve the following pair of equations to three-figure accuracy.

v = 1.50; w = -0.333

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve the following pair of equations to three-figure accuracy.

a = -1.72; b = 7.66

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve the following pair of equations to three-figure accuracy.

x = 17.0; y = 6.24

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve the following pair of equations to three-figure accuracy.

m = 12.8; n = 8.00

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve the following pair of equations to three-figure accuracy.

e = 250; f = 125

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve the following pair of equations to three-figure accuracy.

j = 0.139; k = 0.0820

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve the following pair of equations.

x = 7; y = -2

Difficulty: Easy
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve the following pair of equations.

a = 5; b = -2

Difficulty: Easy
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve the following pair of equations.

x = 3; y = -2

Difficulty: Easy
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve the following pair of equations.

x = 0.4; y = 0.7

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Solve the following pair of equations.

x = 0; y = 0

Difficulty: Easy
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Nguyen fishes for red snapper and lingcod off the coast of British Columbia, and delivers his catch each week to a fish buyer. On one delivery, he received $2454.20 for 370 kg of red snapper and 264 kg of lingcod. On another occasion he was paid $2124.70 for 304 kg of lingcod and 255 kg of red snapper. What price per kg was Nguyen paid for each type of fish?

Lingcod: $3.55 per kg
Red snapper: $4.10 per kg

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Deanna is paid a base salary plus commission. On sales of $27,000 and $35,500 in two successive months, her gross pay was $2815.00 and $3197.50, respectively. What are her base salary and commission rate (in percent)?

Base salary: $1600 per month
Commission rate: 4.5%

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Rory invested a total of $7800 in shares of ABC Ltd. and XYZ Inc. One year later the investment was worth $9310, after the shares of ABC had increased in value by 15% and the shares of XYZ were up 25%. How much did Rory invest in each company?

$3400 invested in XYZ
$4400 invested in ABC

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

A hockey arena has 2500 seats in the preferred red sections near centre ice and 4500 seats in the less desirable blue sections. At regular season prices, a sell-out would generate ticket revenue of $50,250 for a single game. Ticket prices are raised by 20% in the “blues” and 30% in the “reds” for the playoffs. Ticket revenue from a playoff sell-out would be $62,400. What are the ticket prices for the playoffs?

$10.92 reds
$7.80 blues

Difficulty: Medium
Learning Objective: 05-04 Solve two equations in two unknowns by an algebraic method.
Topic: 05-05 Solving Two Linear Equations in Two Unknowns

Business Mathematics in Canada 9Th Edition By Jerome - Test Bank

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Business Mathematics in Canada 9Th Edition By Jerome - Test Bank

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