Contribution margin, break-even,etc

Feb 3rd, 2012
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Name: ______________________________(print or type) Quiz #1ACCT 6273There are 100 points on this quiz. Show your formulas and your work to receive partial credit. There is no partial credit for multiple choice or True/False.Problem 1 FunToys is introducing a new game. The expected costs for this game are as follows:Variable Manufacturing Expenses$15 per unitFixed Manufacturing Expenses$10,000 per yearVariable Selling and Admin Expenses$3 per unitFixed Selling and Admin Expenses$5,000 per yearThe expected selling price is $20 per unit.a. Compute the contribution margin per unit. [5 points]contribution margin per unit=Revenue -Variable cost = $20- ($15+$3)=$2Answer: __$2____________b. Compute the breakeven point in units. [10 points]PQ= TC= Total fixed cost +total variable cost20Q= 15000+18Q 2Q=15,000 Q=7,500Answer: ___7,500 units___________c. Compute the number of units which must be sold to earn $20,000 profit. [5 points]P=TR-TC 20000= 20Q-15000 -18Q20000+15000 =2Q35000/2=QQ=17,500 Answer: __17,500___________d. Due to its excellent brand reputation and brand recognition, FunToys expects that it will sell 25,000 new games without spending anything on advertising for these games. However, if FunToys spends $25,000 on advertising for the games, an additional 20,000 games are expecte

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