# Liberty ACCT 212 Chapter 5 Reading Assignment Answers Complete Solutions

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Naples Company produced 650,000 units and sold 500,000 units. Their unit selling price is $10. Cost of goods sold is $6 per unit. Fixed selling expenses are $10,000 and variable selling and administrative expenses are $3 per unit. Compute Naple’s net income under absorption costing.

The extent, or relative size, of fixed costs in the total cost structure is known as:

Mandolin produced 70,000 units and sold 50,000 units. Their unit selling price is $20 and they have variable unit production costs of $10, variable selling expenses of $3 and fixed overhead of $10,000. Compute Mandolin’s net income under variable costing.

On a CVP chart, the line which crosses the vertical axis at the level of fixed costs and slopes upwards has a slope equal to:

The break-even point can be expressed as sales in or .

In costing, only costs that change in total with changes in production levels are included in product costs.

A company has a margin of safety of 20%. If expected sales are $50,000, then break-even sales are:

Each of the following are methods used to separate mixed costs into their fixed and variable components except:

A company sells 800 units at $16 each, has variable costs of $12 per unit, fixed costs of $1,200, and a 40% tax rate. The after-tax income is ___.

A company produces a product with a contribution margin per unit of $36. If the company incurs $62,000 in total fixed costs, expects to sell 2,500 units, and has a tax rate of 35%, the pre-tax income is __________.

A company has break-even sales of $200,000. If the company expects sales of $500,000, the margin of safety is __________. (Enter a percentage.)

The variable costing method is not allowed for external financial reporting. Instead, GAAP requires __________. Under this method, product costs include direct materials, direct labor, and all overhead, both variable and fixed.

The percent by which a product’s unit selling price exceeds its total unit variable cost is the:

A production supervisor’s salary is an example of a __________.

“Uses only two sets of values” and “less precise because it uses the extreme points” are cost estimation characteristics of (of the) __________.

“Most precise method” and “uses a statistical technique and all data points” are cost estimation characteristics of (of the) __________.

A sales rep’s pay which includes salary plus commission is an example of a __________.

The __________ is the sales level at which a company neither earns a profit nor incurs a loss.

__________ is equal to fixed costs divided by contribution margin per composite unit. X = Fixed costs/Contribution margin per composite unit

__________ is equal to fixed costs divided by contribution margin ratio. X = Fixed costs/Contribution margin ratio

__________ is equal to fixed costs divided by contribution margin per unit. X = Fixed costs/Contribution margin per unit

__________ is equal to DOL times the change in sales (percentage). X = DOL x Change in sales (%)