@FARISFUN Those are usually the algebra ones. Here is one I posted earlier from Gleim, and I posted another one at the top of the page.
A ceramics manufacturer sold cups last year for $7.50 each. Variable costs of manufacturing were $2.25 per unit. The company needed to sell 20,000 cups to break even. Net income was $5,040. This year, the company expects the following changes: sales price per cup to be $9.00, variable manufacturing costs to increase 33.3%, fixed costs to increase 10%, and the income tax rate to remain at 40%. Sales in the coming year are expected to exceed last year’s sales by 1,000 units. How many units does the company expect to sell this year?
A. 21,000
B. 21,600
C. 21,960
D. 22,600
Answer (D) is correct.
The number of units the company expects to sell this year can be found once the number of units sold last year is derived. Fixed costs can be found using breakeven analysis.
Breakeven point in units = Fixed costs (FC) ÷ Unit contribution margin (UCM)
20,000 units = FC ÷ ($7.50 sales price – $2.25 unit variable manufacturing cost)
20,000 units = FC ÷ $5.25 UCM
$105,000 = FC
Fixed costs can then be used to calculate the number of units sold last year.
[($5.25 UCM × Units sold last year) – $105,000 FC] × (1 – .4) = $5,040 net income
($5.25 UCM × Units sold last year) – $105,000 FC = $8,400
$5.25 UCM × Units sold last year = $113,400
Units sold last year = 21,600
The company expects to sell 1,000 more units this year than it did last year. Thus, it expects to sell 22,600 units.
AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)
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