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Break-Even Analysis Answers

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A furniture manufacturer must pay $16.91 to make a certain kind of chair, which it can sell for $55.75. If the manufacturer has starting overhead costs of $18,340, not including production costs, how many chairs must it sell to realize a profit of $24,850, to the nearest chair?

A
1,112
B
918
C
775
D
640
22
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Below is last month's business income statement for Korey's Comics. Using the information provided in the statement, determine net income for Korey's Comics last month.Korey?s Comics Monthly Business Income Statement RevenueSales:$6,825 Returns:$215 Net Sales: Cost of Goods Sold Beginning Inventory:$780 Purchases:$1,795 Goods Available for Sale: Ending Inventory:$795 Total Cost of Goods Sold: Gross Profit:: Operating ExpensesWages:$1,460 Rent:$650 Utilities:$185 Advertising:$90 Taxes:$125 Total Operating Expenses: Net Income:

A
$2,320
B
$2,510
C
$4,830
D
$6,610
23

The table below shows possible cost and revenue equations for a manufacturer of cameras. Cost I Cost II Revenue III Revenue IV Which of the following pairs of equations will never break even?

Question illustration
A
I and III
B
I and IV
C
II and III
D
II and IV
24

Which of the following statements best describes the difference between net income and gross profit?

A
Gross profit considers operating expenses while net income does not.
B
Net income considers operating expenses while gross profit does not.
C
Gross profit deducts taxes while net income does not.
D
Net income deducts taxes while gross profit does not.
25

At the beginning of January, Kesia Records paid $148,950 to acquire the exclusive rights to a new album. It costs them $1.13 to print a copy of this album, which they can sell for $9.75. The following chart shows the sales of that record, along with the overhead expenses of running a record studio, not counting production costs.MonthAlbums SoldExpensesJan.5,486$27,714Feb.8,191$21,689Mar.4,796$25,195Apr.7,490$28,766May6,272$24,604Jun.5,131$29,040In whch month did Kesia Records first break even?

A
January
B
March
C
April
D
May
26

Which would NOT be included on an income statement for the Best Brand Company?

A
Projected Profit
B
Net Sales
C
Cost of Goods
D
Operating Expenses
27

Rhianna is in charge of a facility which produces and sells roast coffee. Her expense sheet can be seen below.ItemCostRent$23,280/mo.Salaries$45,860/wk.Raw coffee$0.51/lb.Insurance$19,750/mo.Advertising$22,110/mo.Coffee roasting$0.32/lbRhianna’s coffee sells for $2.89 per pound. How much coffee must her facility sell each month to break even, to the nearest hundred pounds?

A
120,700 pounds
B
104,400 pounds
C
96,700 pounds
D
53,900 pounds
28

Bill owns a company (Bill’s Gates) that manufactures fence panels. Bill’s Gates had a net profit margin last quarter of 18%. Which of the following actions will not help Bill increase his net profit margin this year, assuming he sells the same number of fence panels?

A
Increase the price per panel.
B
Use cheaper lumber to construct panels.
C
Offer panels in a “buy one get one free” special.
D
Reduce workforce and labor costs to construct panels.
29

The following graph displays the cost and revenue functions for Jake’s homemade wicker baskets. How many baskets must Jake sell to break even?

Question illustration
A
10
B
8
C
4
D
0
30

At the beginning of January, Kesia Records paid $148,950 to acquire the exclusive rights to a new album. It costs them $1.13 to print a copy of this album, which they can sell for $9.75. The following chart shows the sales of that record, along with the overhead expenses of running a record studio, not counting production costs.MonthAlbums SoldExpensesJan.5,486$27,714Feb.8,191$21,689Mar.4,796$25,195Apr.7,490$28,766May6,272$24,604Jun.5,131$29,040In whch month did Kesia Records first break even?

A
January
B
March
C
April
D
May
31

It costs a petroleum refinery $0.39 to refine one gallon of gasoline, and $0.39 to refine one gallon of natural gas. The refinery can sell gasoline for $2.11 per gallon, and can sell natural gas for $1.60 per gallon. Due to the refining process, the refinery must produce and sell twice as much natural gas as it does gasoline. If the refinery’s monthly overhead costs, not including production costs, are $180,000, how many gallons of natural gas will the refinery have sold when it breaks even each month? Round to the nearest whole gallon, if necessary.

A
86,957
B
141,732
C
148,760
D
217,392
32

Which of the following expenses is not a variable cost?

A
sales commission
B
hourly wages
C
rent
D
materials
33

At his comic book store, Korey’s Comics, Korey sells approximately $3,250 in comic books each month. But as a comic book dealer, Korey only pays $1,285 for these comic books. Korey’s monthly operating expenses, including labor, are $875. Calculate Korey’s monthly net income.

A
$1,090
B
$1,965
C
$2,375
D
$2,840
34

The following graph shows the relationship between cost and revenue for a manufacturer of lab coats. Which of the following pairs of equations best suits this graph? Cost I Cost II Revenue III Revenue IV

Question illustration
A
I and III
B
I and IV
C
II and III
D
II and IV
35

Which of the following equations correctly describes how to calculate net income?a.net income = (cost of goods sold) - (net sales) - (operating expenses)b.net income = (operating expenses) - (cost of goods sold) - (net sales)c.net income = (operating expenses) + (cost of goods sold) - (net sales)d.net income = (net sales) - (cost of goods sold) - (operating expenses)

A
A
B
B
C
C
D
D

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