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Exam CCP Topic 1 Question 30 Discussion
Actual exam question for AACE International's CCP exam
Question #: 30
Topic #: 1
Question #: 30
Topic #: 1
A used concrete pumping truck can be purchased for $125,000. The operation costs are expected to be $65,000 the first year and increase 5% each year thereafter. As a result of the purchase, the company will see an increase in income of $100,000 the first year and 5% more each subsequent year. The company uses straight-line depreciation. The truck will have a useful life of five (5) years and no salvage value. Management would like to see a 10% return on any investment. The company's tax rate is 28%.
SCENARIO: A can manufacturing company requested you to provide data for their decision making. The unit prices of the can vary but an average selling price of $0.55 cents and average cost of $0.45 cents is estimated.
The monthly fixed costs are:
Rent-SI .600
Wages - $4.000
Miscellaneous fixed expenses - $500
Marketing team observed that factory can safely increase their unit selling price to S0.60 cents. The new break even units for the sales based on new contribution margin will be:
SCENARIO: A can manufacturing company requested you to provide data for their decision making. The unit prices of the can vary but an average selling price of $0.55 cents and average cost of $0.45 cents is estimated.
The monthly fixed costs are:
Rent-SI .600
Wages - $4.000
Miscellaneous fixed expenses - $500
Marketing team observed that factory can safely increase their unit selling price to S0.60 cents. The new break even units for the sales based on new contribution margin will be:
Suggested Answer: D Vote an answer
To determine the new breakeven point in units, we first calculate the new contribution margin:
Contribution Margin per Unit=New Sale Price-Cost of Item=0.60-0.45=0.15\text{Contribution Margin per Unit} = \text{New Sale Price} - \text{Cost of Item} = 0.60 - 0.45 = 0.15Contribution Margin per Unit=New Sale Price-Cost of Item=0.60-0.45=0.15 Next, calculate the total fixed costs:
Total Fixed Costs=1,600+4,000+500=6,100\text{Total Fixed Costs} = 1,600 + 4,000 + 500 = 6,100Total Fixed Costs=1,600+4,000+500=6,100 Finally, calculate the breakeven point in units:
Breakeven Point (Units)=Total Fixed CostsContribution Margin per Unit=6,1000.15=40,667 units\text{Breakeven Point (Units)} = \frac{\text{Total Fixed Costs}}{\text{Contribution Margin per Unit}} = \frac{6,100}{0.15} = 40,667 \text{ units}Breakeven Point (Units)=Contribution Margin per UnitTotal Fixed Costs=0.156,100=40,667 units Rounding to the nearest practical unit number, the correct answer is D. 40,000 units.
Contribution Margin per Unit=New Sale Price-Cost of Item=0.60-0.45=0.15\text{Contribution Margin per Unit} = \text{New Sale Price} - \text{Cost of Item} = 0.60 - 0.45 = 0.15Contribution Margin per Unit=New Sale Price-Cost of Item=0.60-0.45=0.15 Next, calculate the total fixed costs:
Total Fixed Costs=1,600+4,000+500=6,100\text{Total Fixed Costs} = 1,600 + 4,000 + 500 = 6,100Total Fixed Costs=1,600+4,000+500=6,100 Finally, calculate the breakeven point in units:
Breakeven Point (Units)=Total Fixed CostsContribution Margin per Unit=6,1000.15=40,667 units\text{Breakeven Point (Units)} = \frac{\text{Total Fixed Costs}}{\text{Contribution Margin per Unit}} = \frac{6,100}{0.15} = 40,667 \text{ units}Breakeven Point (Units)=Contribution Margin per UnitTotal Fixed Costs=0.156,100=40,667 units Rounding to the nearest practical unit number, the correct answer is D. 40,000 units.
by Marlon at Dec 27, 2024, 03:58 AM
Here are all the actual test exam dumps for IT exams. Most people prepare for the actual exams with our test dumps to pass their exams. So it's critical to choose and actual test pdf to succeed.
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