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16. able costs per unit increased because of an increase in ho g e mates, the beak-even point would decrease increase remain the same increase or decrease, depending upon the percentage increase in wage rates 17. The point where the profit line intersects the horizontal axis on the profit-volume chart represents the maximum possible operating loss the maximum possible operating income the total fixed costs the break-even point 18. The Rocky Company reports the following data: Sales $800,000 Variable costs 300,000 Fixed costs 120,000 Rocky Company's operating leverage is a. 6.7 (6. 2.7 c. 1.0 d. 1.3 The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months were: January - 200,000 units; February - 180,000 units; March-210,000 units, and April 230,000 units. The Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following months sales. 19. What is the budgeted units of production for January? 236,000 181,000 200,000 d. 219,000 20. Stephanie Corporation sells a single product. Budgeted sales for the year are anticipated to be 640,000 uni estimated beginning inventory is 108,000 units, and desired ending inventory is 90,000 units. The quantities direct materials expected to be used for each unit of finished product are given below. Material A 0.50 lb, per unit @ $0.70 per pound Material B 1.00 lb. per unit @ $1.70 per pound Material C 1.20 lb. per unit @ $1.00 per pound The dollar amount of material A used in production during the year is (Direct Materials Purchased) a. $217,700 b. $528,700 c. $311,000 d. $224,600 Page 5 of 8

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