Questions -
Question 1 - Thomas Train has collected the following information over the last six months.
|
Month
|
Units produced
|
Total costs
|
|
March
|
10,000
|
$25,600
|
|
April
|
12,000
|
26,200
|
|
May
|
18,000
|
29,200
|
|
June
|
13,000
|
26,450
|
|
July
|
12,000
|
26,000
|
|
August
|
15,000
|
26,500
|
Using the high-low method, what is the variable cost per unit?
Question 2 - Rooter's Cleaning Services provided data concerning the costs incurred to clean hotel rooms for which hotel customers pay $150 per night. Data for the past 7 months are as follows:
|
January
|
February
|
March
|
April
|
May
|
June
|
July
|
|
Number of rooms cleaned
|
250
|
160
|
200
|
150
|
300
|
170
|
260
|
|
Cleaning cost
|
$6,450
|
$4,060
|
$5,100
|
$4,100
|
$6,760
|
$4,200
|
$6,530
|
How much are estimated monthly variable costs using the high-low method?
Question 3 - A cost is $3,600 at 1,000 units, $7,000 at 2,000 units, and $9,200 at 3,000 units. This cost is a
mixed cost
step cost
variable cost
fixed cost
Question 4 - Winny's Office Furniture has a contribution margin ratio of 16%. If fixed costs are $188,800, how many dollars of revenue must the company generate in order to reach the break-even point?
Question 5 - Tim Taylor has written a self improvement book that has the following cost characteristics:
|
Selling Price
|
$16.00 per book
|
|
Variable cost per unit:
|
|
|
Production
|
$4.00
|
|
Selling & administrative
|
2.00
|
|
Fixed costs:
|
|
|
Production
|
$89,400 per year
|
|
Selling & administrative
|
19,800 per year
|
How many units must be sold to break-even?
Question 6 - The use of fixed cost to increase profits at a rate faster than sales increase is called:
"What if " analysis
C-V-P analysis
Operating leverage
Contribution margin approach
Question 7 - Assume Sparkle Co. expects to sell 150 units next month. The unit sales price is $100, unit variable cost is $30, and the fixed costs per month are $5,000. The margin of safety is?
Question 8 - Which of the following statements about the relevant range is true?
Cost functions outside the relevant range are usually linear
The relevant range is the normal length of time in a company's accounting period
Estimates outside the relevant range are useful
Cost functions within the relevant range are assumed to be linear