1. Redford, Inc. has provided the following data:
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Sales Price $200.00per unit
Sales 6,000Units
Fixed Cost $300,000
Variable cost $100.00per unit
If the dollar contribution margin per unit is increased by 10%, total fixed cost is decreased by 20%, and all other factors remain the same, net income will:
Answer
A.decrease by $60,000.
B.increase by $60,000.
C.increase by $120,000.
D.. increase by $420,000.
2. Gardner Manufacturing Company produces a product that sells for $120. A selling commission of 10% of the selling price is paid on each unit sold. Variable manufacturing costs are $60 per unit. Fixed manufacturing costs are $20 per unit based on the current level of activity, and fixed selling and administrative costs are $16 per unit. The contribution margin per unit is:
a.$104
b.$72
c.$60
d.$48
3. Lacopi Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $172.50 per unit.
Sales volume (units) 4,000 5,000
Cost of sales $307,600 $384,500
Selling and administrative costs $321,200 $337,000
The best estimate of the total contribution margin when 4,300 units are sold is:
Answer
a.$343,140
b.$65,790
c. $121,260
d.$411,080
4. Shipping expense is $9,000 for 8,000 pounds shipped and $11,250 for 11,000 pounds shipped. Assuming that this activity is within the relevant range, if the company ships 9,000 pounds, its expected shipping expense is closest to:
a.$10,125
b.$8,583
c.$9,972
d.$9,750
5. Fixed cost per unit increases as activity decreases and decreases as activity increases.
True
False
6. Within the relevant range, the variable cost per unit:
Answer
A. remains constant as activity changes
B. increases as activity increases.
C. decreases as activity increases.
D. can increase or decrease as the activity changes.
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