(1) When the cost behavior pattern has been identified as fixed at a certain volume of activity: which one is correct.
(A) any change in volume will probably cause the cost to change.
(B) it is appropriate to express the cost on a per unit of activity basis.
(C) the total cost will not change even if the volume of activity changes substantially.
(D) the total cost may change if the volume of activity changes substantially.
2. A firm has revenues of $120,000, a contribution margin ratio of 30%, and fixed expenses that total $56,000. If revenues increase $20,000, then: which one is correct.
(A) operating income will increase by $6000.
(B) operating income will be 0.
(C) fixed expenses will increase $8000
(D) the contribution margin ratio will increase by 1/8.
3. Selling price per unit $ 100
Variable expenses per unit $ 40
Fixed expenses per month $60,000
If sales volume were to decrease 10%, from 4,000 units per month to 3,600 units per month, operating income would: which one is correct.
(A) not change.
(B) decrease $10,000.
(C) decrease $24,000.
(D) decrease $40,000
4. Selling price per unit $ 100
Variable expenses per unit $ 40
Fixed expenses per month $60,000
If the selling price per unit were to drop $2, from $100 to $98, the sales volume were to increase 500 units to 4,500 units per month, and advertising expense were to increase by $1,000: which one is correct:
(A) the break-even point would increase.
(B) the break-even point would decrease.
(C) the contribution margin ratio would increase.
(D) operating income would decrease.
(5)
Month Total Maintenance Cost Production Volume (units)
Jan. 1,880 1,750
Feb. 1,800 1,500
Mar. 2,200 2500
Apr. 2120 2250
May. 2300 2750
Using the high-low method, the monthly fixed component of maintenance cost is: which one is correct.
(A) $1,600.
(B) $1,200.
(C) $1,100.
(D) $1,300.