Question 1
Redford, Inc. has provided the following data:
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:
A. decrease by $60,000.
B. increase by $60,000.
C. increase by $120,000.
D. increase by $420,000.
Question 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
Question 3
Iacopi 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:
a. $343,140
b. $65,790
c. $121,260
d. $411,080
Question 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
Question 5
Fixed cost per unit increases as activity decreases and decreases as activity increases.
True
False
Question 6
Within the relevant range, the variable cost per unit:
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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