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____ 1. Fixed costs:a. do not respond to changes in volume.
b. respond in the opposite direction of changes in volume.
c. change in proportion with changes in volume.
d. will always be the same from one period to the next.
____ 2. Which of the following costs change is in direct proportion to the volume?
a. Fixed costs and variable costs.
b. Variable costs.
c. None of the options given.
d. Fixed costs.
____ 3. The definition of contribution margin per unit is:
a. Selling price per unit – variable cost per unit.
b. Selling price per unit – fixed costs.
c. Selling price per unit – total costs.
d. None of the above.
____ 4. The profit equation for a given sales volume is:
a. [Selling price per unit x volume] + [variable cost per unit x volume] – total fixed costs.
b. [Selling price per unit x volume] – [total variable costs] – total fixed costs.
c. [Selling price per unit x volume] + [variable cost per unit x volume] + total fixed costs.
d. [Selling price per unit x volume] – [variable cost per unit x volume] – total fixed costs.
____ 5. Barb’s Best Pies sells a meat pie for $5.00. Variable costs are $3.00 per unit and fixed costs for the period are $4000. The profit on the 2001st pie sold is:
a. $2.00.
b. $5.00.
c. $3.00.
d. $ - 0 -.
____ 6. Widget World makes a widget that is sells for $10 per unit. The variable costs are $7 per unit. Assuming the business has normal fixed costs, and the break-even point is 350 units, what are the total costs at break even?
a. $4500.
b. $3500.
c. $12 000.
d. $7500.
____ 7. Leslie’s Soccer Balls sells soccer balls for $20 each and incurs variable costs of $15 per ball. Leslie’s break-even point is 40 000 units.
What is the total of Leslie’s fixed costs?
a. $2000.
b. $8000.
c. $20 0000.
d. None of the options given.
____ 8. Garrison’s Gaskets has variable costs of $2 per unit and fixed costs of $40 000. Garrison’s selling price is $5 per unit.
What is Garrison’s break-even point?
a. 8000 units.
b. 20 000 units.
c. 13 333 units.
d. None of the options given.
____ 9. Garrison’s Gaskets has variable costs of $2 per unit and fixed costs of $40 000. Garrison’s selling price is $5 per unit.
How many units will Garrison’s have to sell in order to earn a profit of $100 000?
a. 33 333 units.
b. 46 667 units.
c. 20 000 units.
d. 28 000 units.
____ 10. Barney’s Brick Co. has high fixed costs such as building, machinery and salaries. Barney desires to minimise the impact of these fixed costs. A strategy for Barney would be?
a. To produce and sell as many units as possible.
b. To downsize.
c. Sell the business to someone else.
d. Lay off the salary employees.
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