Question 1 The following information would be used to determine the unit cost pe

Question

Question 1

The following information would be used to determine the unit cost per item sold:

Question options:

a)

Selling price per unit.

b)

Total dollar sales.

c)

Total unit sales.

d)

None of the above.

Which of the following average costs per unit will usually decrease by the greatest percentage with an increase in the volume of units produced?

Question options:

a)

Average total cost per unit.

b)

Average fixed cost per unit.

c)

Average variable cost per unit.

d)

Average semi-variable costs per unit.

The high and low levels of direct-labor hours and total manufacturing overhead of Kelly's Mfg. Co. are shown below:
                  Direct Labor-Hours   Total Manufacturing Overhead
Highest level   4,000                              $12,000
Lowest level   1,000                                  6,000
Kelly's fixed portion of total manufacturing overhead is approximately:

Question options:

a)

$4,000 plus $2 direct labor-hour.

b)

$8,000.

c)

$4,000.

d)

$2 per direct labor hour.

Question 5

When a cost-volume-profit graph is prepared, the break-even point will always be found:

Question options:

a)

At 50% of normal capacity.

b)

At the volume resulting in the lowest average unit cost.

c)

At a volume where total revenue equals total fixed costs.

_____________________________________________________

The recent high and low levels of hours operated (HrO) and monthly repair cost (RC) for heavy equipment for Universal Mfg. are shown below:

Highest observed level: 24,000 HrO and RC $7,450
Lowest observed level: 21,500 HrO and RC $6,700

Using the high-low method, compute the variable element of repair cost per hour of operation for Universal’s equipment:

Question options:

a)

$0.34.

b)

$0.30.

c)

$750.

d)

$3.33.

Management predicts total sales for June to be $3,000,000, yielding a margin of safety of $1,000,000 and a contribution margin ratio of 25%. Which of the following amounts is not consistent with this information?

Question options:

a)

Fixed costs, $500,000.

b)

Variable costs, $750,000.

c)

Operating income, $250,000.

d)

Break even sales volume, $2,000,000.

Question 1

Explanation / Answer

1) a - selling price per unit

2) b - Average fixed cost per unit

3) a - $ 4000 plus $ 2 direct labour hour

5) b - at the volume resulting in the lowest average cost per unit

b - $ 0.3 ( 750 / 2500)

d - Break even sales volume $ 200000

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