28. A cost that changes in proportion to changes in volume of activity is a(n):

Question

28. A cost that changes in proportion to changes in volume of activity is a(n): A. Differential cost B. Fixed cost. C. Incremental cost D. Variable cost. E. Product cost. 27. If a firm's forecasted sales are $250,000 and its break-even sales are $190,000, the margin of safety in dollars is A. $60,000. B. $250,000. C. $190,000. D. $440,000. E. $24,000. 28. A product sells for $200 per unit, and its variable costs per unit are $130. The fixed costs are $420,000. If the firm wants to earn $35,000 pretax income, how many units must be sold? A. 6,500. B. 6,000. C. 500. D. 5,000. E. 5,500. 29. A management concept that seeks to uncover and eliminate waste in all aspects of business activities is called: A. Continuous operations. B. Customer orientation. C. Just-in-time. D. Theory of constraints E. Total quality management.

Explanation / Answer

Question 26 - Variable Cost

As production increases, variable costs increase in direct proportion to the change in volume; as production decreases, variable costs decrease in direct proportion to the change in volume

Question 27 - $ 60,000

Margin of safety = Actual Sales - Break-Even Sales

= $ 250000 - $ 190000 = $ 60,000

Question 28 - 6500 Units

Let X be the number of unit sold

$ 35000 = 200X -130X - $ 420000

70X = $ 455000

X = 6500 Units

Question 29 - Total Quality Management

A management concept that seeks to uncover and eliminate waste in all aspects of business activities is called Total Quality Management

ALL THE BEST !!!

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