10. Mixed costs are the same as: a.) Semivariable costs b.) Step costs c.) Total
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Question
10. Mixed costs are the same as:a.) Semivariable costs
b.) Step costs
c.) Total production costs
d.) Discretionary fixed costs
e.) A & C only
11. The Contribution margin ratio is found by:
a.) Subtracting total fixed costs from sales and dividing this by the number of units produced.
b.) Adding total variable costs and fixed costs and dividing by the selling price per unit
c.) Taking the selling price per unit and subtracting variable costs from it and dividing by the selling price per unit.
d.) Dividing total fixed and variable costs by the selling price per unit.
e.) B & C only.
12. John’s Camera is currently selling cameras at a price of $100. The cameras have a variable cost of $75 per camera and John’s Camera has a total fixed cost of $100,000. John’s Camera is currently selling 5,000 units of cameras. John’s Camera is considering changing its production process. With the change in production, John’s Camera will lower its fixed to $80,000 but raise its variable costs to $90 per unit. Should John’s Camera go forward with the change in production process?
a. Yes, because the new production process lowers fixed costs by $20,000.
b. Yes, because the new production process raises the contribution margin.
c. No, because the new production process leads to a decline in profits by $55,000.
d. No, because the new production process raises the variable costs by $15 per unit.
Explanation / Answer
10. Mixed Costs are the sum of Fixed and VAriable costs . Hence, Mixed costs are the same as SemiVariable costs. 11. The contribution margin ratio is found by : Taking the selling price per unit and subtracting variable costs from it and dividing by the selling price per unit.12. No because the d.No, because the new production process raises the variable costs by $15 per unit. Selling Price 100 Less: Variable Costs -75 Unit Contribution 25 Selling Price 100 Less: Variable Costs -75 Unit Contribution 25 Selling Price 100 Less: Variable Costs -75 Unit Contribution 25
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