1. An increase in the level of activity will have the following effects on unit
ID: 471039 • Letter: 1
Question
1. An increase in the level of activity will have the following effects on unit costs for variable and fixed
costs:
2. Two costs at Watson, Inc. appear below for specific months of operation.
Month Amount Units Produced $/unit
Delivery costs January $ 40,000 40,000 $40, 000/40000 = $1
February 55,000 60,000 $55,000/60000 = $.92
Utilities January $ 84,000 40,000 $84,000/40000=$2.10
February 126,000 60,000 $126,000/60,000= $2.10
Which type of costs are these?
3. The contribution margin ratio increases when
4. Wynne Company's high and low level of activity last year was 60,000 units of product produced in May
and 20,000 units produced in November. Machine maintenance costs were $78,000 in May and
$30,000 in November. Using the high-low method, determine an estimate of total maintenance cost for
a month in which production is expected to be 45,000 units.
5. If a company had a contribution margin of $500,000 and a contribution margin ratio of 40%, total
variable costs must have been
6. At the break-even point of 2,000 units, variable costs are $55,000, and fixed costs are $32,000. How
much is the selling price per unit?
7. Givenchy Company sells 100,000 wrenches for $12.00 per unit. Fixed costs are $350,000 and net
income is $250,000. What should be reported as variable expenses in the CVP income statement?
8. In a CVP income statement, a selling expense is generally
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