1. Clear Springs Bottling Company produces a soft drink that is sold for a dollar. The company pays $500,000 in production costs, of which $250,000 are variable production costs. General, selling, and administrative costs amount to $390,000 of which $100,000 are variable costs. Assuming production and sales of 800,000 units, what is the amount of contribution margin per unit?

1. $0.5625
2. $0.3125
3. $0.1375
4. None of the above

2. The following information is provided for Darby Company:

(1)	Raw material used	$ 5,000
(2)	Production wages	$ 10,000
(3)	Sales salaries and other selling costs	$ 20,000
(4)	Overhead Costs	$ 5,000
(6)	Administrative Salaries and costs	$ 30,000
(7)	Sales Revenues	$100,000
(8)	Products Produced	4,000
(9)	Products Sold	3,000

Select the incorrect statement regarding the financial statement impact of classifying the $20,000 in selling costs as product costs.

1. Cost of goods sold will be overstated by $15,000.
2. Ending inventory of finished goods will be overstated by $5,000.
3. Net income will not be affected since the error in cost of goods sold expense will be offset by the error in selling costs.
4. Gross margin will be understated by $5,000.

3. Maxim Company incurred $30,000 of fixed cost and $40,000 of variable cost when 2,000 units of product were made and sold. When 4,000 units of product are made and sold the companys cost per unit is

1. $25
2. $20
3. $27.50
4. $35.00