1/ For a hotel, which of the following is most likely to be a variable cost rather than a fixed cost?

A. Laundry costs to wash the sheets

B. WIFI service

C. Manager's salary

D. Billboard advertising

2/ Which of the following would be an indirect cost for a custom home builder?

A. A $9,000 diamond incrusted bath tub

B. Annual fee for professional license

C. Wood

D. Wages for construction crew

3/ Data for Cost A and Cost B are as follows:

# of Units ProducedTotal Cost # of Units ProducedPer Unit Cost

Cost A1 $10 Cost B1 $3,000

10 $100 10 $300

100 $1,000 100 $30

Which of the following best describes the behavior of CostA and Cost B?

A. Cost A is fixed; Cost B is variable.

B. Cost A is variable; Cost B is fixed.

C. Both Cost A and Cost B are variable.

D. Both Cost A and Cost B are fixed.

4/ I am considering changing careers to become a stand-up comedian.

Which of the following would be considered a sunk cost?

A. My salary at UCLA

B. The amount Netflix might pay me for a stand-up special

C. The cost I paid to get my CPA license

D. The cost to hire an agent in the comedy industry

E. My tuition at comedy college

5/ Which of the following would be classified as an indirect product cost?

A. The commission paid to a salesperson

B. Major materials such as steel used in the production of the car

C. Factory utilities, such as electricity

D. The salary of the plant manager who supervises production

E. The hourly wage of an assembly line worker used in the production of the car

6/ Ward, Inc. has the following data for total utilities costs over the last four months.

Using the High-Low method, estimate the total utilities cost if 800 hours are used in the 5th month.

MonthHours UsedCost

1 904$8,500

2 700$7,000

3 810$7,200

4 950$9,000

7/ Patriot, Inc. which sells American flags on Amazon for $5 each, has total fixed costs of $20,000. The Contribution Margin ratio is 0.24.

How many total flags does Patriot need to sell in order to have a profit of $10,000?

8/ The following information represents a CVP income statement for printer manufacturer based on current performance.

Information relates to questions 8-10.

Sales revenue ($400 per unit)$640,000

Less variable costs $440,000

Contribution margin $200,000

Less fixed costs $400,000

Operating loss ($200,000)

What is the break-even point in units?

9/ The following information represents a CVP income statement for printer manufacturer based on current performance.

Information relates to questions 8-10.

Sales revenue ($400 per unit)$640,000

Less variable costs $440,000

Contribution margin $200,000

Less fixed costs $400,000

Operating loss ($200,000)

What would the profit be if 5,200 units were sold?

10/ The following information represents a CVP income statement for printer manufacturer based on current performance.

Information relates to questions 8-10.

Sales revenue ($400 per unit)$640,000

Less variable costs $440,000

Contribution margin $200,000

Less fixed costs $400,000

Operating loss ($200,000)

The company above is considering buying a new machine to aid in manufacturing its printers. If purchased, fixed costs will increase $30,000 but variable costs will go down $25 per unit. Sales units will increase by 30% because of the superior quality.

How much better off is the company if it purchases the machine?