1.

Head-First Company sells both bicycle helmets and motorcycle helmets. Next year, Head-First expects to earn total revenue of $450,000, of which $300,000 are expected from the sale of bicycle helmets and $150,000 from the sale of motorcycle helmets. Total variable cost and fixed cost are expected to be $270,000 and $120,000, respectively. To break even, how much revenue must be generated by selling bicycle helmets?

A) $300,000

B) $180,000

C) $133,333

D) $200,000

2.

Which of the following statements is FALSE?

A) If the total fixed cost decreases, the break-even point in sales dollars will decrease.

B) The degree of operating leverage in a company will decrease as the sales volume goes away from the break-even point.

C) If the variable cost per unit decreases, the break-even point in units will increase.

D) If the contribution margin per unit increases, the break-even point in units will decrease.

3.

Which of the following business would most likely use a process costing system?

A) A luxury home builder

B) A cement manufacturer

C) A law firm

D) A film maker