Question
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
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
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