1. If a company decreases total fixed costs and increases the variable cost per unit, the total cost line relative to

its previous position on a cost-volume-profit graph will:

a. shift downward and have a steeper slope.

b. shift downward and have a flatter slope.

c. shift upward and have a flatter slope.

d. shift upward and have a steeper slope.

2. Pool Companys variable costs are 64% of sales. Pool is contemplating an advertising campaign that will

cost $40,000. If sales are expected to increase $150,000, the companys net income will increase by:

a. $56,000.

b. $14,000.

c. $64,000.

d. $57,600.

3. The following information Pertains to Sisk Co.:

Sales (20,000 units) $400,000

Direct materials and Direct labor (both are variable) 140,000

Other Variable Costs 20,000

Fixed Costs 60,000

Sisks break-even point in number of units is:

a. 4,924.

b. 6,250.

c. 5,000.

d. 4,615.

4. Jack Co. can increase sales by 40% by spending $25,000 on advertising. If the contribution margin

for Jack Co. is currently $90,000, the impact of this decision on net income would be:

a. an increase of $26,000.

b. a increase of $11,000.

c. a decrease of $46,000.

d. net income would not change.

5. Question 5 refers to the following:

Sales 2,500 units

Sales price $100 per unit

Variable costs $45 per unit

Fixed costs $46,000

How many units will the company need to sell to reach a target net income of $130,000?

a. 3,000 units. c. 3,200 units.

b. 3,900 units. d. 2,600 units.