1.

Wu Company incurred $40,000 of fixed cost and $50,000 of variable cost when 4,000 units of product were made and sold. If the company's volume increases to 5,000 units, the company's total costs will be:

$100,000

$90,000

$102,500

$80,000

2.

Wu Company incurred $40,000 of fixed cost and $50,000 of variable cost when 4,000 units of product were made and sold. If the company's volume doubles, the company's total cost will:

stay the same.

double as well.

increase but will not double.

decrease.

3.

Hard Nails and Bright Nails are competing nail salons. Both companies have the same number of customers. Both charge the same price for a manicure. The only difference is that Hard Nails pays its manicurists on a salary basis (i.e., a fixed cost structure) while Bright Nails pays its manicurists on the basis of the number of customers they serve (i.e., a variable cost structure). Both companies currently make the same amount of net income. If sales of both salons increase by an equal amount, Hard Nails:

will earn a higher profit than Bright Nails.

will earn a lower profit than Bright Nails.

will earn the same amount of profit as Bright Nails.

The answer cannot be determined from the information provided.

4.

The excess of a product's selling price over its variable costs is referred to as:

gross profit

gross margin

contribution margin

manufacturing margin