3. Which of the following costs are variable?

Cost	10,000 Units	30,000 Units
1.	$100,000	$300,000
2.	40,000	240,000
3.	90,000	90,000
4.	50,000	150,000

a. 1 and 2. b. 1 and 4. c. only 1. d. only 2.

6. If a company had a contribution margin of $150,000 and a contribution margin ratio of 40%, total variable costs must have been a. $225,000. b. $90,000. c. $375,000. d. $60,000.

7. A company has contribution margin per unit of $12 and a contribution margin ratio of 40%. What is the unit selling price? a. $20.00. b. $30.00. c. $4.80. d. Cannot be determined

8. Sales are $250,000 and variable costs are $175,000. What is the contribution margin ratio? a. 43% b. 30% c. 70% d. cannot be determined because amounts are not expressed per unit.

9. A company has total fixed costs of $150,000 and a contribution margin ratio of 20%. The total sales necessary to break even are a. $600,000. b. $750,000. c. $187,500. d. $180,000.

10. A company sells a product which has a unit sales price of $5, unit variable cost of $3 and total fixed costs of $80,000. The number of units the company must sell to break even is a. 40,000 units. b. 16,000 units. c. 160,000 units. d. 26,667 units.

11. Fixed costs are $600,000 and the contribution margin per unit is $150. What is the break-even point? a. $1,500,000. b. $4,000,000. c. 1,500 units. d. 4,000 units.

13. A company has a process that results in 6,000 pounds of Product A that can be sold for $8 per pound. An alternative would be to process Product A further at a cost of $40,000 and then sell it for $14 per pound. Should management sell Product A now or should Product A be processed further and then sold? What is the effect of the action? a. Process further, the company will be better off by $4,000. b. Sell now, the company will be better off by $4,000. c. Process further, the company will be better off by $36,000. d. Sell now, the company will be better off by $40,000.

14. A company can produce and sell only one of the following two products:

	Machine	Contribution
	Hours Required	Margin Per Unit
Product 1	3	$30
Product 2	2	$25

If the company has machine capacity of 2,000 hours, what is the total contribution margin of the product it should produce to maximize net income? a. $20,000. b. $24,000. c. $25,000. d. $16,000.