Case 21.3 Fairfield Company management has budgeted the following amounts for its next fiscal year: Total fixed expenses $832,500 Sale price per unit 540 Variable expenses per unit $25 92,50/15 16) Refer to Case 21.3. If Fairfield Company can reduce fixed expenses by $22,500, how will breakeven sales in units be affected? A) decrease by 1,500 units B) no change C) decrease by 900 units D) increase by 562 units 16) Contribution (2,50x15)= 37.5W 17) Refer to Case 21.3. If Fairfield Company spends an additional $30,000 on advertising, sales volume 17 should increase by 2,500 units. What effect will this have on operating income? A) decrease of $62,500 B) increase of $70,000 C) increase of $7,500 less increase -30, w D) cannot be determined from the information given c st . + 17,5 18) 18) Refer to Case 21.3. If Fairfield Company can reduce fixed expenses by $41,625, by how much can variable expenses per unit increase and still allow the company to maintain the original breakeven sales in units? A) $0.75 B) S0.25 C) $2.78 D) $0.53 net Increase in $7,50 19) 19) Refer to Case 213. If fixed expenses increase by 10%, to maintain the original breakeven sales in units, the sale price per unit would have to be which of the following? A) increased by 3.75% B) increased by 3.61% C) decreased by 10% D) decreased by $5.55 20) 20) Mist Company sells two products, X and Y. Mist predicts that it will sell 2,500 units of X and 1,500 units of Y in the next period. The unit contribution margins are $3.50 and $4.80, respectively. What is the weighted average unit contribution margin? A) $4.15 B) $4.25 C) $3.99 D) $3.71 21) Which of the following is an advantage of the budgeting process? A) coordinates the activities of the organization B) assures the company of achieving its objectives C) aids in performance evaluation D) both A and B 22) 22) Which of the following is a benefit of budgeting? A) improved motivation for employees B) focuses management's attention on the future C) improved decision-making processes D) all of the above are benefits of budgeting