Question
Cheesy Company The Company is considering the introduction of a new product with the following price and cost characteristics Sales price $150 each Variable cost
Cheesy Company
The Company is considering the introduction of a new product with the following price and cost characteristics
| Sales price | $150 each |
| Variable cost | $60 each |
| Fixed cost | $135,000 per year |
The company expects to sell 2,000 units for the year.
16. Refer Cheesy Company. How many units must be sold to break even?
| a. | 900 |
| b. | 2,250 |
| c. | 2,000 |
| d. | 1,500 |
17. What effect could an increase (investment) in fixed costs have on the break-even point and the contribution margin?
Break-even Point Contribution Margin
| a. | Increase Increase |
| b. | Increase Decrease |
| c. | Decrease Increase |
| d. | Decrease Decrease |
18. Calculate margin of safety using the following assumptions:
| Sales Price per unit | $500 |
| Variable cost per unit | $300 |
| Fixed Costs in total | $200,000 |
| Actual Sales Volume | 1,750 units |
| a. | 1,000 units |
| b. | $500,000 |
| c. | 1,750 units |
| d. | 750 units |
19. Which of the following is a typical cost structure for home builders?
| a. | high fixed costs relative to variable costs. |
| b. | high variable costs relative to fixed costs. |
| c. | high profits relative to total costs. |
| d. | None of the answers is correct. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started