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Assume that the firm is operating within its relevant range for all questions.

In an operating environment that contains both fixed and variable costs, as the activity level increases, the average cost per unit will

a$.$ increase

b$.$ decrease

c$.$ remain the same

An invested dollar amount, earning an annual rate of return of $9\%,$ will double $($read this as also nearly or just over double$)$ in value in approximately $($circle a$,$b$,$or c$)$ years.

a$.7$

b$.8$

c$.9$

d$.10$

The formula for the contribution margin ratio is

a$.$ total revenue minus total costs

b$.$ total revenue minus variable costs

c$.$ total revenue minus fixed costs

d$.$ total revenue minus variable costs divided by total revenue

The annual payment necessary to amortize $($pay off$)$ a $5\%$$$200,000$ loan with a $20$ year repayment period $($annual end of year payments required$)$ is

MSM Inc. is a profitable company. It sells only one type of product. Management is considering raising selling prices by $10\%$ to offset an expected $10\%$ increase in all $($fixed and variable$)$ costs. The impact of making this change will be to

a$.$ Increase the unit breakeven point

b$.$ Decrease the unit breakeven point

c$.$ Cause no change to the unit breakeven point

On a normal breakeven graph the line with the steepest slope is the

a$.$ revenue line

b$.$ total cost line

c$.$ fixed cost line

On a normal breakeven graph a reduction in fixed cost will move the unit breakeven point

a$.$ to the left

b$.$ to the right

c$.$ not at all

MSM Inc. sells garden statues. Each statue sells for $$95.$ MSM Inc. buys each statue for $$40$ and pays a $20\%$ commission to salespeople for all sales made by the company. All other costs $($ $$3,000$ each month$)$ are fixed. If MSM Inc. reduces monthly fixed cost by $$500$ but increases the commission rate by $5\%$

a$.$ the monthly breakeven point in unit sales will increase

b$.$ the monthly breakeven point in unit sales will decrease