ONE (13 marks) Select the best multiple choice answer and hilite on the test paper. Multiple choice questions are 2 marks each. 1. Sunset Co. sells its product for $25 per unit. Fixed costs are $66,000 and variable costs amount to $10 per unit. Next year Sunset Co. wishes to earn a before-tax net income that equals 20% of fixed costs. How many units must be sold to achieve this income level? A) 560. B) 4,840. C) 5,280. E) D) 6,160. 6,600. 2 A product sells for $15 per unit and has variable costs of $9 per unit. The fixed costs for the period are $360,000. If the variable costs per unit were to decrease to $7.50 per unit and fixed costs increase to $450,000, the number of units required to break even would: A) Stay the same. B) Equal 6,000. Increase by 6,000. D) Decrease by 20,000. E) Increase by 20,000. 3. Ski Fast Co. has predicted that their sales will be $400,000. If fixed costs are $60,000 and they have a contribution rate of 24%, what is the margin of safety as a percent of sales? A) 6%. B) 25%. 38%. 50%. E) 75%. 4. Vancouver Co expects to sell 30,000 units of its product at $10 per unit. Net income before tax is predicted to be $25,000. If the variable costs per unit are $5 per unit, total fixed costs must be: A) $ 65,000. B) $215,000. C) $150,000. D) $ 90,000. E) $125,000. 5. Positive Company has sales of 3,000 units at $80 per unit. Variable costs are 45% of the sales price. If total fixed costs are $66,000, what is the degree of operating leverage? A) 0.39. B) 0.93. 2.57. D) 1.73. 6. A company has provided the following data: Sales Sales Price Variable Cost Fixed Cost 3,000 units $70 per unit $30 per unit $30,000 If the dollar contribution margin per unit is increased by 10%, total fixed cost is increased by 10%, and all other factors remain the same, Using the incremental approach, calculate the increase/decrease in operating income, showing your calculations