QUESTION 1

1. If fixed costs are $45,000 and the total costs are $60,000 at an activity level of 6,000 units, variable costs are:

		$10.00 per unit
		$7.50 per unit
		$5.00 per unit
		$2.50 per unit

QUESTION 2

1. The contribution margin is equal to:

		Revenues - fixed costs
		Revenues - variable costs
		Fixed costs + Variable costs
		Fixed costs - Variable costs

QUESTION 3

1. When other factors remain constant, an increase in variable costs:

		Increases the number of units needed to earn profits
		Decreases the number of units needed to earn profits
		Has no effect on the number of units needed to earn profits
		Has none of the above effects

QUESTION 4

1. Everclean Company cleans draperies. It charges $75 to clean a full-size drape, and its variable and fixed costs are $45 per drape and $8,000 per year respectively. Given this data, how many drapes must the company clean to break even?

		134
		267
		300
		320