Question 1:

Which of the following is the primary source of revenue for a merchandising business?

the production of products from raw materials

the purchase and resale of finished products

providing intangilble goods and services

the sale of raw materials to manufacturing firms

Question 2:

Which of the following represents the components of the income statement for a service business?

Sales Revenue - Cost of Goods Manufactured = gross profit

Service Revenue - Cost of Goods Purchased = gross profit

Sales Revenue - Cost of Goods Sold = gross profit

Service Revenue - Operating Expenses = operating income

Question 3:

Which of the following represents the components of the income statement for a merchandising business?

Service Revenue - Operating Expenses = gross profit

Sales Revenue - Cost of Goods Manufactured = gross profit

Service Revenue - Cost of Goods Purchased = gross profit

Sales Revenue - Cost of Goods Sold = gross profit

Question 4:

Which of the following isnotconsidereda product cost?

direct materials

indirect materials

direct labor

selling expense

Question 5:

Variable costs are expenses that _________________________.

decrease in a per-unit basis as activity level increases

remain constant on a per-unit basis and remain constant in total regardless of activity level

remain constant in total regardless of the activity level within a relevant range

remain constant on a per-unit basis but change in total based on activity level

Question 6:

Which of the following would not be classified as manufacturing overhead?

direct labor

indirect materials

indirect labor

property taxes on the factory

Question 7:

Which of the following statements is true regarding average fixed costs?

Average fixed costs per unit cannot be determined.

Average fixed costs per unit rise as the level of activity rises.

Average fixed costs per unit fall as the level of activity rises.

Average fixed costs per unit remain fixed regardless of activity.

__________________________________________________________________

Question 8:

A company's product sells for $150 and has variable costs of $60 associated with the product. What is its contribution margin per unit?

$150

$40

$60

$90

Question 9:

A company's contribution margin per unit is $25. If the companyincreases its activity level from 200 units to 350 units, how much will its total contributionmargin increase?

$8,750

$3,750

$1,250

$5,000

Question 10:

If a company has fixed costs of $6,000 per month and their product that sells for $200 has a contribution margin ratio of 30%, how many units must they sell in order to break even?

100

2,000

180

200

Question 11:

A company wants to earn an income of $60,000 after taxes. If the tax rate is 32%, what must the company's pre-tax income be in order to have $60,000 after-taxes?

$79,200

$143,000

$19,200

$88,235

Question 12:

When sales price increases and all other variables are heldconstant, the break-even point will ____________________.

produce a lower contribution margin

decrease

remain unchanged

increase

Question 13:

When variable costs increase and all other variables remain unchanged, the break-even point will ___________________.

increase

decrease

remain unchanged

produce a lower contribution margin

Question 14:

When fixed costs increase and all other variables remain unchanged, the contribution margin will ___________________.

increase

increase variable costs per unit

remain unchanged

decrease