QUESTION 1

1. Which of the following would not be considered a variable cost?

   		direct material costs
   		hourly wages of assembly workers
   		salary of production supervisor
   		packaging costs for outgoing finished goods shipments

QUESTION 2

1. Which of the following would not be considered a fixed cost?

   		president's salary
   		real estate taxes
   		depreciation of office equipment
   		oil used in manufacturing equipment

QUESTION 3

1. Which of the following statements describe fixed costs?

   		Costs that remain the same in total dollar amount as the level of activity changes.
   		Costs that vary in total in direct proportion to changes in the level of activity.
   		Costs that are mixed. and sometimes vary and sometimes remain the same in total dollar amount.
   		Costs that are fixed to the stock market and will vary depending on how it trades that day.

QUESTION 4

1. If sales are $1,000,000, variable costs are $300,000 and fixed costs are $400,000, what is the contribution margin ratio?

   		30%
   		70%
   		60%
   		40%

QUESTION 5

1. If sales are $1,000,000, variable costs are $200,000 and fixed costs are $400,000, what is the profit (net operating income)?

   		$400,000
   		$800,000
   		$600,000
   		$200,000

QUESTION 6

1. For the current year ending December 31, Ferlawn Industries expects fixed costs of $10,000, a unit variable cost of $5, and a unit selling price of $15. How many units need to be sold to break even

   		10,000 units
   		5,000
   		1,000
   		500