Use the following information to answer the next two questions: Gammas cost accountant prepared the following static budget based on expected activity of 2,000 units for the 2020 accounting period:

Sales Revenue $64,000

Variable Costs (34,000)

Contribution Margin 30,000

Fixed Costs (18,000)

Net Income $12,000

1. If Gamma actually produced 1,800 units, the flexible budget would show variable costs of

a. $34,000.

b. $22,666.

c. $30,600.

d. $25,500.

2. If Gamma actually produced 1,900 units, the flexible budget would show fixed costs amounting to

a. $19,800.

b. $18,000.

c. $52,000.

d. none of the above.

3. Which of the following is NOT considered an advantage of decentralization?

a. Decentralization often improves the quality of decision making by delegation of authority.

b. Decentralization guarantees that a department will achieve its goals.

c. Decentralization motivates managers to be more productive.

d. Decentralization trains lower-level managers for more responsibility in the future.

4. Which of the following would improve a firms return on investment?

a. Raising sales prices and incurring higher expenses.

b. Increasing earnings and investment in assets.

c. Lowering sales prices and increasing asset investment.

d. A decrease in expenses with no effect on revenues or the investment in assets.

5. Last year, Tamco Corporation had revenues of $120,000 and expenses of $70,000. If Tamco had $500,000 of operating assets last year, what was Tamcos turnover?

a. .48

b. .24

c. .16

d. .40