1. Burger Bobs Boathouse sells only one product. 7,000 units were sold in year, resulting in $70,000 of sales revenue. Variable costs were $28,000 for the year, and fixed costs were $24,000. The Break-even point in volume is:
a. 3,000 units
b. 4,000 units
c. 2,000 units
d. 7,000 units
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2. How many units would have to be sold to yield a target operating income of $6,000, assuming variable costs are $15 per unit, total fixed costs are $2,000, and the unit selling price is $20?
a. 4,800 units
b. 4,400 units
c. 4,000 units
d. 1,600 units
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3. Delta Merchandising, Inc., has provided the following information for the year just ended:
What was the ending inventory for the company at year-end?
a. $65,450.
b. $14,050.
c. $24,500.
d. $9,950.
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4. Gabel Inc. is a merchandising company. Last month, the company's merchandise purchases totaled $63,000. The company's beginning merchandise inventory was $43,000, and its ending merchandise inventory was $15,000. What was the company's cost of goods sold for the month?
a. $61,000.
b. $65,000.
c. $63,000.
d. $91,000.
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5. Last month, when 10,000 units of a product were manufactured, the cost per unit was $60. At this level of activity, variable costs were 50% of total unit costs. If 9,500 units are manufactured next month and cost behavior patterns remain unchanged, how will costs be affected?
a. Total costs per unit will increase.
b. Variable cost per unit will increase.
c. Total cost per unit will decrease.
d. Total variable costs will remain unchanged.
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6. Within the relevant range, what is the difference between variable costs and fixed costs?
a. Total variable costs and total fixed costs fluctuate.
b. Variable costs per unit fluctuate and fixed costs per unit remain constant.
c. Total variable costs and total fixed costs are constant.
d. Variable costs per unit are constant and fixed costs per unit fluctuate.
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7. What will result from a decrease in the activity level within the relevant range?
a. An increase in fixed cost per unit.
b. A decrease in fixed cost per unit.
c. A proportionate increase in total fixed costs.
d. An unchanged fixed cost per unit.
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8. The linear equation Y = a + bX is often used to express cost formulas. Which of the following representations in this equation is correct?
a. The term represents the variable cost in total.
b. The X term represents total costs.
c. The b term represents the variable cost per unit of activity.
d. The Y term represents total fixed costs.
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9. The following data pertain to activity and costs for two months:
Assuming that these activity levels are within the relevant range, what were the mixed costs for July?
a. $15,000.
b. $10,000.
c. $40,000.
d. $35,000.
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10. A company has sales of $87,500 at the break-even point and fixed costs are $35,000. Assuming cost behavior does not change if sales increase by $50,000, how much will operating income will increase by?
a. $8,000.00.
b. $4,000.00.
c. $12,000.00.
d. $20,000.00.
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