ACC 350 test 2
Franco Company has variable costs of $0.65 per unit of product. In October, the volume of production was 24,000 units and units sold were 23,000. The total production costs incurred were $32,200. What are the fixed costs per month?
$16,600
Neptune Company sold 2 comma 1002,100 units in November at a price of $ 40$40 per unit. The variable cost is $ 25$25 per unit. Calculate the total contribution margin.
$31,500
Tanaka Company has fixed costs of $14,000. Their contribution margin ratio is 40% and ratio of selling expenses to sales is 20%. What is the breakeven point in sales dollars?
$35,000
total cost formula
(variable cost per unit*number of units) + fixed costs
different types of costs
1. variable costs 2. fixed costs 3. mixed costs
A company that sells multiple products will always set selling prices such that all products have the same contribution margin.
False
An increase in selling price per unit decreases the contribution margin per unit.
False
Which of the following costs does not change in total despite changes in volume?
Fixed cost
Which of the following statements is true of the behavior of total fixed costs, within the relevant range?
They will remain the same as production levels change.
Which of the following will lower the breakeven point?
Which of the following will lower the breakeven point?
Which of the following is a period cost?
administrative cost
Which of the following will lower the breakeven point?
an increase in the sales price per unit
A(n) ________ groups cost by behavior; that is, costs are classified as either variable costs or fixed costs.
contribution margin income statement
A(n) ________ groups cost by behavior; that is, costs are classified as either variable costs or fixed costs.
contribution margin income statement
When the total fixed costs decreases, the breakeven point ________.
decreases
The degree of operating leverage can be measured by ________.
dividing the contribution margin by operating income
A company that sells multiple products will always set selling prices such that all products have the same contribution margin.
false
An increase in selling price per unit decreases the contribution margin per unit.
false
An increase in selling price per unit increases the number of units required to break even.
false
If the variable cost per unit decreases, the total number of units required to breakeven will increase.
false
Which of the following is considered a period cost under variable costing but not under absorption costing?
fixed manufacturing overhead
The fixed costs per unit will ________.
increase as production decreases
When the total fixed costs increases, the breakeven point ________.
increases
A variable costing income statement is used for ________.
internal decision-making purposes
Contribution margin ratio is the ratio of contribution margin to ________.
net sales revenue
When the total fixed costs increases, the contribution margin per unit ________.
remains the same
In variable costing, fixed manufacturing overhead is considered a period cost because ________.
these costs are incurred whether or not the company manufactures any goods
If a company reduces its fixed costs, the operating income will increase by the same amount as the cost reduction.
true
Diaz Foods produces a gourmet salsa which sells for $28 per unit. Variable costs are $8 per unit, and fixed costs are $7,000 per month. If Diaz expects to sell 1,700 units, compute the margin of safety in units.
1,350 units