Accounting 206 Exam 1 Chapter 6

Which of the following statements is true regarding fixed and variable costs?

Fixed costs are constant in total, and variable costs are constant per unit

Which of the following describes the behavior of the fixed cost per unit?

decreases with increasing production

Spice Inc.'s unit selling price is $60, the unit variable costs are $35, fixed costs are $125,000, and current sales are 10,000 units. How much will operating income change if sales increase by 8,000 units?

$200,000 increase

Variable costs as a percentage of sales for Lemon Inc. are 80%, current sales are $600,000, and fixed costs are $130,000. How much will operating income change if sales increase by $40,000?

$8,000 increase

If the contribution margin ratio for France Company is 45%, sales are $425,000, and fixed costs are $100,000, the operating income is

$91,250

If fixed costs are $750,000 and variable costs are 60% of sales, the break-even point in sales dollars is

1,875,000

If fixed costs are $1,200,000, the unit selling price is $240, and the unit variable costs are $110, the amount of sales (units) required to realize an operating income of $200,000 is

10,769 units

If fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, the break-even sales (units) is

4,808 units

If sales are $820,000, variable costs are 55% of sales, and operating income is $260,000, the contribution margin ratio is

45%

Bryce Co. sales are $914,000, variable costs are $498,130, and operating income is $196,000. The contribution margin ratio is

45.5%

Zeke Company sells 25,000 units at $21 per unit. Variable costs are $10 per unit, and fixed costs are $75,000. The contribution margin ratio and the unit contribution margin, respectively, are

52% and $11 per unit

Costs that remain constant in total dollar amount as the level of activity changes are called ________ costs.

fixed

The three most common cost behavior classifications are

fixed costs, variable costs, and mixed costs