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