1. Redford, Inc. has provided the following data: Sales Price $200.00per unit Sales 6,000Units Fixed Cost $300,000 Variable cost $100.00per unit If the dollar contribution margin per unit is increased by 10%, total fixed cost is decreased by 20%, and all other factors remain the same, net income will: Answer A.decrease by $60,000. B.increase by $60,000. C.increase by $120,000. D.. increase by $420,000. 2. Gardner Manufacturing Company produces a product that sells for $120. A selling commission of 10% of the selling price is paid on each unit sold. Variable manufacturing costs are $60 per unit. Fixed manufacturing costs are $20 per unit based on the current level of activity, and fixed selling and administrative costs are $16 per unit. The contribution margin per unit is: a.$104 b.$72 c.$60 d.$48 3. Lacopi Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $172.50 per unit. Sales volume (units) 4,000 5,000 Cost of sales $307,600 $384,500 Selling and administrative costs $321,200 $337,000 The best estimate of the total contribution margin when 4,300 units are sold is: Answer a.$343,140 b.$65,790 c. $121,260 d.$411,080 4. Shipping expense is $9,000 for 8,000 pounds shipped and $11,250 for 11,000 pounds shipped. Assuming that this activity is within the relevant range, if the company ships 9,000 pounds, its expected shipping expense is closest to: a.$10,125 b.$8,583 c.$9,972 d.$9,750 5. Fixed cost per unit increases as activity decreases and decreases as activity increases. True False 6. Within the relevant range, the variable cost per unit: Answer A. remains constant as activity changes B. increases as activity increases. C. decreases as activity increases. D. can increase or decrease as the activity changes.
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