Study "ACCT 102", a flashcard deck on FORKSAI.
A company incurred $15,000 in fixed costs and $5 per unit in variable costs. If they produced 3,000 units, what would be the total cost? A) $15,000 B) $30,000 C) $45,000 D) $60,000
B) $30,000. Total variable cost is $5/unit * 3,000 units = $15,000. Total cost is fixed costs + total variable costs = $15,000 + $15,000 = $30,000.
A company's highest activity level was 10,000 units with a total cost of $80,000. The lowest activity level was 6,000 units with a total cost of $56,000. Using the high-low method, what is the variable cost per unit?
The variable cost per unit is $6.00. (Change in Cost / Change in Activity) = ($80,000 - $56,000) / (10,000 units - 6,000 units) = $24,000 / 4,000 units = $6.00 per unit.
A CVP income statement reports sales of $500,000, variable costs of $300,000, and fixed costs of $150,000. What is the contribution margin?
The contribution margin is $200,000. Sales - Variable Costs = Contribution Margin. So, $500,000 - $300,000 = $200,000.
If a product sells for $100 per unit and has variable costs of $60 per unit, what is the contribution margin ratio? A) 40% B) 60% C) 100% D) 160%
A) 40%. The contribution margin per unit is $100 - $60 = $40. The contribution margin ratio is ($40 / $100) * 100% = 40%.
A company has fixed costs of $90,000 and a contribution margin per unit of $30. How many units must be sold to break even?
The company must sell 3,000 units to break even. Break-even point in units = Fixed Costs / Contribution Margin per Unit = $90,000 / $30 = 3,000 units.
A company wants to earn a target profit of $60,000. Fixed costs are $120,000, and the contribution margin per unit is $40. How many units must be sold to achieve the target profit?
The company must sell 4,500 units. Units to earn target profit = (Fixed Costs + Target Profit) / Contribution Margin per Unit = ($120,000 + $60,000) / $40 = $180,000 / $40 = 4,500 units.
If actual sales are $500,000 and the break-even sales are $400,000, what is the margin of safety in dollars? A) $100,000 B) $400,000 C) $500,000 D) $900,000
A) $100,000. Margin of Safety = Actual Sales - Break-Even Sales. So, $500,000 - $400,000 = $100,000.
A company sells two products: Product A and Product B. Product A has sales of $300,000 and Product B has sales of $200,000. What is the sales mix for Product A?
The sales mix for Product A is 60%. Total sales are $300,000 + $200,000 = $500,000. Sales mix for Product A = ($300,000 / $500,000) * 100% = 60%.
Which of the following is an example of a fixed cost? A) Direct materials B) Sales commissions C) Rent on factory building D) Hourly wages for production workers
C) Rent on factory building. Fixed costs remain constant in total, regardless of changes in the level of activity, within a relevant range. Rent is a classic example of a fixed cost.
The high-low method is used to: A) Calculate the break-even point in units. B) Separate mixed costs into their fixed and variable components. C) Determine the target profit. D) Calculate the margin of safety ratio.
B) Separate mixed costs into their fixed and variable components. The high-low method identifies the highest and lowest activity levels and their associated total costs to estimate the variable cost per unit and total fixed costs.