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CVP questions

Managerial Accounting Review

1. Joe's Bagel Shop has total costs of $7,000 when 3,500 units are produced and $10,500 when 7,000 units are produced. What is the total fixed cost?
A. $7,000
B. $3,500
C. $10,500
D. $0

2. Total costs at the Pisces Fish House were $75,800 when 30,000 units were produced and $95,800 when 40,000 units were produced. Use the high-low method to find the estimated total costs for a production level of 32,000 units.
A. $80,115
B. $76,000
C. $79,800
D. $91,800

3. Assume that Vega's Tamales has fixed costs of $128,325. Each unit generates variable costs of $0.42 and sells for $1.00. What is the break-even point?
A. 90,170 units
B. 221,250 units
C. 304, 536 units
D. 86,325 units

4. Mike's Tires, Inc. sells a single product at a price of $275 per unit. Variable cost per unit is $135 and fixed costs total $356,860. If sales are expected to be $825,000, what is Mike's margin of safety?
A. $468,140
B. $124,025
C. $700,975
D. $405,000

5. Eddie's had revenues of $360,000 when 60,000 units were sold. If fixed costs totaled $90,000 and variable costs totaled $210,000, what was the contribution margin per unit?
A. $6.00
B. $5.00
C. $2.50
D. $4.50

Solution Preview

1. Use the high low method to separate the costs into fixed and variable
Variable cost per unit = (10,500-7,000)/(7,000-3,500) = $1 per unit
Fixed cost = 10,500 total cost - 7,000 units X $1 variable cost = $3,500

2. ...

Solution Summary

The solution explains some multiple choice questions relating to CVP analysis

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