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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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