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Multiple Choice

1. As the cost driver activity level decreases within the relevant range:
a)total fixed costs increase
b)fixed costs per unit decreases
c)total variable costs decrease
d)variable costs per unit decreases

2. The following information is for Allen Corporation:

Total Fixed Cost $313,500
Variable costs per unit $101
Selling price per unit $163

The contribution-margin ratio is:
a)35.7%
b)38.0%
c)55.6%
d)64.3%

3. Desks R' Us Corporation sells desks at $480 per desk. The costs associated with each desk are as follows:

Direct Materials $195
Direct labor 126
Variable factory overhead 51

Total fixed costs for the period are $456,840. The break-even point in desks is:
a)952 desks
b)1,228 desks
c)4,230 desks
d)5,458 desks

4. On Fire Company, a producer of salsa, has the following information:

Income tax rate 30%
Selling price per unit $5.00
Variable cost per unit $3.00
Total fixed costs $90,000.00

The contribution margin per unit is:

a)$2.00
b)$3.00
c)$5.00
d)$8.00

Solution Preview

1. c)total variable costs decrease

The variable cost are fixed on a per unit basis. As the activity reduces, the ...

Solution Summary

The solution explains some multiple choice questions in accounting

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