Variable Cost and Points Question
Question 1 1.
Mrs. Granberry is going to sell Christmas tree lights for $20 a box. The lights cost Marsha $5 a unit and any unsold lights can be returned for a full refund. She is planning to rent a booth at the upcoming Happy Holidays Convention, which offers three options: 1. paying a fixed fee of $1,500, or 2. paying a $500 fee plus 10% of revenues made at the convention, or 3. paying 25% of revenues made at the convention.Which of the following statements is FALSE?
Answer
| | One of the options will allow Marsha to break even, even if she doesn 't sell any lights. | | | Her decision will determine the risk she faces. | | | Contribution margin will vary depending upon the option chosen. | | | Operating profit will be the greatest for Option 3. |
1 points
Question 2 1.
Assume there is a reduction in the selling price and all other CVP parameters remain constant. This change will:
Answer
| | increase variable costs | | | increase contribution margin | | | reduce fixed costs | | | reduce operating profit |
1 points
Question 3 1.
Answer the following questions using the information below:The West Company manufactures several different products. Unit costs associated with Product ORD203 are as follows: Direct materials $ 40 Direct manufacturing labour 8 Variable manufacturing overhead 12 Fixed manufacturing overhead 23 Sales commissions (2% of sales) 6 Administrative salaries 9 Total $98What are the variable costs per unit associated with Product ORD203?
Answer
| | $60 | | | $66 | | | $83 | | | $48 |
1 points
Question 4 1.
Total quality management is a philosophy in which management improves operations throughout the value chain.
Answer True False
1 points
Question 5 1.
Assume there is an increase in advertising expenditures and all other CVP parameters remain constant. This change will:
Answer
| | increase variable costs | | | reduce operating profit
Mrs. Granberry is going to sell Christmas tree lights for $20 a box. The lights cost Marsha $5 a unit and any unsold lights can be returned for a full refund. She is planning to rent a booth at the upcoming Happy Holidays Convention, which offers three options: 1. paying a fixed fee of $1,500, or 2. paying a $500 fee plus 10% of revenues made at the convention, or 3. paying 25% of revenues made at the convention.Which of the following statements is FALSE?
Answer
| | One of the options will allow Marsha to break even, even if she doesn 't sell any lights. | | | Her decision will determine the risk she faces. | | | Contribution margin will vary depending upon the option chosen. | | | Operating profit will be the greatest for Option 3. |
1 points
Question 2 1.
Assume there is a reduction in the selling price and all other CVP parameters remain constant. This change will:
Answer
| | increase variable costs | | | increase contribution margin | | | reduce fixed costs | | | reduce operating profit |
1 points
Question 3 1.
Answer the following questions using the information below:The West Company manufactures several different products. Unit costs associated with Product ORD203 are as follows: Direct materials $ 40 Direct manufacturing labour 8 Variable manufacturing overhead 12 Fixed manufacturing overhead 23 Sales commissions (2% of sales) 6 Administrative salaries 9 Total $98What are the variable costs per unit associated with Product ORD203?
Answer
| | $60 | | | $66 | | | $83 | | | $48 |
1 points
Question 4 1.
Total quality management is a philosophy in which management improves operations throughout the value chain.
Answer True False
1 points
Question 5 1.
Assume there is an increase in advertising expenditures and all other CVP parameters remain constant. This change will:
Answer
| | increase variable costs | | | reduce operating profit