Acct2121 Ch2 Quiz

Circle the letter that corresponds to your choice of best answer.

1. If variable selling expenses increase, then contribution margin (assuming all else constant) must _____. A) decrease B) increase C) need more information D) stayed the same

2. Cost drivers _____. A) are the costs of manufacturing the product B) are activities that cause costs to be incurred

C) are the employees responsible for controlling costs D) all of the above

3. AAA Company has total variable costs of $150,000 if 10,000 units are produced. The relevant range is 8,000 units to 20,000 units. If 15,000 units are produced, variable costs are: A) $150,000 in total B) 225,000 in total C) 10 per unit D) 100,000 in total

4. BBB Company has total fixed costs of $112,500 if 15,000 units are produced. The relevant range is 8,000 units to 30,000 units. If 25,000 units are produced, fixed costs are: A) 187,500 in total B) 7.5 per unit C) 4.5 per unit D) 67,500 in total

5. Given: selling price = $10; variable cost per unit = $7; current operating income is $150,000. How much would operating income be if sales are increased by 3,000 units? A) $9,000 B) $141,000 C) $159,000 D) None of the above

6. Given: selling price = $15; variable cost per unit = $9; current quantity sold = 35,000; current operating income is $150,000. How many units should the company sell to reach an operating income of $180,000? A) 37,000 B)