2024 – Question 1 Redford Inc has provided the following data Sales Price 200 00per unit Sales 6 000Units Fixed Cost 300 000 Variable cost

Question 1

Redford, Inc. has provided the following data:

 

Sales Price $200.00per unit

Sales 6,000Units

Fixed Cost $300,000 

Variable cost $100.00per unit

  

If the dollar contribution margin per unit is increased by 10%, total fixed cost is decreased by 20%, and all other factors remain the same, net income will:

 

A.  decrease by $60,000.

B.  increase by $60,000.

C.  increase by $120,000.

D.  increase by $420,000.

 

Question 2

Gardner Manufacturing Company produces a product that sells for $120. A selling commission of 10% of the selling price is paid on each unit sold. Variable manufacturing costs are $60 per unit. Fixed manufacturing costs are $20 per unit based on the current level of activity, and fixed selling and administrative costs are $16 per unit. The contribution margin per unit is:

 

a.  $104

b.  $72

c.  $60

d.  $48     

  

Question 3 

Iacopi Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $172.50 per unit.

 

Sales volume (units) 4,000 5,000

Cost of sales $307,600 $384,500

Selling and administrative costs $321,200 $337,000

 

The best estimate of the total contribution margin when 4,300 units are sold is:

 

a.  $343,140

b.  $65,790

c.    $121,260

d.  $411,080

 

Question 4 

Shipping expense is $9,000 for 8,000 pounds shipped and $11,250 for 11,000 pounds shipped. Assuming that this activity is within the relevant range, if the company ships 9,000 pounds, its expected shipping expense is closest to:

 

a.  $10,125

b.  $8,583

c.  $9,972

d.  $9,750

  

Question 5 

Fixed cost per unit increases as activity decreases and decreases as activity increases.

 

True 

False 

 

Question 6 

Within the relevant range, the variable cost per unit:

 

A.   remains constant as activity changes

 B.   increases as activity increases.

 C.  decreases as activity increases.

 D.  can increase or decrease as the activity changes.