1. Redford, Inc. has provided the following data:

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:

Answer  

A.decrease by $60,000. 

B.increase by $60,000. 

C.increase by $120,000. 

D.. increase by $420,000.

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

3.  Lacopi 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:

Answer  

a.$343,140 

b.$65,790 

c.  $121,260 

d.$411,080

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  

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

 True 

 False 

6. Within the relevant range, the variable cost per unit:

Answer  

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.