1. redford, inc. has provided the following data:

1. ÿRedford, Inc. has provided the following data:ÿ
ÿ
Sales Price $200.00per unit
Sales 6,000Units
Fixed Cost $300,000
Variable cost $100.00per unit
ÿ
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:
ÿ
Answer ÿ
A.decrease by $60,000.ÿ
B.increase by $60,000.ÿ
C.increase by $120,000.ÿ
D.. increase by $420,000.
ÿ
2. ÿGardner 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:
ÿ
a.$104ÿ
b.$72ÿ
c.$60ÿ
d.$48
ÿ
3. ÿLacopi 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.
ÿ
Sales volume (units) 4,000 5,000ÿ
Cost of sales $307,600 $384,500ÿ
Selling and administrative costs $321,200 $337,000ÿ
ÿ
The best estimate of the total contribution margin when 4,300 units are sold is:
ÿ
Answer ÿ
a.$343,140ÿ
b.$65,790ÿ
c. ÿ$121,260ÿ
d.$411,080
ÿ
4. ÿShipping 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:
ÿ
a.$10,125ÿ
b.$8,583ÿ
c.$9,972ÿ
d.$9,750 ÿ
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5. Fixed cost per unit increases as activity decreases and decreases as activity increases.
ÿTrueÿ
ÿFalseÿ
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6. Within the relevant range, the variable cost per unit:
ÿ
Answer ÿ
A.ÿ remains constant as activity changes ÿ
B.ÿ increases as activity increases.ÿ
C.ÿ decreases as activity increases.ÿ
D. ÿcan increase or decrease as the activity changes.
ÿ