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1. Given the following cost and activity observations for Wondrous Company's utilities, utilize high-low method to compute Wondrous' variable utilities costs per machine hour.

 

Cost

Machine Hours

March

$3,100

15,000

April

2,700

10,000

May

2,900

12,000

June

3,500

18,000

a. $10.00

b. $.67

c. $.10

d. $.63

2. Variable costs as percentage of, sales for Leamon Inc. are 75%, current sales are $600,000, and fixed costs are $110,000. How much will operating income change if sales rise by $40,000?

a. $30,000 decrease

b. $10,000 decrease

c. $30,000 increase

d. $10,000 increase

3. If variable costs per unit decreased as of decrease in utility rates, break-even point would:

a. Increase

b. Decrease

c. Increase or decrease, depending upon percentage increase in utility rates

d. Remain the same

4. Suppose that Crowley Co. sold 8,000 units of Product A and 2,000 units of Product B during the past year. Unit contribution margins for Products A and B are $20 and $45 respectively. Crowley has fixed costs of $350,000. Break-even point in units is:

a. 10,769 units

b. 14,000 units

c. 25,278 units

d. 8,000 units

5. If sales are $300,000, variable costs are 75% of sales, and operating income is $40,000, determine the operating leverage?

a. 1.333

b. 0

c. 7.500

d. 1.875

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  • Category:- Accounting Basics
  • Reference No.:- M917178

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