1. Given the following cost and activity observations for Wondrous Company's utilities, utilize highlow 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, breakeven 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. Breakeven 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