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1) Given the following cost and activity observations for Star Company's utilities, use high-low method to compute Star 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 a percentage of, sales for Leamon Inc. are 75%, present sales are $600,000, and fixed costs are $110,000. How much will operating income change if sales increase 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 reduce since of a decline in utility rates, break-even point would:

a. decrease

b. increase 

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

d. remain the same

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

a. 8,000 units 

b. 25,278 units 

c. 14,000 units

d. 10,769 units

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M99839

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