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