Fixed and Variable Costs and Break-Even Point

1. The Clothes Factory wants to increase capacity by adding a new sewing machine. The fixed costs for machine A are $9,000, and its variable cost is $4 per unit. The revenue is $7 per unit. The break-even point for the sewing machine is:
1200 units
1600 units
3000 units
1500 units

2. A full-service restaurant is considering opening a new facility in a specific city. The table below shows its ratings of four factors at each of two potential sites.

Factor Weight Wind City State Line
Affluence of local population .40 25 25
Traffic flow .20 50 20
Parking availability .10 30 40
Growth petential .30 10 30

The score for Wind City is _____ and the score for State Line is ______.
Wind City = 7.00; State Line = 7.25
Wind City = 14; State Line = 14.50
Wind City = 28; State Line = 29
Wind City = 26, State Line = 27

3. A fleet repair facility has a design capacity to repair 800 trucks per month. However, due to scheduled maintenance of their equipment, management feels that they can repair no more than 600 trucks per month. Last month, two of the employees were absent several days each and only 500 trucks were repaired. What is the utilization of the repair shop last month?
30.1%
50%
62.5%
25%

4. A bakery has a design capacity to bake 200 loaves of bread a day. However, due to scheduled maintenance of their equipment, management feels that they can bake 100 loaves a day. Yesterday the gas was turned off while the city was repairing a leak and only 22 loaves where baked. What was the efficiency of the ovens yesterday?
5%
7%
10%
22%

5. Design capacity is the:
maximum output of a system in a given period
actual production over a specified time period in ideal conditions
average output that can be achieved under ideal conditions
maximum usable capacity of a particular facility
the capacity a firm expects to achieve given the current operating constraints

6. Fixed costs are:
costs that vary with volume of units produced.
the difference between the selling price and variable costs.
not a part of the break even analysis.
costs that do not continue even if no units are produced.
none of the above

7. Which of these factors would be considered when making a location decision at the site level?
government rules, attitudes, stability, and incentives
cultural and economic issues
market regulations
cost and availability of utilities
none of the above

8. When making a location decision at the site level, which of these would be considered?
corporate desires
land/construction costs
air, rail, highway, and waterway systems
attractiveness of region
location of markets

9. Intangible costs include which of the following?
Climatic conditions
Availability of public transportation
Taxes
A and B
None of the above