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Accounting Review

# Accounting Review

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12/16/2012

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# Quiz 4 Canine Company produces and sells dog treats for discriminating pet owners.

The unit selling price is \$10, unit variable costs are \$7, and total fixed costs are \$3,300. What is the breakeven point in sales dollars? Answer: \$11,000 Fixed Company produces a single product selling for \$30 per unit. Variable costs are \$12 per unit and total fixed costs are \$4,000. What is the contribution margin ratio? Answer: 0.60 The breakeven point represents the minimum number of units a company must sell before it earns a profit. Answer: True Fairfield Company management has budgeted the following amounts for its next fiscal year: Total fixed expenses- \$832,500; sale price per unit- \$40; variable expenses per unit- \$25. What will happen to the breakeven point in units if Fairfield can reduce fixed expenses by \$22,500? Answer: The breakeven point will decrease by 1,500 units If a unit sells for \$11.40 and has a variable cost of \$3.80, its contribution margin per unit is \$7.60. Answer: True Canine Company produces and sells dog treats for discriminating pet owners. The unit selling price is \$10, unit variable costs are \$7, and total fixed costs are \$3,300. How many dog treats must Canine Company sell to breakeven? Answer: 1,100 A 15% increase in production will result in a 15% increase in: Answer: total variable costs The variable cost per unit is assumed to be constant within a particular relevant range of activity. Answer: True Quiz 3 Traditional costing systems can distort unit manufacturing costs and product profitability when many products are produced and the various products have significantly different production processes. Answer: True