Determine maximum variable cost

Reference no: EM1361296

1. If a business has sales of $2000 in widgets, with fixed costs of 1000 and a sell price of 200 per widget, what is the maximum variable cost for each widget in order for the business to breakeven?
a. $100
b. ($100)
c. 0
d. Can not be determined from data given

2. A business collects 50% of its sales in the current month, 30% in the second month after the sale and the balance 2 months after the sale. The business has sales of 100 in the first month, 200 in the second month, 300 in the third month and 400 in the fourth month. What are its projected collections in the third month?
a. 330
b. 230
c. 130
d. 300

3. If a business has fixed costs of $100,000 and produces a product that it can sell for $500 with variable costs of $250, how many units of product must the business produce to reach breakeven profits?
a. 100 units
b. 200 units
c. 300 units
d. 400 units

4. A certain business shows sales of 300 and has cost of goods sold of 150. What is the projected gross margin in the next year if the sales are 400 and the percent of sales method is used to estimate its cost of goods sold?
a. $150
b. $200
c. $400
d. $300
e. None of the above

5. If a business produces enough widgets to reach a profit level of 200 with cost of goods sold as 100 and records inventory turns of 10, what is its average inventory recorded on the balance sheet for the period?
a. 5
b. 10
c. 15
d. 20
e. None of the above

6. Three years of inventory data are presented in a financial statement. 2002 has a closing balance of 200K, 2003 has a closing balance of 300K and 2004 has a closing balance of 400K. What is the average inventory used in computing inventory turns in 2004?
a. 300K
b. 350K
c. 250K
d. 400K

7. When considering a payment term of 2/10 net 30, the firm has all of the following payment options except:
a. Payment of 98% of the balance in 10 days after receipt of the invoice.
b. Payment of the full balance in 30 days after receipt of the invoice.
c. Payment of the full balance in 45 days after receipt of the invoice.
d. All of the above.

Reference no: EM1361296

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