Reference no: EM132454997

Questions -

Q1. Within the relevant range for a Transportation Company, if there is an increase in the level of cars transported, then:

fixed costs per unit will increase and variable costs per unit will decrease

fixed costs per unit will decrease and variable costs per unit will increase

fixed costs per unit will decrease and variable costs per unit will remain the same.

fixed costs per unit will remain the same and variable costs per unit will increase.

Q2. At break-even point

a firm's contribution margin exceeds total costs.

a firm's contribution margin equals total variable costs.

a firm's contribution margin equals fixed costs.

a firm's net operating profit exceeds total costs.

Q3. Marcus intends to sell his customers a special round-trip airline ticket package. He is able to purchase the package from the airline carrier for $150 per customer. The round-trip tickets will be sold for $200 each and the airline intends to reimburse Marcus for any unsold ticket packages. Fixed costs include $5,000 in advertising costs. For every $25,000 of ticket packages sold, operating income will increase by _____.

$12,500

$6,250

$18,750

an indeterminable amount

Q4. Nortrika Company sells several products. Information of average revenue and costs is as follows:

Selling price per unit $34.00

Variable costs per unit:

Direct material $6.00

Direct manufacturing labor $2.40

Manufacturing overhead $0.60

Selling costs $2.00

Annual fixed costs $97,400

Find the contribution margin per unit?

$6

$7

$12

$16