Reference no: EM132660749

Problem 1: A firm that sells a product for $100 has variable costs of $60 per unit and total fixed costs of $80,000. If 3,500 units are sold during the year, what is the profit in dollars?

Select one:

a. $60,000
b. $150,000
c. $140,000
d. $350,000

Problem 2: Widget World makes a widget that is selling for $10 per unit. Variable costs are $7 per unit. Assuming the business has normal fixed costs, and the break-even point is 350 units, what are the total costs at break-even point?

Select one:

a. $7,500
b. $12,000
c. $4,500
d. $3,500

Problem 3: Fixed costs:

Select one:

a. Will always be the same from one period to the next
b. Do not respond to changes in volume.
c. Change in proportion with changes in volume
d. Respond in the opposite direction of changes in volume

Problem 4: Cost-volume-profit analysis is a useful tool to:

Select one:

a. assist in decisions on managers' salaries.
b. assist in decisions on selling prices, determining the number of units to be made obsolete, how many units are required to break even and how much should be spent on advertising.
c. assist in decisions on selling prices, how many units must be sold to break even, how many units must be sold to make a specified target profit.
d. assist in decisions on selling prices, detailing the number of units to be sold, how many units are required to break even, and how much money should be spent on advertising.