Reference no: EM132837525
Problem - Holly Ltd. has the following costs for 1,000 units:
|
|
Total Cost
|
Cost per Unit
|
|
Direct materials
|
£1,500
|
£1.50
|
|
Direct labour
|
7,500
|
7.50
|
|
Depreciation on building
|
30,000
|
30.00
|
1. What is the total amount of direct materials for 100 units?
a. £1.50
b. £3.00
c. £150.00
d. £225.00
2. If production volume increases from 8,000 to 10,000 units, ___________
a. total costs will increase by 20 percent.
b. total costs will increase by 25 percent.
c. total variable costs will increase by 25 percent.
d. mixed and variable costs will increase by 25 percent.
3. An equipment lease that specifies payment of £1,000 per month plus £5 per machine hour used is an example of a _________.
a. fixed cost
b. variable cost
c. mixed cost
d. step cost
4. Baker Company sells its product for $60. In addition, it has a variable cost ratio of 40 percent and total fixed costs of £9,000. What is the break-even point in units for Baker Company?
a. 375 units
b. 3,600 units
c. 250 units
d. 2,400 units