UMUC MGMT640 homework 9

Thomas Train has collected the following information over the last six months.

Month Units produced Total costs
March 10,000 $25,600
April 12,000 26,200
May 19,200 29,600
June 13,000 26,450
July 12,000 26,000
August 15,000 26,500
Using the high-low method, what is the variable cost per unit?

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Question 2 (1 point) Question 2 Unsaved
Rooter’s Cleaning Services provided data concerning the costs incurred to clean hotel rooms for which hotel customers pay $150 per night. Data for the past 7 months are as follows:

January February March April May June July
Number of rooms cleaned 250 160 200 150 270 170 260
Cleaning cost $6,450 $4,060 $5,100 $4,100 $6,640 $4,200 $6,530
How much are estimated monthly variable costs using the high-low method?

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Question 3 (1 point) Question 3 Unsaved
A cost is $3,600 at 1,000 units, $7,000 at 2,000 units, and $9,200 at 3,000 units. This cost is a

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mixed cost

step cost

variable cost

fixed cost

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Question 4 (1 point) Question 4 Unsaved
Winny’s Office Furniture has a contribution margin ratio of 16%. If fixed costs are $186,800, how many dollars of revenue must the company generate in order to reach the break-even point?

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Question 5 (1 point) Question 5 Unsaved
Tim Taylor has written a self improvement book that has the following cost characteristics:

Selling Price $16.00 per book
Variable cost per unit:
Production $4.00
Selling & administrative 2.00
Fixed costs:
Production $91,600 per year
Selling & administrative 21,900 per year
How many units must be sold to break-even?

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Question 6 (1 point) Question 6 Unsaved
The use of fixed cost to increase profits at a rate faster than sales increase is called:

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“What if “ analysis

C-V-P analysis

operating leverage

contribution margin approach

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Question 7 (1 point) Question 7 Unsaved
Assume Sparkle Co. expects to sell 150 units next month. The unit sales price is $80, unit variable cost is $35, and the fixed costs per month are $5,000. The margin of safety is:

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Question 8 (1 point) Question 8 Unsaved
Which of the following statements about the relevant range is true?

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Cost functions outside the relevant range are usually linear

The relevant range is the normal length of time in a company’s accounting period

Estimates outside the relevant range are useful

Cost functions within the relevant range are assumed to be linear

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