Chapter 2 - Problems - Solutions

Chapter 2 - Problems - Solutions - Chapter 2 Problems 1...

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Chapter 2 Problems 1. When volume increases: a. fixed cost in total increases and fixed cost per unit decreases b. fixed cost in total remains constant and fixed cost per unit decreases c. fixed cost in total and fixed cost per unit remain constant d. none of the above 2. When volume increases: a. variable cost in total increases and variable cost per unit decreases b. variable cost in total remains constant and variable cost per unit decreases c. variable cost in total and variable cost per unit increase d. none of the above – Correct answer: Variable Cost in total increases 3. At a point when volume reached 4,000 units, fixed costs amounted to \$20,000 and total cost amounted to \$60,000. If volume were to increase to a level of 5,000 units, total cost would be: a. \$70,000 TC = FC + VC b. \$60,000 \$60,000 = 20,000 + VC c. \$100,000 VC = \$40,000 d. None of the above VC / unit = \$40,000 / 4,000 units = \$10 /unit @ 5,000 units FC = \$20,000 VC = \$50,000 TC = \$70,000

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Chapter 2 - Problems - Solutions - Chapter 2 Problems 1...

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