Chapter 4 Q&A

Chapter 4 Q&A - D Repair and Maintenance Costs A2 C...

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Q1. Suppose total variable cost is $120,000 when 2,000 units are produced and $270,000 when 4,500 units are produced. What is the variable cost per unit (slope)? (Chapter 4 Section 1) A1. (270,000 – 120,000) / (4500 – 2000) = 150,000 / 2500 = $60 Q2. Which is typically an example of a committed fixed cost? (Chapter 4 Section 1) A) Advertising expenses B) Research and Development Costs C) Rent expenses
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Unformatted text preview: D) Repair and Maintenance Costs A2. C) Rent expenses are an example of a committed fixed cost Q3. Suppose the monthly break-even level of sales for Model A of a product is $300,000 and management expects to have sales of $375,000. Compute the Margin of Safety Ratio. (Chapter 4 Section 2) A3. Margin of Safety = 375,000 – 300,000 = 75,000 Margin of Safety ratio = 75,000 / 375,000 = .2...
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