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Question 1:

Which of the following is the primary source of revenue for a merchandising business?

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the production of products from raw materials


the purchase and resale of finished products


providing intangilble goods and services


the sale of raw materials to manufacturing firms



Question 2:

Which of the following represents the components of the income statement for a service business?


Sales Revenue - Cost of Goods Manufactured = gross profit


Service Revenue - Cost of Goods Purchased = gross profit


Sales Revenue - Cost of Goods Sold = gross profit


Service Revenue - Operating Expenses = operating income



Question 3:

Which of the following represents the components of the income statement for a merchandising business?


Service Revenue - Operating Expenses = gross profit


Sales Revenue - Cost of Goods Manufactured = gross profit


Service Revenue - Cost of Goods Purchased = gross profit


Sales Revenue - Cost of Goods Sold = gross profit



Question 4:

Which of the following is not considered a product cost?


direct materials


indirect materials


direct labor


selling expense



Question 5:

Variable costs are expenses that _________________________.


decrease in a per-unit basis as activity level increases


remain constant on a per-unit basis and remain constant in total regardless of activity level


remain constant in total regardless of the activity level within a relevant range


remain constant on a per-unit basis but change in total based on activity level



Question 6:

Which of the following would not be classified as manufacturing overhead?


direct labor


indirect materials


indirect labor


property taxes on the factory



Question 7:

Which of the following statements is true regarding average fixed costs?


Average fixed costs per unit cannot be determined.


Average fixed costs per unit rise as the level of activity rises.


Average fixed costs per unit fall as the level of activity rises.


Average fixed costs per unit remain fixed regardless of activity.


__________________________________________________________________


Question 8:

A company's product sells for $150 and has variable costs of $60 associated with the product. What is its contribution margin per unit?


$150


$40


$60


$90



Question 9:

A company's contribution margin per unit is $25. If the company increases its activity level from 200 units to 350 units, how much will its total contribution margin increase?


$8,750


$3,750


$1,250


$5,000



Question 10:

If a company has fixed costs of $6,000 per month and their product that sells for $200 has a contribution margin ratio of 30%, how many units must they sell in order to break even? 


100


2,000


180


200



Question 11:

A company wants to earn an income of $60,000 after taxes. If the tax rate is 32%, what must the company's pre-tax income be in order to have $60,000 after-taxes?


$79,200


$143,000


$19,200


$88,235



Question 12:

When sales price increases and all other variables are held constant, the break-even point will ____________________.


produce a lower contribution margin


decrease


remain unchanged


increase



Question 13:

When variable costs increase and all other variables remain unchanged, the break-even point will ___________________.


increase


decrease


remain unchanged


produce a lower contribution margin



Question 14:

When fixed costs increase and all other variables remain unchanged, the contribution margin will ___________________.


increase


increase variable costs per unit


remain unchanged


decrease

Top Answer

1. Answer - the purchase and resale of finished products Explanations - Merchandising business deals with purchase and sale... View the full answer

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