Chapter 18 – Multiple Choice
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If one would prepare a graph with a horizontal axis representing units of production and a vertical axis representing per-unit production cost, how would a line representing fixed production cost be drawn?CorrectIncorrect
Lansing Corporation provides household painting services. During June, its busiest month, Lansing had total direct labor hours of 20,000 and total costs of $274,000. During December, its slowest month, the company had direct labor hours of 12,500 and total costs of $214,000. The company is planning for 16,000 direct labor hours in July. How many dollars should the company budget for fixed costs during July?CorrectIncorrect
Blackhat Chimney Builders constructed 80 units during 19X1. The total sales value for these 80 units was $460,000. Variable costs associated with each unit was $4,000 and the company’s fixed costs for 19X1 amounted to $50,000. How much was the per-unit contribution margin?CorrectIncorrect
The Rug Outlet Store produces two products, carpet and padding. These account for 40% and 60% of the total sales dollars of the company, respectively. Variable costs (as a percentage of sales dollars) are 40% for carpet and 50% for padding. Total fixed costs are $540,000. No other costs are expected to be incurred. How much is the company’s total break-even point in sales dollars?CorrectIncorrect