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Companies may use an actual or an estimated for
Companies may use an actual or an estimated for......... A. Overhead allocation rates B. Direct material C. Freed Cost D. Direct hibou Q5) If fixed cost is SAR300,000 and contribution margin per unit is SAR6,000 per unit, the breakeven in units will be.............. A. 50 units B. 60 units C. 70 units D. 65 units 06) A company pays a yearly rent of 700,000 SAR for the administration offices. This is....... A. Fixed Costs. B. Variable Costs. C. Mixed Costs D. Cost Driver Q7) If sales are SAR100, 000, variable costs are SAR75, 000, and fixed costs are SAR40,000, the contribution margin ratio is... A. 25% B. 40% C. 60% D. 30%
Expert Solution
4. A - Overhead Allocation rates
Most entities use pre deterined overhead rates which can either be actual or estimated.
Q5.A - 50 Units
Breakeven Units = Fixed Costs / Contribution Margin per unit
=SAR 300000 / SAR 6000 = 50 Units
Q6. A - Fixed Costs
Fixed costs are the costs that does not change with the level of activity. Rent is paid yearly irrespective of the level of activity.
Q7. A - 25%
Contribution Margin Ratio = (Sales - Variable costs) / Sales * 100
=[(SAR 100000 - SAR 75000) / SAR 100000 ] * 100
=(SAR 25000/ SAR 100000) * 100
= 25%
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