Temple University

ACCT 2102

Ch 5

1)If selling price is $25, unit variable cost is $15, sales volume is 500 units, and fixed costs are

$4,000, the profit is:

A. $1,000

B. $7,500

C. $5,000

D. $3,500

1. None of the above.

2. Selling price is $125, unit variable cost is $85, and unit fixed cost is $20. Profit increases by what amount if one more unit is sold?

A. $20

B. $105

C. $40

D. $125

E. None of the above.

3. The controller of Samson Electronics is evaluating the unit contribution margin for the GPS receivers. If 20 GPS receivers are produced and sold during June at a unit selling price of $100, with a fixed cost per unit of $5, and variable costs totaling $800, how much is the unit contribution margin for the each GPS receiver?

a.    $60

b. $100

c.     $55

d.   $40

4. If selling price is $25, unit variable cost is $10, and total fixed costs are $6,000, then the breakeven volume is:
   1. 150 units.
   2. 600 units.
   3. 400 units.
   4. 1,250 units.
   5. 750 units.

5. At current price of $25, you sell 300 units. If you increase the price to $27, sales volume will decrease by 10% to 270 units. Total fixed costs are $1,000, and variable costs are $10 per unit. How much will the profit change if you increase the price?

1. $1,600 increase.
2. $250 increase.
3. $90 increase.
4. $270 increase.
5. $1,600 decreas

6. Which of the following statements is true?

1. The lower the margin of safety, the lower the risk of a loss if actual sales do not meet expectations.
2. A good rule of thumb is that the margin of safety should be approximately 20%.
3. The higher the margin of safety, the lower the risk of a loss if actual sales do not meet expectations.
4. Firms that face highly variable demand conditions desire a lower margin of safety.
5. None of the above statements are tru