MGMT 640 Week 8 HW Quiz Answer

Quiz Submissions – Session 8 HW
Question 1
Thomas Train has collected the following information over the last six months.
Month Units produced Total costs
March 10,000 \$25,600
April 12,000 26,200
May 19,200 28,000
June 13,000 26,450
July 12,000 26,000
August 15,000 26,500

Question 2
Rooter’s Cleaning Services provided data concerning the costs incurred to clean hotel rooms for which hotel customers pay \$150 per night. Data for the past 7 months are as follows:
January February March April May June July
Number of rooms cleaned 250 160 200 150 300 170 260
Cleaning cost \$6,450 \$4,060 \$5,100 \$4,100 \$6,760 \$4,200 \$6,530
How much are estimated monthly variable costs using the high-low method?

Question 3
A cost is \$3,600 at 1,000 units, \$7,000 at 2,000 units, and \$9,200 at 3,000 units. This cost is a

mixed cost

step cost

variable cost

fixed cost

Question 4
Winny’s Office Furniture has a contribution margin ratio of 16%. If fixed costs are \$183,800, how many dollars of revenue must the company generate in order to reach the break-even point?

Question 5
Tim Taylor has written a self improvement book that has the following cost characteristics:
Selling Price \$16.00 per book
Variable cost per unit:
Production \$4.00
Fixed costs:
Production \$88,200 per year
Selling & administrative 21,900 per year
How many units must be sold to break-even?

Question 6
The use of fixed cost to increase profits at a rate faster than sales increase is called:

“What if “ analysis

C-V-P analysis

operating leverage

contribution margin approach

Question 7
Assume Sparkle Co. expects to sell 150 units next month. The unit sales price is \$100, unit variable cost is \$45, and the fixed costs per month are \$5,000. The margin of safety is:

Question 8
Which of the following statements about the relevant range is true?

Cost functions outside the relevant range are usually linear

The relevant range is the normal length of time in a company’s accounting period

Estimates outside the relevant range are useful

Cost functions within the relevant range are assumed to be linear