29 Jun Question 1.Gypsy Joe’s operates a chain
Question
1.Gypsy Joe’s operates a chain of coffee shops. The company pays rent of $10,000 per year for each shop. Supplies (napkins, bags and condiments) are purchased as needed. The managers of each shop are paid a salary of $2,500 per month and all other employees are paid on an hourly basis. The costs of supplies relative to the number of customers in a particular shop and relative to the number of customers in the entire chain of shops is which kind of cost, respectively? (Points : 2)
Variable cost / fixed cost
Fixed cost / fixed cost
Variable cost / fixed cost
Variable cost / variable cost
2.Tri-State Food Service operates six fast food restaurants in the New England area. The company pays rent of $10,000 per year for each shop. The managers of each shop are paid a salary of $3,200 per month and all other employees are paid on an hourly basis. Relative to the number of hours worked, total compensation cost for a particular shop is which kind of cost? (Points : 2)
Variable cost
Fixed cost
Mixed cost
None of the above
3.Larry’s Lawn Care incurs significant gasoline costs. This cost would be classified as a variable cost if the total gasoline cost: (Points : 2)
varies inversely with the number of hours the lawn equipment is operated.
increases in direct proportion to the number of hours the lawn equipment is operated.
is not affected by the number of hours the lawn equipment is operated.
Both A or B.
4.Hico Bottling Company pays its production manager a salary of $5,000 per month. Salespersons are paid strictly on commission, at $2 for each case of product sold.
For Hico Bottling Company, the salespersons’ commissions are an example of: (Points : 2)
a variable cost.
a fixed cost.
a mixed cost.
none of the above.
5.Felix Company produces a product that has a selling price of $12.00 and a variable cost of $9.00 per unit. The company’s fixed costs are $60,000. What is the breakeven point measured in sales dollars? (Points : 2)
$240,000
$120,000
$80,000
$100,000
6.Barker Company’s break-even point is 10,000 units. Its product sells for $25 and has a $10 variable cost per unit. What is the company’s total fixed cost amount? (Points : 2)
$250,000
$100,000
$150,000
Fixed costs cannot be computed with the information provided
7.Wall Company incurred $30,000 of fixed cost and $40,000 of variable cost when 1,000 units of product were made and sold. If the company’s volume doubles, the company’s total cost will: (Points : 2)
stay the same.
double as well.
increase but will not double.
decrease.
8.For the last two years, Barton Company had net income as follows:
2009 2010
Net income $80,000 $100,000
What was the percentage change in income from 2009 to 2010? (Points : 2)
20% increase
20% decrease
25% decrease
25% increase
9.Ajani Company has variable costs equal to 40% of sales. The company is considering a proposal that will increase sales by $10,000 and total fixed costs by $6,000. By what amount will net income increase? (Points : 2)
$6,000
$4,000
$2,000
$0
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