MA CHAPTER 6 MULTIPLE CHOICE Quizzes

1. Dapper Hat Makers is in the business of designing and producing specialty hats.
The material used for derbies costs $4.50 per unit, and Dapper pays each of its two full-
time employees $250 per week. If Employee A makes 15 derbies in one week, what is the
variable cost per derby? (Round to two decimal places where necessary.)
a. $4.50
b. $15.00
c. $16.67
d. $21.17
e. None of these answers are correct.
ANSWER: A

2. Dapper Hat Makers is in the business of designing and producing specialty hats.
The material used for derbies costs $4.50 per unit, and Dapper pays each of its two full-
time employees $250 per week. If the employees make 50 derbies in one week, what is
the fixed cost per derby? (Round to two decimal places where necessary.)
a. $4.50
b. $5.00
c. $10.00
d. $14.50
e. None of these answers are correct.
ANSWER: C

3. Dapper Hat Makers is in the business of designing and producing specialty hats.
The material used for derbies costs $4.50 per unit, and Dapper pays each of its two full-
time employees $250 per week. If Employee B makes only 12 derbies in one week, what
are this workers variable costs per derby? (Round to two decimal places where
necessary.)
a. $4.50
b. $12.00
c. $20.83
d. $25.33
e. None of theses answers is correct.
ANSWER: A

4. Identify which of the following is a fixed cost:

a. Direct materials
b. Personnel managers salary
c. Operating supplies
d. Telephone expense
e. Direct labor
ANSWER: B

5. Using the high-low method and the information below, compute the monthly
variable cost per telephone hour for SKP Corporation.
 Telephone Hours Telephone
Month Used Expenses
April 100 $4,500
May 110 4,800
June 150 5,400
a. $15.00
b. $18.00
c. $36.00
d. $34.64
e. $45.00
ANSWER: B

6. Using the high-low method and the information below, compute the monthly total
fixed costs for SKP Corporation.
Telephone Hours Telephone
Month Used Expenses
April 100 $4,500
May 110 4,800
June 150 5,400
a. $1,500
b. $1,800
c. $2,700
d. $3,640
e. $4,500
ANSWER: C

7. Dilly LLC, wants to make a profit of $30,000. It has variable costs of $80 per unit
and fixed costs of $20,000. How much must it charge per unit if 5,000 units are sold?
a. $ 20.00
b. $50.00
c. $80.00
d. $90.00
e. $100.00
ANSWER: D

8. How many units must BAC Company sell to break even if the selling price per
unit is $8.50, variable costs are $4.00 per unit, and fixed costs are $9,000?
a. 1,000
b. 1,059
c. 2,000
d. 2,250
e. None of these answers is correct
ANSWER: C
9. How many units must BAC Company sell to break even if the selling price per
unit is $8.50, variable costs are $4.00 per unit, and fixed costs are $9,000? What is the
breakeven point in total dollars of sales?
a. $4,000.00
b. $8,500.00
c. $9,000.00
d. $17,00.00
e. $20,000.00
ANSWER: D

10. Using the contribution margin approach, find the breakeven point in units for
Consumer Products if the selling price per unit is $12, the variable cost per unit is $6, and
the fixed costs are $8,040.
a. 670
b. 1,200
c. 1,340
d. 6,000
e. 8,040
ANSWER: C

11. Using the contribution margin approach, find the contribution margin ratio for
Consumer Products if the selling price per unit is $12, the variable cost per unit is $3, and
the fixed costs are $8,040.
a. 25%
b. 50%
c. 75%
d. 100%
e. None of these answers is correct.
ANSWER: C

12. If Oui Watches sells 300 watches at $48 per watch and has variable costs of $20
per watch and fixed costs of $4,000, what is the projected profit?
a. $4,000
b. $4,400
c. $8,400
d. $12,000
e. $14,400
ANSWER: B