Question 22 A home goods store has a unit contribution margin of $30 and a contr

Question

Question 22

A home goods store has a unit contribution margin of $30 and a contribution margin ratio of 60%. How much is the selling price of each unit?

a. $50

b. $48

c. $42

d. $18

Question 23

If the activity level increases 10%, what will happen to the total variable costs?

a. Increase 10%

b.Remain the same

c. Increase by more than 10%

d. Decrease by less than 10%

Question 24

Which term refers to the range over which a company expects to operate?

a. Mixed range

b. Fixed range

c. Variable range

d. Relevant range

Question 25

What is the name of the activity that causes changes in the behavior of costs?

a. Index

b. Multiplier

c. Element

d. Correlation

a. $50

b. $48

c. $42

d. $18

Explanation / Answer

1.

2. Variable cost will change based on activity change. So here in this question increase in 10% in activity, variable cost also will increase by 10%

3.d. Relevent range

The range over which a company expects to operate is called the relevant range.

4.Activity index causes changes the behavior of costs

Contribution margin ratio = Contribution margin / Sales price 60% = $30 / Sales price Sales price = $30/60% Sales price = $50

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