1. If variable cost per unit decreased because of the decrease in materials cost

Question

1. If variable cost per unit decreased because of the decrease in materials cost, the break-even point would:

As part of operations control, budgeted results are compared to

Budget performance reports summarize

San Antonio Business Furniture Inc. makes office tables. During the most productive month of the year, 1,200 tables were manufactured at a total cost of $38,000. In its slowest month, the company made 700 tables at a total cost of $23,000. Using the high-low method of cost estimation, total fixed costs are:

If fixed cost are $680,000 and unit contribution margin is $16.25, what is the break-even point in units if the variable costs are decreased by $.75 per unit

Big Mac Manufacturing Inc.'s budget at 8,000 units of production includes $40,000 for direct labor and $4,000 for electric power. Total fixed costs are $23,000. At 9,000 units of production, a flexible budget would show:

Explanation / Answer

1. Correct answer is Option A i.e. Decrease

2. Correct answer is Option C i.e. Actual results

3. Correct answer is Option D i.e. budgeted cost, actual results, and over (under) budget

4. Correct answer is Option C i.e. $2,000

Variable Cost per unit = ($38,000 - $23,000) / (1,200 - 700)

...................................= $30

Fixed cost = $38,000 - (1,200 x $30) - $38,000

.................= $2,000

5. Correct answer is Option B i.e. 40,000 units

Break-even Point = $680,000 / ($16.25 + $0.75)

.............................= 40,000 units

6. Correct answer is Option C i.e. Variable costs of $49,500 and $23,000 of fixed cost.

Variable costs = ($44,000 / 8,000) x 9,000

........................= $49,500

Fixed Cost = $23,000

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