Question : 11.Wu Company incurred $40,000 of fixed cost and $50,000 of : 1257099

 

 

11.Wu Company incurred $40,000 of fixed cost and $50,000 of variable cost when 4,000 units of product were made and sold.If the company’s volume increases to 5,000 units, the total cost per unit will be:   

A. $18.00.

 

B. $20.00.

 

C. $20.50.

 

D. $22.50.

 

 

12.Wu Company incurred $40,000 of fixed cost and $50,000 of variable cost when 4,000 units of product were made and sold.If the company’s volume increases to 5,000 units, the company’s total costs will be:   

A. $100,000

 

B. $90,000

 

C. $102,500

 

D. $80,000

 

 

13.Wu Company incurred $40,000 of fixed cost and $50,000 of variable cost when 4,000 units of product were made and sold.If the company’s volume doubles, the company’s total cost will:   

A. stay the same.

 

B. double as well.

 

C. increase but will not double.

 

D. decrease.

 

 

14.In the graph below, which depicts the relationship between units produced and total cost, the dotted line depicts which type of total cost?     

A. Variable cost

 

B. Fixed cost

 

C. Mixed cost

 

D. None of these

 

 

15.In the graph below, which depicts the relationship between units produced and unit cost, the dotted line depicts which type of cost per unit?     

A. Variable cost

 

B. Fixed cost

 

C. Mixed cost

 

D. None of these

 

 

16.In the graph below, which depicts the relationship between units produced and total cost, the dotted line depicts which type of total cost?     

A. Variable cost

 

B. Fixed cost

 

C. Mixed cost

 

D. None of these

 

 

17.Pickard Company pays its sales staff a base salary of $4,500 a month plus a $3.00 commission for each product sold. If a salesperson sells 800 units of product in January, the employee would be paid:   

A. $6,900

 

B. $4,500

 

C. $2,300

 

D. $2,700

 

 

18.Quick Change and Fast Change are competing oil change businesses. Both companies have 5,000 customers. The price of an oil change at both companies is $20. Quick Change pays its employees on a salary basis, and its salary expense is $40,000. Fast Change pays its employees $8 per customer served. Suppose Quick Change is able to lure 1,000 customers from Fast Change by lowering its price to $18 per vehicle. Thus, Quick Change will have 6,000 customers and Fast Change will have only 4,000 customers.Select the correct statement from the following.   

A. Quick Change’s profit will increase while Fast Change’s profit will fall.

 

B. Fast Change’s profit will fall but it will still earn a higher profit than Quick Change.

 

C. Profits will decline for both Quick Change and Fast Change.

 

D. Quick Change’s profit will remain the same while Fast Change’s profit will decrease.

 

 

19.Hard Nails and Bright Nails are competing nail salons. Both companies have the same number of customers. Both charge the same price for a manicure. The only difference is that Hard Nails pays its manicurists on a salary basis (i.e., a fixed cost structure) while Bright Nails pays its manicurists on the basis of the number of customers they serve (i.e., a variable cost structure). Both companies currently make the same amount of net income. If sales of both salons increase by an equal amount, Hard Nails:   

A. will earn a higher profit than Bright Nails.

 

B. will earn a lower profit than Bright Nails.

 

C. will earn the same amount of profit as Bright Nails.

 

D. The answer cannot be determined from the information provided.

 

 

20.Fixed cost per unit:   

A. decreases as production volume decreases.

 

B. is not affected by changes in the production volume.

 

C. decreases as production volume increases.

 

D. increases as production volume increases.