Question

11. Which of the following costs is least likely to be a variable cost?

1. sales commissions
2. direct labor
3. indirect materials
4. supervisory salaries

12. Which of the following components are included in a mixed cost?

1. a sunk cost and an opportunity cost
2. a fixed cost and a variable cost
3. a manufacturing cost and a selling cost
4. a product cost and a period cost

13. Kari’s Kookies has total costs of $5,000 when 2,000 units are produced and $11,000 when 5,000 units are produced. What is the variable cost per unit?

1. $2.50
2. $2.20
3. $2.00
4. $0.50

14. Which of the following items appears on a contribution margin income statement but not on a GAAP income statement?

A.        Sales

B.        Gross margin

C.        Net income

D.        Contribution margin

15. Well Water Inc. wants to produce and sell a new flavored water. In order to penetrate the market, the product will have to sell at $2.00 per 12 oz. bottle. The following data has been collected:

Annual sales                                                          50,000 bottles

Projected selling and administrative costs            $8,000

Desired profit                                                        $70,000

            The target cost per bottle is

a.   $0.44.

b.   $0.60.

c.   $0.16.

d.   $0.40.

Answer 1

11. D. supervisory salaries

Considering all the options supervisory salaries considered to be least likely to be a variable cost as it is fixed for a period.

12. B. a fixed cost and a variable cost

Fixed cost and variable cost are Components included in a mixed cost

13. C. $2.00

	Units	Cost
	5,000	$11,000
	2,000	$5,000
	3,000	$6,000
Variable cost per unit		$2.00
($6,000 / 3,000)

14. D.        Contribution margin

15. b.   $0.60.

$2.00 – ($70,000 ÷ 50,000) = $0.60