In: Accounting
1 .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:
stay the same.
double as well.
increase but will not double.
decrease.
2 .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:
will earn a higher profit than Bright Nails.
will earn a lower profit than Bright Nails.
will earn the same amount of profit as Bright Nails.
The answer cannot be determined from the information provided.
3 The excess of a product's selling price over its variable costs is referred to as:
gross profit
gross margin
contribution margin
manufacturing margin
manufacturing margin