Question

Question:1

True of False: Variable costs change in a straight line fashion with production levels and DO NOT encounter relevant range implications

True

False

Question: 2

True of false: Understanding "fixed versus variable" costs relates to costing "accuracy", while understanding "direct versus indirect" costs relates to how costs behave.

True

False

Question:3

Your company manufactures customized "smart phone cases" in a building that it rents for $12,000 per year, and is currently quite profitable! The building has lots of extra space to accommodate future products

You are thinking of adding a new product line called "X", which you feel you can sell for $100 per unit. Variable material and labour for "X" are estimated at $65 per unit. In addition, you feel you'll need to hire a Product Manager to promote the "X" product line at an estimated annual cost of $72,000. Your company's tax rate is 35%.

How many units must you sell per month to make a monthly net income of $10,000

from the sale of "X"

458

640

611

2840

Question:4

Management accountants should produce reports for front-line managers that emphasize the key operating parameters a manager should focus on in an easily understandable & timely format". This statement is an example of the "Accounting Guideline" known as

Cost-Benefit Approach

Different Costs for Different Purposes

Behavioural & Technical Considerations

None of the listed answers are correct.

please reply as soon as possible

Answer 1

1) True : Variable cost is constant per unit but varies in total with the activity level. It is possible for the variable cost per unit to change once activity levels are outside the relevant range.

2) True

3) Option 4

	Note	Amount $
Profit After Tax / Net Income	A	10,000.00
Tax @ 35% of EBIT (10000*35/65)	B	5,384.62
Operating Income Before Interest and Taxes (EBIT)	C=A+B	15,384.62
Fixed Cost
Fixed Overheads -operations	D =72K+12K	84,000.00
Contribution Margin	E=C+D	99,384.62
Selling cost per unit	F	100.00
Varibale cost per unit	G	65.00
Contribution per Unit	H= F-G	35.00
No of Units (Sales ) required	E/H	2,839.56

4) Option A : COst Benefit Approach