51 if company a is heavily labor intensive and company b is heavily capital intensiv 4313413

51 if company a is heavily labor intensive and company b is heavily capital intensiv 4313413

51.If Company A is heavily labor-intensive and Company B is heavily capital-intensive which of the following is most likely to be true relative to the other company?

A.Company A’s contribution margin per unit will be higher

B.Company B’s contribution margin per unit will be higher

C.Company A’s break-even point will be higher

D.Company B’s contribution margin ratio will be lower

52.A company can achieve an increase in contribution margin (given no other changes) if:

A.Fixed costs decrease

B.Selling price decreases

C.Fixed costs increase

D.Variable costs decrease

53.Greenbrier Company had sales of $400,000, variable costs of $240,000, and fixed costs of $90,000.  In order to break-even necessary sales would be:

A.$240,000

B.$225,000

C.$70,000

D.$250,000

54.If selling price per unit and sales volume remain the same while variable costs per unit decrease and total fixed costs decrease, which of the following is false:

A.Contribution margin ratio will increase.

B.Contribution margin per unit will increase.

C.Net operating income will increase.

D.Net operating income will decrease.

55.The following information is being provided for the two products produced by the Stay-Dri Deodorant Company.  For every 5 units sold, 3 of those units are from the men’s line of product while 2 units are from the women’s line of product.

MenWomenTotal

Expected product mix32

Selling price per unit$2.202.80

Variable cost per unit1.501.10

Fixed Costs (total)$88,000

How many units of each product need to be sold in order to break-even in total?

MenWomen

A.48,00032,000

B.40,00040,000

C.80,00080,000

D.32,00048,000

56.Debbie’s Donut Shop has been the only donut shop in town.  However, after Barry’s Breakfast Treats opened up last month, Debbie’s sales have dropped.  Debbie decides to cut the selling price of her delicious donuts.  The decrease in selling price will result in:

A.A reduction in the unit contribution margin.

B.An increase in the unit contribution margin.

C.A reduction in the unit variable costs.

D.An increase in the unit variable costs.

E.A reduction in fixed costs.

57.Assume University T-shirt Shop has a selling price of $25 and unit variable cost of $10 for its long-sleeve cotton shirts.  Fixed costs total $1,000.  University believes increasing its price to $27 will not cause a reduction in the number of shirts it will sell.  If University’s sales volume for the month is 300 shirts, how will net profit be affected by the change in selling price?

A.$1,600 increase.

B.$250 increase.

C.$600 increase.

D.$270 increase.

E.$1,600 decrease.

58.Barry’s Breakfast Treats has been selling only plain and cream-filled donuts.  Barry believes he can increase his sales by adding a healthy-choice muffin to his menu.  He will incur some additional costs such as ingredients, muffin pans and advertisement on the local TV station.  Which of the following statements is false?

A.Barry’s fixed costs will probably increase.

B.Barry’s total variable costs will probably increase

C.Barry should add the muffin only if the increased contribution margin exceeds the increase in revenues.

D.Barry should add the muffin only if the increased contribution margin exceeds the increase in fixed costs.

E.All of the above statements are false.

59.Assume University T-shirt Shop has a selling price of $25 and unit variable cost of $10 for its long-sleeve cotton shirts.  Fixed costs total $1,000.  University believes increasing its price to $27 its sales volume will drop by 5 percent.  If University’s sales volume for the month was estimated to be 300 shirts before the price increase, how will net profit be affected by the change in selling price?

A.$395 increase.

B.$345 increase.

C.$345 decrease.

D.$150 increase.

E.$150 decrease.

60.If unit variable cost is reduced and selling price and fixed cost remain the same, then:

A.Contribution margin will decrease.

B.Contribution margin will remain the same.

C.Sales volume will increase

D.Sales volume will decrease.

E.Overall profit will increase.

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