1. Dalian Company provides the following information:

Price per unit: $20

Variable cost per unit: $8

Fixed costs per month: $15,000

What is the breakeven point in terms of sales revenues? 

 $18,500

 $25,000   

 $37,500

 $22,750

2. Activity-based costing focuses on a single predetermined overhead rate for cost analysis. 

 True 

 False  

3. Peterson Company has both fixed and variable costs. If the volume doubles, the total variable costs will double. 

 True        

 False 

4. Total variable costs change in response to changes in the volume of production. 

 True 

 False 

5.  The first step in the activity-based costing system is to identify each activity and its total indirect cost. 

 True 

 False        

6.  Equival Company wishes to sell truck axles to car manufacturers. The current market price of the axles is $400, and Equival knows it must accept the market price. Currently, it costs the company $330 to produce each axle. The company wishes to make a profit equal to 20% of the price. Which of the following strategies should Equival adopt to achieve its objective? 

 Raise the price to $410.

 Reduce its production costs by $10 per unit.     

 Increase the production costs by $20 per unit.

 Use advertising to increase the volume of sales.

7. JB Company has fixed costs of $300,000. Total costs, both fixed and variable, are $378,000 when 40,000 units are produced. How much is the variable cost per unit? (Please round to the nearest cent.) (Points : 1) 

$9.45

 $2.78

 $7.50

 $1.95     

 None of these is correct

8. Activity-based costing creates more precise matching of indirect costs with products 

 True 

 False  

9. Jurassic Manufacturers produces flooring material. Fixed costs are $5,000 per month. Sales price for one unit of product is $50, and the variable cost per unit is $30. If Jurassic wishes to earn an operating income of $5,000, how many units need to be sold? 

 500   

 300

 450

 350

10. Dalian Company provides the following information:

Price per unit: $20

Variable cost per unit: $8

Fixed costs per month: $15,000

What is the breakeven point in terms of units sold? 

 1,150

 1,200

 1,875

 1,250