Case Reading 3-2 Quiz

 

  1. The Pryor Company has determined that the utility bill for the month is directly related to the number of hours the store is open during the month. The company has determined that the utility bill is a mixed expense and has identified the following months as the high and low activity levels for the year.

     

    Month

     

    Utility Bill

     

    Open Hours

    January

    480

    200

    August

    444

    176

     

    Given this information, what is the variable rate for each hour that the store is open?

    a. $1.50 per hour

    b. $1.60 per hour

    c. $2.00 per hour

    d. $1.75 per hour

     

  2. The Keller Company has determined that the utility bill for the month is directly related to the number of hours the store is open during the month. The company has determined that the utility bill is a mixed expense and has identified the following months as the high and low activity levels for the year.

     

    Month

     

    Utility Bill

     

    Open Hours

    February

    450

    200

    July

    420

    176

    The variable rate for the utility bill has been determined to be $1.25 per open hour. Given this information, what is the fixed portion of the utility bill per month for the store?

    a. $700

    b. $640

    c. $200

    d. $250

     

  3. The Pryor Company has determined that the utility bill for the month is directly related to the number of hours the store is open during the month. The company has determined that the utility bill is a mixed expense and has identified the following months as the high and low activity levels for the year.

     

    Month

     

    Utility Bill

     

    Open Hours

    March

    665

    220

    September

    625

    200

    It has been correctly determined that the variable rate is $2.00 per open hour and the fixed portion of the bill is $225. In October the store expects to be open about 190 hours. What should be the approximate amount of the utility bill?

    a. $615

    b. $1,025

    c. $1,575

    d. $605

     

  4. The Reiff Company sells snow boards for $270 apiece. Variable expenses are 36%, mixed expenses are 3% plus $80 and fixed expenses are $1,500. What is the contribution margin ratio?

    a. 39%

    b. 61%

    c. 64%

    d. 67%

     

  5. The Reiff Company sells snow boards for $270 apiece. Variable expenses are 41% and fixed expenses are $1,500. What is the dollar amount of the contribution margin if the company sells 10 snowboards?

    a. $1,593

    b. $1,107

    c. $2,700

    d. $93

     

  6. The Reiff Company sells snow boards for $300 apiece. Variable expenses are 40%, and fixed expenses are $1,400. What is net income if the company sells 10 snowboards?

    a. ($200)

    b. $1,800

    c. $1,400

    d. $400

     

  7. The Reiff Company sells snowboards for $300 apiece. Variable expenses are $120, and fixed expenses are $1,400. If the sales volume increases by two snowboards, what affect will that have on profit?

    a. profit will decrease by $1,220

    b. profit will increase by $1,220

    c. profit will increase by $40

    d. profit will increase by $360

     

  8. The Ferrini Company has sales during the month of $8,400. Variable expenses total $1,932 and fixed expenses are $4,200. What is the contribution margin ratio?

    a. 73%

    b. 77%

    c. 23%

    d. 27%

     

  9. The Ferrini Company has sales during the month of $8,400. Variable expenses total $1,932 and fixed expenses are $4,200. What would the total net income for the month be if the company had sales of $9,000?

    a. $2,268

    b. $2,070

    c. $2,730

    d. $2,430

     

  10. Traditional income statements:

a. have variable and fixed expense categories

b. are required for companies that are publicly traded

c. have a format that facilitates "what if" analyses.

d. generally show a different dollar amount for net income than would be calculated on a income statement using the contribution approach.