Question

4. When the selling price per unit and variable costs per unit remain constant, if total fixed costs decrease, which of the following statements is true? A. Breakeven point in units increases. C. Breakeven point in units decreases B. Contribution margin decreases. D. Contribution margin increases. lace Furniture sells two products, tables and chairs. A table sells for $80 per unit riable costs of $25 per unit. A chair sells for $60 per unit with variable costs of Total fixed costs for the company are $3,570. Wallace Furniture typically with va $10 per unit. sells one table for every four chairs. What is the breakeven point in total units A. 70 units D. 20 units B. 123 units C. 34 units 16. Which would be a consideration for making special orders? A. Available capacity to fill the order B. If the order will affect regular sales in the long run C. If price will cover incremental costs of filling the order D. All of the above

Answer 1

14	Contribution margin will not be effected with fixed cost
	Fixed cost decrease so breakeven in units will also decrease
	So correct answer is C
		1 table	4 chairs
15		Table	Chair
	Selling price	80	240
	Variable cost	25	40
	Contribution margin	55	200
	Total contribution margin per unit	255
	Fixed cost	3570
	Total combination of 1 table and 4 chairs	14
	So total 14*1 = 14 tables and 14*4= 56 Chairs	70	units
	Correct answer is A 70 units
16	Available capacity to fill the order
	effect regular sales in the long run
	If price will cover incremental cost of filling the order
	All the above is correct
	Correct answer is D