4. If production increases by 15%, how will variable costs per unit likely react?

A. Increase by about 5%

B. Increase by about 15%

C. Decrease by about 15%

D. Remain the same

E. Decrease by about 5%

13. In the CVP Graph above for the Proglide Skate Company, the relevant range is from 0 units to a maximum of 1,500 units. You can see the total revenue ($135,000) at 1,500 units, the total cost ($91,800) at 1,500 units, and the total fixed cost ($37,800) at 1,500 units. How much would the net income for the Proglide Skate Company be at 1,200 units? HINT: Find the total variable cost at 1,500 units.

A. $27,000

B. $43,200

C. $34,560

D. $77,760

14. ABC Company sells its product for $70 per unit and has variable costs of $30 per unit. Total fixed costs are $80,000. Suppose variable costs increase by 25% and fixed costs decrease 40%. What will be the effect on the breakeven point in units? HINT: First compute the original B/E point.

1. Increase by 875 units

2. Increase by 523 units

3. Decrease by 523 units

D. Decrease by 875 units

15. Assuming a constant mix of 1 unit of Small for every 4 units of Large.

Small Large

Sales $45 $50

Variable cost per unit 20 15

Total common fixed costs $66,000

The breakeven point in combined units of Small & Large would be

a. 1,600 units

b. 1,800 units

c. 2,000 units

d. 2,200 units