Use the information below to answer the following question(s).

Macadamia Co. produced and sold 40,000 units last year. Per unit revenue and costs were as follows:

Revenue

$100.00

Cost of Goods Sold:

Direct Materials

$15.00

Direct Labour

30.00

Variable Manufacturing Overhead

20.00

Fixed Manufacturing Overhead

10.00

Total Cost of Goods Sold

75.00

Gross Margin

$25.00

Selling and Administrative Costs:

Sales Commissions (10% of Sales)

$10.00

Administrative Salaries

20.00

Total Selling and Administrative

30.00

Operating Income

<$5.00>

Fixed manufacturing overhead and administrative salaries are fixed costs. The per unit amounts are based on last year's production.

31) Calculate last year's operating income when the company produced and sold 40,000 units.

A) $0

B) $<200,000>

C) $<500,000>

D) $<800,000>

E) $<1,000,000>

32) Calculate this year's operating income if the company plans to produce and sell 50,000 units.

A) $50,000

B) $0

C) $<250,000>

D) $<550,000>

E) $250,000

33) Calculate this year's operating income if the company plans to produce and sell 60,000 units.

A) $150,000

B) $0

C) $<300,000>

D) $<650,000>

E) $300,000

34) Cost behaviour refers to

A) how costs react to a change in the level of activity.

B) whether a cost is incurred in a manufacturing, merchandising, or service company.

C) classifying costs as either inventoriable or period costs.

D) whether a particular expense has been ethically incurred.

E) how costs react to a change in selling price.

35) A mixed cost is

A) a fixed cost.

B) a cost with fixed and variable elements.

C) a variable cost.

D) always an indirect cost.

E) a cost with direct and indirect elements.

36) Variable costs

A) are always indirect costs.

B) increase in total when the actual level of activity increases.

C) include most personnel costs and depreciation on machinery.

D) can always be traced directly to the cost object.

E) change in relation to selling price.