Question 1 1 pts The range over which a company is expected to operate is called…
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Question “Question 1 1 pts The range over which a company is expected to operate is called…”
Answer
Answer(2): False.
Mixed cost includes fixed and variable costs. Fixed cost refers to the cost that is fixed at every level of an activity, while variable cost refers to the cost that changes depending on the activity. But mixed cost contains both.
Example: A company might pay $100 per 500MB per month for a broadband connection. After that, the price is fixed and increases per unit.
Answer(3) False
Variable cost refers to the cost that changes depending on the level of activity and production. Variable costs increase when production is higher and decrease when production falls. It is dependent on the number of units manufactured.
Examples: Sales commission, cost of raw material etc.
Answer(4): True.
Fixed costs remain the same for all levels of activity. It doesn’t matter if the company serves two people or ten people.
Examples: Insurance on buildings, Rent of factories, etc.
Answer(5): True.
Contribution margin = Revenue + Variable cost
Variable cost: 80 x 40% =$32
Contribution margin: 80-32 = $48
Answer(6): False.
Contribution margin This is the amount after subtracting variable costs from sales/revenues. It is the amount that can be used to pay fixed costs and generate profit.
Answer(7): True.
The sales mix refers to how much each product or product line contributes towards overall sales. If a company produces 100 widgets, 30 of them are smaller and 70 larger than the others, then its sales mix would be 30% and 70% respectively.
Answer(8): True.
Break even point (In units) = Fixed cost / Contribution margin in units
BEP: 240000/300 = 800 Units
Answer(10): False.
Margin of Safety is the sales volume that exceeds the break-even point.
Conclusion
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