21 jarvis foods produces a gourmet condiment which sells for 10 00 per unit variable 4311299

21) Jarvis Foods produces a gourmet condiment which sells for $10.00 per unit.  Variable costs are $7.50 per unit, and fixed costs are $18,000 per month.  Jarvis is currently selling 8,000 units per month.  If Jarvis is forced to reduce the selling price down to $9.00 per unit, and volume remains constant, how will that affect its operating income?

A) Operating income will go up by $6,000.

B) Operating income will become a loss of $6,000.

C) Operating income will become a loss of $2,000.

D) Operating income will go up by $2,000.

22) Jarvis Foods produces a gourmet condiment which sells for $10.00 per unit.  Variable costs are $7.50 per unit, and fixed costs are $18,000 per month.  Jarvis is currently selling 8,000 units per month.  If Jarvis reduces the selling price down to $9.00 per unit, they believe volume will rise to 13,000 units per month.   How would that affect its operating income?

A) Operating income will go up by $6,000.

B) Operating income will go down by $1,600.

C) Operating income will go down by $500.

D) Operating income will go up by $2,000.

23) Jarvis Foods produces a gourmet condiment which sells for $10.00 per unit.  Variable costs are $7.50 per unit, and fixed costs are $18,000 per month.  Jarvis is currently selling 8,000 units per month.  How much is Jarvis's margin of safety expressed in units?

A) 250 units

B) 800 units

C) 160 units

D) 40 units

24) Jarvis Foods produces a gourmet condiment which sells for $10.00 per unit.  Variable costs are $7.50 per unit, and fixed costs are $18,000 per month.  Jarvis is currently selling 8,000 units per month.  How much is Jarvis's margin of safety expressed in sales revenue?

A) $8,000

B) $7,400

C) $6,000

D) $2,600

25) Arquebus Company is owned and operated by a craftsman who makes replicas of historic firearms for museums, sportsmen and collectors.  He is currently producing 40 flintlock muskets per month.  Cost data are as follows:

Price$720 per unit

Variable cost$470 per unit

Fixed costs$8,000 per month

In June, the cost of the special kind of metal he uses went up considerably, and the variable cost per unit increased by $50 per unit.  If volume and other factors remain constant, how will this affect the company's breakeven point?

A) It will go up by 12 units.

B) It will have no effect on breakeven.

C) It will go up by 8 units per month.

D) It will go down by 2 units per month.

26) Arquebus Company is owned and operated by a craftsman who makes replicas of historic firearms for museums, sportsmen and collectors.  He is currently producing 40 flintlock muskets per month.  Cost data are as follows:

Price$720 per unit

Variable cost$470 per unit

Fixed costs$8,000 per month

In June, the cost of the special kind of metal he uses went up considerably, and the variable cost per unit increased by $50 per unit.  If volume and other factors remain constant, how will this affect the company's breakeven point in sales dollars?

A) It will go up by $5,760 of sales revenue.

B) It will go up by $2,400 of sales revenue.

C) It will go down by $400 of sales revenue.

D) It will go down by $2,720 of sales revenue.

27) Arquebus Company is owned and operated by a craftsman who makes replicas of historic firearms for museums, sportsmen and collectors.  He is currently producing 40 flintlock muskets per month.  Cost data are as follows:

Price$720 per unit

Variable cost$470 per unit

Fixed costs$8,000 per month

In June, the cost of the special kind of metal he uses went up considerably, and the variable cost per unit increased by $50 per unit.  If volume and other factors remain constant, how will this affect the company's operating income?

A) It will go up by $5,760 of sales revenue.

B) It will go up by $2,400 of sales revenue.

C) It will go down by $400 of sales revenue.

D) It will go down by $2,000.

28) Arquebus Company is owned and operated by a craftsman who makes replicas of historic firearms for museums, sportsmen and collectors.  He is currently producing 40 flintlock muskets per month.  Cost data are as follows:

Price$720 per unit

Variable cost$470 per unit

Fixed costs$8,000 per month

In June, the cost of the special kind of metal he uses went up considerably, and the variable cost per unit increased by $50 per unit.  The owner believes he can pass along half of the cost increase to his customers by raising the price to $745, and still maintain the same volume of sales.  If so, how will this affect his operating income?

A) It will go up by $1,000.

B) It will go down by $1,000.

C) It will go down by $1,225.

D) It will go down by $2,500.

29) Arquebus Company is owned and operated by a craftsman who makes replicas of historic firearms for museums, sportsmen and collectors.  He is currently producing 40 flintlock muskets per month.  Cost data are as follows:

Price$720 per unit

Variable cost$470 per unit

Fixed costs$8,000 per month

How much is his margin of safety expressed in units per month?

A) 8 units

B) 6 units

C) 4 units

D) 2 units

30) Arquebus Company is owned and operated by a craftsman who makes replicas of historic firearms for museums, sportsmen and collectors.  He is currently producing 40 flintlock muskets per month.  Cost data are as follows:

Price$720 per unit

Variable cost$470 per unit

Fixed costs$8,000 per month

How much is his margin of safety expressed in sales revenue?

A) $2,000

B) $1,600

C) $900

D) $1,200

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