# 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&#39;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&#39;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&#39;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&#39;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&#39;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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