Chapter 3

3.  Lacopi Corporation is a wholesaler that sells a single product. Management has provided the following
cost data for two levels of monthly sales volume. The company sells the product for $172.50 per unit.
 
Sales volume (units) 4,000 5,000 
Cost of sales $307,600 $384,500 
Selling and administrative costs $321,200 $337,000 
 
The best estimate of the total contribution margin when 4,300 units are sold is:
 
Answer  
a.$343,140 
b.$65,790 
c.  $121,260 
d.$411,080
 
4.  Shipping expense is $9,000 for 8,000 pounds shipped and $11,250 for 11,000 pounds shipped.
Assuming that this activity is within the relevant range, if the company ships 9,000 pounds, its expected
shipping expense is closest to:
 
a.$10,125 
b.$8,583 
c.$9,972 
d.$9,750  
 
5. Fixed cost per unit increases as activity decreases and decreases as activity increases.
 True 
 False 
 
6. Within the relevant range, the variable cost per unit:
 
Answer  
A.  remains constant as activity changes  
B.  increases as activity increases. 
C.  decreases as activity increases. 
D.  can increase or decrease as the activity changes.