Chapter 12 Determining the Financing Mix

10) The break-even model assumes that selling price per unit and variable cost per unit of output are constant over the relevant range of output.

11) If fixed costs are $150,000, price per unit is $10, and variable cost per unit is $4, the break-even point is 15,000 units.

12) Fixed costs per unit vary inversely with production output.

13) Over the relevant range of output, fixed costs remain unchanged.

14) Jones Blanket Company sells blankets for $25 each. The variable cost of each blanket is $10. If fixed cost is $4,500,000 then the break-even point is 300,000 units.

15) Depreciation is considered a fixed cost.

16) Fixed operating costs include charges incurred from the firm's use of debt financing.

17) In break-even analysis, semivariable costs are segregated into their fixed and variable components over the relevant range of output.

18) Kohler Manufacturing typically achieves one of three production levels in any given year: 8 million pounds of steel, 10 million pounds of steel, or 16 million pounds of steel. In tracking some of its costs, Kohler's controller discovered one cost that was $10 per pound at a production level of 8 million pounds, $8 per pound at a production level of 10 million pounds, and $5 per pound at a production level of 16 million pounds. This is an example of a

A) variable cost.

B) fixed cost.

C) semivariable cost.

D) semifixed cost.

19) Kohler Manufacturing typically achieves one of three production levels in any given year: 8 million pounds of steel, 10 million pounds of steel, or 16 million pounds of steel. In tracking some of its costs, Kohler's controller discovered one cost that was $10 per pound no matter what the production level for the year. This is an example of a

A) variable cost.

B) fixed cost.

C) semivariable cost.

D) semifixed cost.