Exam 4: Short-Term Decision Making

Define and distinguish between a sunk cost and an opportunity cost,and give an example of each.Is each one relevant to decision making? Explain.

Dreary Days,Inc.sells raincoats at a selling price of $25.00 for each rain coat.The variable cost per coat is $16.25.Total fixed costs are $142,000.The contribution margin ratio is:

Promotion Industries manufacturers license plates for automobiles.The license plates sell for $10.50 each.During 2008,Miller sold 750,000 plates incurring total variable costs of $1,462,500 and fixed costs of $3,268,720. (a)Determine the contribution margin per unit. (b)Determine the breakeven point in units for 2008. (c)Determine the amount of profit earned in 2008. (d)Determine the breakeven point in units for 2009,assuming variable costs increase by 20% and fixed costs remain unchanged