The following data relate to Lobo Corporation for the year just ended: $\begin{array} { | l | r | } \hline \text { Sales revenue } & \$ 750,000 \\ \hline \text { Cost of goods sold: } & \\ \hline \text { Variable portion } & 370,000 \\ \hline \text { Fixed portion } & 110,000 \\ \hline \text { Variable selling and administrative cost } & 50.000 \\ \hline \text { Fixed selling and administrative cost } & 75.000 \\ \hline \end{array}$ Which of the following statements is correct?

A) Lobo's variable-costing income statement would reveal a gross margin of $270,000. B) Lobo's variable costing income statement would reveal a contribution margin of $330,000. C) Lobo's absorption-costing income statement would reveal a contribution margin of $330,000. D) Lobo's absorption costing income statement would reveal a gross margin of $330,000. E) Lobo's absorption-costing income statement would reveal a gross margin of $145,000 A) Lobo's variable-costing income statement would reveal a gross margin of $270,000. B) Lobo's variable costing income statement would reveal a contribution margin of $330,000. C) Lobo's absorption-costing income statement would reveal a contribution margin of $330,000. D) Lobo's absorption costing income statement would reveal a gross margin of $330,000. E) Lobo's absorption-costing income statement would reveal a gross margin of $145,000

WenWen Company makes and sells two types of peanut butter, Smooth and Chunky. Data concerning these products are as follows: $\begin{array} { l c c } & \text { Smooth } & \text { Chunky } \\ \text { Unit selling price } & \$ 40.00 & \$ 55.00 \\ \text { Variable cost per unit } & 16.00 & 24.50 \end{array}$ Forty percent of the unit sales are Chunky, and annual fixed expenses are $159,600. Assuming that the sales mix remains constant, the number of units of Smooth that the company must sell to break even is:

A) 1,757. B) 3,140. C) 3,432. D) 3,600. E) 3,990. A) 1,757. B) 3,140. C) 3,432. D) 3,600. E) 3,990.

A) is not allowed under GAAP. B) is not allowed for external reporting purposes. C) may lead to poor business decisions D) highlights differences between variable and fixed costs. E) optimizes business decisions. A) is not allowed under GAAP. B) is not allowed for external reporting purposes. C) may lead to poor business decisions D) highlights differences between variable and fixed costs. E) optimizes business decisions.

Pickering Company produced and sold 45,000 units of a single product last year, with the following results: $\begin{array} { | c | r | } \hline \text { Sales revenue } & \$ 1.350,000 \\ \hline \text { Manufacturing costs: } & \\ \hline \text { Variable } & 585.000 \\ \hline \text { Fixcd } & 270.000 \\ \hline \text { Sclling costs: } & \\ \hline \text { Variable } & 40.500 \\ \hline \text { Fixcd } & 54,000 \\ \hline \text { Administrative cosis: } & \\ \hline \text { Variable } & 184.500 \\ \hline \text { Fixed } & 108.000 \\ \hline \end{array}$ If Pickering's sales revenues increase 15%, what will be the percentage increase in income before income taxes?

A) 15%. B) 45%. C) 60%. D) 90%. E) 75%. A) 15%. B) 45%. C) 60%. D) 90%. E) 75%.

Exam 7: Cost-Volume-Profit Analysis, Absorption and Variable Costing

Dunrobin Company sells a single product for $12. Variable costs are $8 per unit and fixed costs total $360,000 at a volume level of 60,000 units. Assuming that fixed costs does not change, Dunrobin's break-even point would be:

(Multiple Choice)

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Question 81

The following data relate to Lobo Corporation for the year just ended: Sales revenue \ 750,000 Cost of goods sold: Variable portion 370,000 Fixed portion 110,000 Variable selling and administrative cost 50.000 Fixed selling and administrative cost 75.000 Which of the following statements is correct?

(Multiple Choice)

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Question 82

Which of the following expressions can be used to calculate the break-even point in sales dollars with the contribution-margin ratio (CMR)?

(Multiple Choice)

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Question 83

Consider the statements that follow. 1. Variable selling costs are expensed when incurred. 2. The income statement discloses a company's contribution margin. 3. Fixed manufacturing overhead is attached to each unit produced. 4. Direct labour becomes part of a unit's cost. 5. Sales revenue minus cost of goods sold equals contribution margin. 6. This method must be used for external financial reporting. 7. Fixed selling and administrative expenses are treated in the same manner as fixed manufacturing overhead. 8. This method is sometimes called full costing. 9. This method requires the calculation of a fixed manufacturing cost per unit. Required: Determine which of the nine statements: A. Relate to neither absorption costing nor variable costing. B. Relate to both absorption costing and variable costing. C. Relate only to absorption costing. D. Relate only to variable costing.

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Question 84

Operating leverage is an important concept for many companies. Required: A. Define operating leverage. B. Assume that a firm pays no income taxes and is planning to increase its selling price. If sales volume in units does not change, what will be the effect on the operating leverage factor? Explain. C. Assume that another firm that pays no income taxes is planning to increase total fixed manufacturing costs and decrease variable manufacturing costs per unit. At the present volume of production, the total manufacturing costs will be unchanged. What will this change do to the operating leverage factor? Explain.

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Question 85

Franz began business at the start of this year and had the following costs: variable manufacturing cost per unit, $9; fixed manufacturing costs, $60,000; variable selling and administrative costs per unit, $2; and fixed selling and administrative costs, $220,000. The company sells its units for $45 each. There were no variances. Planned and actual production was 10,000 units. Sales were 8,500 units. The net income/(loss) under absorption costing is:

(Multiple Choice)

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Question 86

WenWen Company makes and sells two types of peanut butter, Smooth and Chunky. Data concerning these products are as follows: Smooth Chunky Unit selling price \ 40.00 \ 55.00 Variable cost per unit 16.00 24.50 Forty percent of the unit sales are Chunky, and annual fixed expenses are $159,600. Assuming that the sales mix remains constant, the number of units of Smooth that the company must sell to break even is:

(Multiple Choice)

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Question 87

Absorption costing

(Multiple Choice)

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Question 88

Maddox Corporation's Product No. H647 has a negative contribution margin. How can such a situation arise? Should the company continue to stock and sell Product No. H647?Explain.

(Essay)

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Question 89

The assumptions on which cost-volume-profit analysis is based appear to be most valid for businesses:

(Multiple Choice)

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Question 90

Pickering Company produced and sold 45,000 units of a single product last year, with the following results: Sales revenue \ 1.350,000 Manufacturing costs: Variable 585.000 Fixcd 270.000 Sclling costs: Variable 40.500 Fixcd 54,000 Administrative cosis: Variable 184.500 Fixed 108.000 If Pickering's sales revenues increase 15%, what will be the percentage increase in income before income taxes?

(Multiple Choice)

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Question 91

Which of the following situations would cause variable-costing net income to be lower than absorption-costing net income?

(Multiple Choice)

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Question 92

Orion's management recently committed to incurring direct labour and all manufacturing overhead charges regardless of the number of units produced. Under throughput costing, the company's cost of goods sold would include charges for:

(Multiple Choice)

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Question 93

A traditional cost-volume-profit analysis focuses on:

(Multiple Choice)

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Question 94

Red River Company sells its product for $12,000 per unit. Variable costs per unit are: Manufacturing overhead -$8,000 Selling and administrative -$150 Fixed costs are: Manufacturing overhead -$30,000 Selling and administrative -$40,000 Red River had no beginning inventory at January 1, 2010. Production was 20 units each year in 2010, 2011, and 2012. Sales were 20 units in 2010, 16 units in 2011, and 24 units in 2012. For the three years from 2010 to 2012 inclusive:

(Multiple Choice)

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Question 95

Eganville Company has per-unit fixed and variable manufacturing costs of $40 and $15, respectively. Variable selling and administrative costs are $9 per unit. Consider the two independent cases that follow for the firm. Case A: Variable-costing net income, $110,000; sales, 6,000 units; production, 6,000 units Case B: Variable-costing net income, $178,000; sales, 7,500 units; production, 7,100 units Required: A. From a product-costing perspective, what is the basic difference between absorption costing and variable costing? B. Compute Eganville's absorption-costing net income in Case A. C. Compute Eganville's absorption-costing net income in Case B.

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Question 96

Red River Company sells its product for $12,000 per unit. Variable costs per unit are: Manufacturing overhead -$8,000 Selling and administrative -$150 Fixed costs are: Manufacturing overhead -$30,000 Selling and administrative -$40,000 Red River had no beginning inventory at January 1, 2010. Production was 20 units each year in 2010, 2011, and 2012. Sales were 20 units in 2010, 16 units in 2011, and 24 units in 2012. Income/(Loss) under absorption costing for 2011 is:

(Multiple Choice)

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Question 97

Seventh Heaven takes tourists on helicopter tours of the Canadian Rockies. Each tourist buys a $150 ticket; the variable costs average $60 per person. Seventh Heaven has annual fixed costs of $702,000. Required: A. How many tours must the company conduct in a month to break even? B. Compute the sales revenue needed to produce a target net profit of $36,000 per month. C. Calculate the contribution margin ratio. D. Determine whether the actions that follow will increase, decrease, or not affect the company's break-even point.1. A decrease in tour prices.2. The termination of a salaried clerk (no replacement is planned).3. A decrease in the number of tours sold.

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Question 98

Bingo Inc. sells a single product for $20. Variable costs are $14 per unit and fixed costs total $220,000 at a volume level of 10,000 units. What dollar sales level would Bingo Inc. have to achieve to earn a target net profit of $340,000?

(Multiple Choice)

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Question 99

All of the following costs are inventoried under absorption costing except:

(Multiple Choice)

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Question 100

Showing 81 - 100 of 114

Dunrobin Company sells a single product for $12. Variable costs are $8 per unit and fixed costs total $360,000 at a volume level of 60,000 units. Assuming that fixed costs does not change, Dunrobin's break-even point would be:

The following data relate to Lobo Corporation for the year just ended: Sales revenue \ 750,000 Cost of goods sold: Variable portion 370,000 Fixed portion 110,000 Variable selling and administrative cost 50.000 Fixed selling and administrative cost 75.000 Which of the following statements is correct?

Which of the following expressions can be used to calculate the break-even point in sales dollars with the contribution-margin ratio (CMR)?

Absorption costing

Maddox Corporation's Product No. H647 has a negative contribution margin. How can such a situation arise? Should the company continue to stock and sell Product No. H647?Explain.

The assumptions on which cost-volume-profit analysis is based appear to be most valid for businesses:

Which of the following situations would cause variable-costing net income to be lower than absorption-costing net income?

Orion's management recently committed to incurring direct labour and all manufacturing overhead charges regardless of the number of units produced. Under throughput costing, the company's cost of goods sold would include charges for:

A traditional cost-volume-profit analysis focuses on:

Bingo Inc. sells a single product for $20. Variable costs are $14 per unit and fixed costs total $220,000 at a volume level of 10,000 units. What dollar sales level would Bingo Inc. have to achieve to earn a target net profit of $340,000?

All of the following costs are inventoried under absorption costing except:

The Changing Role of Managerial Accounting

Basic Cost Management Concepts

Product Costing and Cost Accumulation

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behaviour, and Cost Estimation

Profit Planning and Activity-Based Budgeting

Standard Costing and Flexible Budgeting

Cost Management Tools

Responsibility Accounting, Investment Centres, and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

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