Question 1

Activity-based costing may be used to charge selling and administrative expenses to:

Accepted Answer

A) types of products sold. 
B) sales offices. 
C) sales persons. 
D) All of the above. 
A) types of products sold. 
B) sales offices. 
C) sales persons. 
D) All of the above. D

Question 2

Donellan Company produces a special gear used in automatic transmissions.Each gear sells for $30,and the company sells approximately 500,000 gears each year.Unit cost data for the year follows:   Donellan has received an offer from a foreign manufacturer to purchase 25,000 gears.Domestic sales would be unaffected by this transaction.If the offer is accepted,variable distribution costs will increase $1.00 per gear for insurance,shipping,and import duties.The relevant unit cost to a pricing decision on this offer is:

Accepted Answer

A) $18.00. 
B) $20.00. 
C) $24.00. 
D) $26.00. 
A) $18.00. 
B) $20.00. 
C) $24.00. 
D) $26.00. D

Question 3

When evaluating profitability of a segment,costs that are directly identifiable with a specific segment are called:

Accepted Answer

A) Direct costs. 
B) Common costs. 
C) Indirect costs. 
D) Fixed costs. 
A) Direct costs. 
B) Common costs. 
C) Indirect costs. 
D) Fixed costs. A

Question 4

The basic assumption made in a variable costing system with respect to fixed costs is that all fixed costs are:

Accepted Answer

A) Sunk costs. 
B) Product costs. 
C) Fixed as to the total cost. 
D) Period costs. 
A) Sunk costs. 
B) Product costs. 
C) Fixed as to the total cost. 
D) Period costs.

Question 5

Each of the following would affect the break-even point except a change in the:

Accepted Answer

A) Variable cost per unit. 
B) Total fixed costs. 
C) Sales price per unit. 
D) Number of units sold. 
A) Variable cost per unit. 
B) Total fixed costs. 
C) Sales price per unit. 
D) Number of units sold.

Question 6

Franklin Company is a medium-sized manufacturer of bicycles.During the year a new line called "Radical" was made available to Franklin's customers.The break-even point for sales of Radical is $250,000 with a contribution margin ratio of 40 percent.Assuming that the profit for the Radical line during the year amounted to $80,000,total sales during the year would have amounted to:

Accepted Answer

A) $450,000. 
B) $420,000. 
C) $400,000. 
D) $475,000. 
A) $450,000. 
B) $420,000. 
C) $400,000. 
D) $475,000.

Question 7

The practice of accepting a selling price when there is excess capacity,as long as it exceeds variable cost is called:

Accepted Answer

A) Contribution pricing. 
B) Differential pricing. 
C) Capacity pricing. 
D) Special pricing. 
A) Contribution pricing. 
B) Differential pricing. 
C) Capacity pricing. 
D) Special pricing.

Question 8

Spire Ridge Company produces bells.Fixed costs are $800,000.Variable costs per bell are $60.00,and each bell sells for $100.00.The company' sales budget calls for sales of 24,000 units. At the budgeted level of sales,what is the margin of safety ratio?

Accepted Answer

A) 20.0% 
B) 16.7% 
C) 44.4% 
D) 33.3% 
A) 20.0% 
B) 16.7% 
C) 44.4% 
D) 33.3%

Question 9

Cleese Company currently purchases a finished part from Idle Company,but is considering using it excess capacity to make the part.Normal capacity is 20,000 hours,but Cleese is currently running at 17,000 hours.Details about budgeted factory overhead follow:   Direct costs to manufacture 1,000 parts in-house would be:   The relevant unit cost Cleese should use to decide whether to make or buy the part is:

Accepted Answer

A) $31.00 
B) $24.50 
C) $27.00 
D) $26.00 
A) $31.00 
B) $24.50 
C) $27.00 
D) $26.00

Question 10

In performing an activity-based costing study for distribution costs,appropriate cost drivers for preparing orders for shipment would include all of the following except the:

Accepted Answer

A) Number of orders shipped. 
B) Time spent packing orders. 
C) Time devoted to selling each product. 
D) Number of items per order. 
A) Number of orders shipped. 
B) Time spent packing orders. 
C) Time devoted to selling each product. 
D) Number of items per order.

Question 11

What factor related to manufacturing costs causes the difference in net earnings computed using absorption costing and net earnings computed using variable costing?

Accepted Answer

A) Absorption costing considers all costs in the determination of net earnings,whereas variable costing considers only direct costs. 
B) Absorption costing "inventories" all direct costs,but variable costing considers direct costs to be period costs. 
C) Absorption costing "inventories" all fixed manufacturing costs for the period in ending finished goods inventory,but variable costing expenses all fixed costs. 
D) Absorption costing allocates fixed manufacturing costs between cost of goods sold and inventories,and variable costing considers all fixed costs to be period costs. 
A) Absorption costing considers all costs in the determination of net earnings,whereas variable costing considers only direct costs. 
B) Absorption costing "inventories" all direct costs,but variable costing considers direct costs to be period costs. 
C) Absorption costing "inventories" all fixed manufacturing costs for the period in ending finished goods inventory,but variable costing expenses all fixed costs. 
D) Absorption costing allocates fixed manufacturing costs between cost of goods sold and inventories,and variable costing considers all fixed costs to be period costs.

Question 12

Bradley Inc.has the capacity to make 100,000 windows.Bradley is currently operating at 100% capacity.The windows usually sell for $20.00 each.Costs for each window follow:   The Army has offered to buy 10,000 windows for $12.00 each for barracks.Bradley should:

Accepted Answer

A) Reject the offer because it currently does not have enough capacity to accept the order. 
B) Reject the order because the company will lose $20,000 on the order. 
C) Accept the offer because the company will realize $20,000 in additional contribution margin. 
D) Accept the offer because the company will realize $40,000 in additional contribution margin. 
A) Reject the offer because it currently does not have enough capacity to accept the order. 
B) Reject the order because the company will lose $20,000 on the order. 
C) Accept the offer because the company will realize $20,000 in additional contribution margin. 
D) Accept the offer because the company will realize $40,000 in additional contribution margin.

Question 13

Consider the income statement for Pickbury Farm:   What is the margin of safety ratio (to the nearest percentage point)?

Accepted Answer

A) 47% 
B) 70% 
C) 30% 
D) 88% 
A) 47% 
B) 70% 
C) 30% 
D) 88%

Question 14

Nolan Company has two segments: Audio and Video.Sales for the Audio Segment were $500,000,and variable costs were 40% of sales.The Video Segment also had sales of $500,000,but variable costs were 60% of sales.Fixed costs directly traceable to the Audio and Video segments were $150,000 and $120,000,respectively.Common fixed costs of $200,000 were arbitrarily allocated equally to each segment. ​
What was the segment margin of the Video Segment?

Accepted Answer

A) $200,000 
B) $ 80,000 
C) $(20,000) 
D) $ 150,000 
A) $200,000 
B) $ 80,000 
C) $(20,000) 
D) $ 150,000

Question 15

Which of the following does not appear on an income statement prepared using variable costing?

Accepted Answer

A) Gross margin/profit. 
B) Manufacturing margin 
C) Fixed production costs. 
D) Variable production costs. 
A) Gross margin/profit. 
B) Manufacturing margin 
C) Fixed production costs. 
D) Variable production costs.

Question 16

Which of the following is a more descriptive term of the type of cost accounting often called "variable costing"?

Accepted Answer

A) Prime costing 
B) Out-of-pocket costing 
C) Direct costing 
D) Relevant costing 
A) Prime costing 
B) Out-of-pocket costing 
C) Direct costing 
D) Relevant costing

Question 17

Nolan Company has two segments: Audio and Video.Sales for the Audio Segment were $500,000,and variable costs were 60% of sales.The Video Segment also had sales of $500,000,but variable costs were 60% of sales.Fixed costs directly traceable to the Audio and Video segments were $150,000 and $120,000,respectively.Common fixed costs of $200,000 were arbitrarily allocated equally to each segment. ​
What was the contribution margin of the Audio Segment.

Accepted Answer

A) $50,000 
B) $300,000 
C) $200,000 
D) $150,000 
A) $50,000 
B) $300,000 
C) $200,000 
D) $150,000

Question 18

Consider the income statement for Pickbury Farm:   ​ At what sales level does Pickbury achieve net income of $200,000?

Accepted Answer

A) $700,000 
B) $933,333 
C) $300,000 
D) $666,666 
A) $700,000 
B) $933,333 
C) $300,000 
D) $666,666

Question 19

Hoctor Industries wishes to determine the profitability of its products and asks the cost accountant to make a comparative analysis of sales,cost of sales and distribution costs of each product for the year.The accountant gathers the following information which will be useful in preparing the analysis:   Advertising expenses total $100,000,with 60% being expended to advertise the Deluxe model.The representatives commissions are 5% and 7% for the standard and deluxe models,respectively.The sales manager's salary of $50,000 is allocated evenly between products.Other miscellaneous selling costs are estimated to be $6 per order received.
(a)Compute the selling cost per unit.
(b)Prepare an analysis for Hoctor Industries that will show in comparative form the income derived from the sale of each unit for the year.

Accepted Answer

(a) @#IMG-DLM& (b)
Hoctor Indu

Question 20

Fortran Industries produces burner elements for stoves.Each element sells for $20,and the company sells approximately 2,000,000 elements each year.Unit cost data for the year follows:   The unit cost of an element for variable costing inventory purposes is:

Accepted Answer

A) $15.50 
B) $12.00 
C) $10.50 
D) $7.00 
A) $15.50 
B) $12.00 
C) $10.50 
D) $7.00

Activity-based costing may be used to charge selling and administrative expenses to:

When evaluating profitability of a segment,costs that are directly identifiable with a specific segment are called:

The basic assumption made in a variable costing system with respect to fixed costs is that all fixed costs are:

Each of the following would affect the break-even point except a change in the:

The practice of accepting a selling price when there is excess capacity,as long as it exceeds variable cost is called:

Spire Ridge Company produces bells.Fixed costs are $800,000.Variable costs per bell are $60.00,and each bell sells for $100.00.The company' sales budget calls for sales of 24,000 units. At the budgeted level of sales,what is the margin of safety ratio?

In performing an activity-based costing study for distribution costs,appropriate cost drivers for preparing orders for shipment would include all of the following except the:

What factor related to manufacturing costs causes the difference in net earnings computed using absorption costing and net earnings computed using variable costing?

Bradley Inc.has the capacity to make 100,000 windows.Bradley is currently operating at 100% capacity.The windows usually sell for $20.00 each.Costs for each window follow: The Army has offered to buy 10,000 windows for $12.00 each for barracks.Bradley should:

Consider the income statement for Pickbury Farm: What is the margin of safety ratio (to the nearest percentage point)?

Which of the following does not appear on an income statement prepared using variable costing?

Which of the following is a more descriptive term of the type of cost accounting often called "variable costing"?

Consider the income statement for Pickbury Farm: At what sales level does Pickbury achieve net income of $200,000?

Fortran Industries produces burner elements for stoves.Each element sells for $20,and the company sells approximately 2,000,000 elements each year.Unit cost data for the year follows: The unit cost of an element for variable costing inventory purposes is:

Introduction to Cost Accounting

Accounting for Materials

Accounting for Labor

Accounting for Factory Overhead

Process Cost Accounting--General Procedures

Process Cost Accounting--Additional Procedures

Master Budget and Flexible Budgeting

Standard Cost Accounting--Materials, labor, and Factory Overhead

Cost Accounting for Service Businesses

Filters

Exam 10: Cost Analysis for Management Decision Making

Activity-based costing may be used to charge selling and administrative expenses to:

When evaluating profitability of a segment,costs that are directly identifiable with a specific segment are called:

The basic assumption made in a variable costing system with respect to fixed costs is that all fixed costs are:

Each of the following would affect the break-even point except a change in the:

The practice of accepting a selling price when there is excess capacity,as long as it exceeds variable cost is called:

Spire Ridge Company produces bells.Fixed costs are $800,000.Variable costs per bell are $60.00,and each bell sells for $100.00.The company' sales budget calls for sales of 24,000 units. At the budgeted level of sales,what is the margin of safety ratio?

In performing an activity-based costing study for distribution costs,appropriate cost drivers for preparing orders for shipment would include all of the following except the:

What factor related to manufacturing costs causes the difference in net earnings computed using absorption costing and net earnings computed using variable costing?

Bradley Inc.has the capacity to make 100,000 windows.Bradley is currently operating at 100% capacity.The windows usually sell for $20.00 each.Costs for each window follow: The Army has offered to buy 10,000 windows for $12.00 each for barracks.Bradley should:

Consider the income statement for Pickbury Farm: What is the margin of safety ratio (to the nearest percentage point)?

Which of the following does not appear on an income statement prepared using variable costing?

Which of the following is a more descriptive term of the type of cost accounting often called "variable costing"?

Consider the income statement for Pickbury Farm: ​ At what sales level does Pickbury achieve net income of $200,000?

Fortran Industries produces burner elements for stoves.Each element sells for $20,and the company sells approximately 2,000,000 elements each year.Unit cost data for the year follows: The unit cost of an element for variable costing inventory purposes is:

Introduction to Cost Accounting

Accounting for Materials

Accounting for Labor

Accounting for Factory Overhead

Process Cost Accounting--General Procedures

Process Cost Accounting--Additional Procedures

Master Budget and Flexible Budgeting

Standard Cost Accounting--Materials, labor, and Factory Overhead

Cost Accounting for Service Businesses

Filters

Consider the income statement for Pickbury Farm: At what sales level does Pickbury achieve net income of $200,000?