Question 1

Davis Corporation has developed the following flexible budget formula for monthly overhead:
For output of less that 200,000 units:
             For output of less than 200,000 units:       $36,600 + $.80(units)               For output of 200,000 units or more:       $43,000 + $.80(units)      
How much overhead should Davis expect if the firm plans to produce 200,000 units?

Accepted Answer

A) $52,600 
B) $59,000 
C) $196,600 
D) $203,000

Question 2

Sales minus cost of goods sold is referred to as variable contribution margin.

Accepted Answer

A) True 
 B)False

Question 3

If overapplied factory overhead is immaterial,the account is closed by a credit to Cost of Goods Sold.

Accepted Answer

A) True 
 B)False

Question 4

A credit to the Factory Overhead account represents actual overhead costs.

Accepted Answer

A) True 
 B)False

Question 5

At its present level of operations,a small manufacturing firm has total variable costs equal to 75 percent of sales and total fixed costs equal to 15 percent of sales.Based on variable costing,if sales change by $1.00,income will change by

Accepted Answer

A) $0.25. 
B) $0.10. 
C) $0.75. 
D) can't be determined from the information given.

Question 6

Consider the regression equation y = a + bX.The portion of the equation that represents the variable rate is __________.

Accepted Answer

The answer of Consider the regression equation y = a...

Question 7

The facility manager of Tovar Corporation asked the systems analyst for information to help in forecasting handling costs.The following printout was generated using the least squares regression method.

Fixed cost	$2,550
Variable cost per unit	$ 1.85
Activity variable	units of production volume

a.Using the information from the print out, develop a cost tunction that can be used to estumate handing costs at different voluine levels b. Estimate handling costs if expected procluction for next month is 20,000 units.

Accepted Answer

The answer of The facility manager of Tovar Corporation asked...

Question 8

For its most recent fiscal year,a firm reported that its contribution margin was equal to 40 percent of sales and that its net income amounted to 10 percent of sales.If its fixed costs for the year were $60,000,how much were sales?

Accepted Answer

A) $150,000 
B) $200,000 
C) $600,000 
D) can't be determined from the information given

Question 9

Truman Corporation
The following information has been extracted from the financial records of Truman Corporation for its first year of operations:
             Units produced       10,000               Units sold       7,000               Variable costs per unit:                       Direct material       $8                Direct labor       9                Manufacturing overhead       3                SG&A       4               Fixed costs:                       Manufacturing overhead       $70,000                SG&A       30,000      
Refer to Truman Corporation.Based on absorption costing,what amount of period costs will Truman Corporation deduct?

Accepted Answer

A) $70,000 
B) $79,000 
C) $30,000 
D) $58,000

Question 10

On the variable costing income statement,the difference between the "contribution margin" and "income before income taxes" is equal to

Accepted Answer

A) the total variable costs. 
B) the Cost of Goods Sold. 
C) total fixed costs. 
D) the gross margin.

Question 11

Consider the regression equation y = a + bX.The portion of the equation that represents the activity base is __________.

Accepted Answer

The answer of Consider the regression equation y = a...

Question 12

A performance measure that is short-run in nature and represents a firm's anticipated activity level for the upcoming period is ____________________ capacity.

Accepted Answer

The answer of A performance measure that is short-run in...

Question 13

Absorption costing differs from variable costing in all of the following except

Accepted Answer

A) treatment of fixed manufacturing overhead. 
B) treatment of variable production costs. 
C) acceptability for external reporting. 
D) arrangement of the income statement.

Question 14

Phoenix Corporation
The records of Phoenix Corporation revealed the following data for the current year.
             Work in Process       $ 73,150               Finished Goods       115,000               Cost of Goods Sold       133,650               Direct Labor       111,600               Direct Material       84,200      
Refer to Phoenix Corporation.Assume that Phoenix has overapplied overhead of $25,000 and that this amount is material.What is the balance in Cost of Goods Sold after the overapplied overhead is closed?

Accepted Answer

A) $123,267 
B) $144,033 
C) $158,650 
D) $108,650

Question 15

Buxton Office Supply Company has the following information available regarding costs and revenues for two recent months.Selling price is $20.

Fixed cost	$2,550
Variable cost per unit	$ 1.85
Activity variable	units of production volume

b. By use of the high-low method, separate each mixed expense into variable and fixed elements. State the cost formula for each mixe expense c. What is the total cost equation? d. Estimate total cost if sales $ =\$ 75,000 $ Required: a. Identify each of the company's expenses (including cost of goods sold) as being either variable, fixed, or mixed. b. By use of the high-low method, separate each mixed expense into variable and fixed elements. State the cost formula for each mixed expense. c. What is the total cost equation? d. Estimate total cost if sales = $75,000.

Accepted Answer

The answer of Buxton Office Supply Company has the following...

Question 16

The slope of a regression line is determined by dividing the change in total cost by the change in activity level.

Accepted Answer

A) True 
 B)False

Question 17

Absorption costing conforms with generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 18

Absorption costing is commonly used for internal reporting.

Accepted Answer

A) True 
 B)False

Question 19

Consider the following three product costing alternatives: process costing,job order costing,and standard costing.Which of these can be used in conjunction with variable costing?

Accepted Answer

A) job order costing 
B) standard costing 
C) process costing 
D) all of them

Question 20

Why should predetermined overhead rates be used?

Accepted Answer

The answer of Why should predetermined overhead rates be used?...

	March	April
Sales revenue	$60,000	$100,000
Cost of goods sold	-36,000	- 60,000
Gross profit	$24,000	$ 40,000
Less other expenses:
Advertising	$ 600	$ 600
Utilities	4,200	5,600
Salaries and commissions	3,200	4,000
Supplies (bags, cleaning supplies etc.)	320	400
Depreciation	2,300	2,300
Administrative costs	1,900	1,900
Total	-12,520	-14,800
Net income	$11,480	$25,200

For output of less than 200,000 units:	$36,600 + $.80(units)
For output of 200,000 units or more:	$43,000 + $.80(units)

Units produced	10,000
Units sold	7,000
Variable costs per unit:
Direct material	$8
Direct labor	9
Manufacturing overhead	3
SG&A	4
Fixed costs:
Manufacturing overhead	$70,000
SG&A	30,000

Work in Process	$ 73,150
Finished Goods	115,000
Cost of Goods Sold	133,650
Direct Labor	111,600
Direct Material	84,200

Exam 3: Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

Sales minus cost of goods sold is referred to as variable contribution margin.

If overapplied factory overhead is immaterial,the account is closed by a credit to Cost of Goods Sold.

A credit to the Factory Overhead account represents actual overhead costs.

At its present level of operations,a small manufacturing firm has total variable costs equal to 75 percent of sales and total fixed costs equal to 15 percent of sales.Based on variable costing,if sales change by $1.00,income will change by

Consider the regression equation y = a + bX.The portion of the equation that represents the variable rate is __________.

For its most recent fiscal year,a firm reported that its contribution margin was equal to 40 percent of sales and that its net income amounted to 10 percent of sales.If its fixed costs for the year were $60,000,how much were sales?

On the variable costing income statement,the difference between the "contribution margin" and "income before income taxes" is equal to

Consider the regression equation y = a + bX.The portion of the equation that represents the activity base is __________.

A performance measure that is short-run in nature and represents a firm's anticipated activity level for the upcoming period is ____________________ capacity.

Absorption costing differs from variable costing in all of the following except

The slope of a regression line is determined by dividing the change in total cost by the change in activity level.

Absorption costing conforms with generally accepted accounting principles.

Absorption costing is commonly used for internal reporting.

Consider the following three product costing alternatives: process costing,job order costing,and standard costing.Which of these can be used in conjunction with variable costing?

Why should predetermined overhead rates be used?