Problem 1: The relevant range of activity refers to the
a. geographical areas where the company plans to operate.
b. activity level where all costs are curvilinear.
c. levels of activity over which the company expects to operate.
d. level of activity where all costs are constant.
Problem 2: The financial budgets include the
a. cash budget and the selling and administrative expense budget.
b. cash budget and the budgeted balance sheet.
c. budgeted balance sheet and the budgeted income statement.
d. cash budget and the production budget.
Problem 3: It is important that budgets be accepted by
a. division managers.
b. department heads.
c. supervisors.
d. all of these.
Problem 4. If costs are not responsive to changes in activity level, then these costs can be best described as
a. mixed.
b. flexible.
c. variable.
d. fixed
Problem 5: If actual direct material costs are greater than standard direct materials costs, it means that
a. actual costs were calculated incorrectly.
b. the actual unit price of direct materials was greater than the standard unit price of direct materials.
c. the actual unit price of raw materials or the actual quantities of raw materials used was greater than the standard unit price or standard quantities of raw materials expected.
d. the purchasing agent or the production foreman is inefficient.
Problem 6: If a plant is operating at full capacity and receives a one-time opportunity to accept an order at a special price below its usual price, then
a. only variable costs are relevant.
b. fixed costs are not relevant.
c. the order will likely be accepted.
d. the order will likely be rejected.
Problem 7: The cost-plus pricing approach's major advantage is
a. it considers customer demand.
b. that sales volume has no effect on per unit costs.
c. it is simple to compute.
d. none of these.
Problem 8: Downing Company produces a high resolution computer monitor. The following information is available for this product:
Fixed cost per unit $50
Variable cost per unit 150
Total cost per unit 200
Desired ROI per unit 60
Downing Company's markup percentage would be:
a. 120%.
b. 60%.
c. 40%.
d. 30%.