Multiple Choice Questions -
Q1. A cost that can be separated into fixed and variable components is called a:
A. Mixed cost
B. Step-variable cost
C. Composite cost
D. Curvilinear cost
E. Differential cost
Q2. If a firm's forecasted sales are $250,000 and its break-even sales are $190,000, the margin of safety in dollars is:
A. $60,000
B. $250,000
C. $190,000
D. $440,000
E. $24,000
Q3. A department that incurs costs without directly generating revenues is a
A. Service center
B. Production center
C. Profit center
D. Cost center
E. Performance center
Q4. The most useful evaluation of a manager's cost performance is based on
A. Controllable costs
B. Contribution percentages
C. Departmental contributions to overhead
D. Fixed expenses
E. Direct costs
Problem - Texas Toys, a retail store, has four sales departments supported by three service departments. Cost and operational data for each department follow:
|
Sales Department
|
Sales
|
Cost of Goods Sold
|
Square Footage
|
Purch. Orders Issued
|
|
1
|
$92,160
|
$36,864
|
1,728
|
1,260
|
|
2
|
69,120
|
32,832
|
3,024
|
1,680
|
|
3
|
80,640
|
32,256
|
1,296
|
2,310
|
|
4
|
46,080
|
27,648
|
2,592
|
1,750
|
|
Service Department
|
Allocation Basis
|
Cost
|
|
Advertising
|
Sales
|
$10,000
|
|
Maintenance
|
Square footage
|
6,900
|
|
Purchasing
|
No. of purchase orders issued
|
12,000
|
Determine the service department expenses to be allocated to Sales Department 1 for:
Advertising ___________________
Maintenance __________________
Purchasing ___________________