Question 1 Pedro Company provides the following information about its product:
Targeted operating income $50,000
Selling price per unit 6.00
Variable cost per unit 1.50
Total fixed costs 125,000
What is the contribution margin ratio?
Question 1 options:
A) 75%
B) 100%
C) 125%
D) 25%
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Question 2 The utility bill for a law firm consists of both fixed and variable costs. Refer to the 4-month data below and apply the high-low method to answer the question.
Minutes Total Bill
January 460 $3,000
February 200 $2,675
March 160 $2,625
April 300 $2,800
If the company uses 380 minutes in May, how much will the total bill be?
Question 2 options:
A) $2,425
B) $2,478
C) $2,900
D) $3767
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Question 3 Vatsala Company provides the following financial information:
Income from operations $200,000
Interest expense 45,000
Gains/(losses) on sale of equipment (2,500)
Net income 152,500
Total assets at Jan 1 2,600,000
Total assets at Dec 31 3,200,000
Calculate return on investment based on the information given above.
Question 3 options:
A) 6.3%
B) 5.3%
C) 6.9%
D) 7.2%
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Question 4 Venkat Inc. manufactures and sells pens for $5 each. Wolf Corp. has offered Venkat Inc. $3 per pen for a one-time order of 3,500 pens. The total manufacturing cost per pen, using traditional costing, is $1 per unit, and consists of variable costs of $0.85 per pen and fixed overhead costs of $0.15 per watch. Assume that Venkat Inc. has excess capacity and that the special order would not adversely affect regular sales. What is the change in operating income that would result from accepting the special sales order?
Question 4 options:
A) increase of $7,000
B) decrease of $7,000
C) increase of $7,525
D) decrease of $7,525
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Question 5 Jackson Company had a finished goods inventory of 55,000 units on January 1. It's projected sales for the next four months were: January - 200,000 units; February - 180,000 units; March - 210,000 units; and April - 230,000 units. The Jackson Company wishes to maintain a desired ending finished goods inventory of 20% of the following months sales.
What should the budgeted production be for January?
Question 5 options:
A)
236,000
B)
181,000
C)
200,000
D) 219,000
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Question 6 Nebraska Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $240,000, $300,000, and $420,000, respectively, for September, October, and November. The company expects to sell 20% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale, 25% in the month following the sale, and the remainder in the following month. The cash collections in September from accounts receivable are:
Question 6 options:
A) $240,000
B) $134,400
C)
$192,000
D)
$168,000
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Question 7 Florida Company began its operations on March 31 of the current year. Projected manufacturing costs for the first three months of business are $156,800, $195,200, and $217,600, respectively, for April, May, and June. Depreciation, insurance, and property taxes represent $28,800 of the estimated monthly manufacturing costs. Insurance was paid on March 31, and property taxes will be paid in November. Three-fourths of the remainder of the manufacturing costs are expected to be paid in the month in which they are incurred, with the balance to be paid in the following month. The cash payments for manufacturing in the month of June are:
Question 7 options:
A) $14,600
B) $188,800
C) $217,600
D) $183,200
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Question 8 The following data relate to direct materials costs for November:
Actual costs 4,600 pounds at $5.50
Standard costs 4,500 pounds at $6.00
What is the direct materials price variance?
Question 8 options:
A) $2,250 favorable
B) $2,250 unfavorable
C) $2,300 favorable
D) $1,700 unfavorable
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Question 9 The following data relate to direct materials costs for November:
Actual costs 4,600 pounds at $5.50
Standard costs 4,500 pounds at $6.00
What is the direct materials quantity variance?
Question 9 options:
A) $550 unfavorable
B) $600 favorable
C) $550 favorable
D) $600 unfavorable
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Question 10 The following data relate to direct labor costs for February:
Actual costs 7,700 hours at $13
Standard costs 7,000 hours at $9
What is the direct labor time variance?
Question 10 options:
A) $9,100 favorable
B)
$9,100 unfavorable
C) $6,300 unfavorable
D) $6,300 favorable
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Question 11 The following data relate to direct labor costs for February:
Actual costs 7,700 hours at $13
Standard costs 7,000 hours at $9
What is the direct labor rate variance?
Question 11 options:
A) $28,000 favorable
B) $28,000 unfavorable
C) $30,800 favorable
D) $30,800 unfavorable
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Question 12 Kim Corporation has two major divisions: Agricultural Products and Industrial Products. It provides the following information for the year 2014
Agriculture Division Industrial Division
Sales revenue $140,000 $1,040,000
Operating income $46,400 $220,000
Average total assets $300,000 $5,540,000
Target rate of return 14.0% 14.0%
Calculate the residual income for the Agriculture division.
Question 12 options:
A) $5,500
B) $4,400
C) $2,500
D) $1,800
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Question 13 New York Inc. Inc. has a division that manufactures a component that sells for $150 and has a variable cost of $45. Another division of the company wants to purchase the component. Fixed cost per unit of component is $25. What is the minimum transfer price if the division is operating at capacity?
Question 13 options:
A) $150
B) $45
C) $55
D) $140
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Question 14 Da Silva Company has variable costs of $0.60 per unit of product. In August, the volume of production was 24,000 units and units sold were 20,000. The total production costs incurred were $31,900. What are the fixed costs per month?
Question 14 options:
A) $17,500
B) $19,900
C) $9,600
D) $14,400
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Question 15 Littleton Co. can further process Product J to produce Product D. Product J is currently selling for $21 per pound and costs $15.75 per pound to produce. Product D would sell for $35 per pound and would require an additional cost of $8.75 per pound to produce. What is the differential revenue of producing Product D?
Question 15 options:
A) $7 per pound
B)
$8.75 per pound
C) $14 per pound
D) $5.25 per pound
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Question 16 Nottingham Tools, Inc. received an offer from Mumbai Trading Co. exporter for 10,000 units of product at $16 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available:
Domestic unit sales price $20
Unit manufacturing costs:
Variable 13
Fixed 1
What is the amount of gain or loss from acceptance of the offer?
Question 16 options:
$30,000 gain
$40,000 loss
$30,000 loss
$20,000 loss
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Question 17 Manglore Heavy Metals is currently operating at 80% of capacity and is currently purchasing a part used in its manufacturing operations for $5 a unit. The unit cost for Frank Co. to make the part is $6, which includes $.40 of fixed costs. If 4,000 units of the part are normally purchased each year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease for making the part rather than purchasing it?
Question 17 options:
$12,000 cost decrease
$20,000 cost increase
$20,000 cost decrease
$2,400 cost increase
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Question 18 Fletcher Enterprises sells a single product. Budgeted sales for the year are anticipated to be 640,000 units, estimated beginning inventory is 108,000 units, and desired ending inventory is 90,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below.
Material A .50 lb. per unit @ $ .60 per pound
Material B 1.00 lb. per unit @ $1.70 per pound
Material C 1.20 lb. per unit @ $1.00 per pound
The dollar amount of direct material A used in production during the year is:
Question 18 options:
$186,600
$181,200
$240,000
$210,600
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Question 19 The condensed income statement for Maryland Fisheries LLC for the past year is as follows:
Product
T U
Sales $600,000 $320,000
Less variable costs 540,000 220,000
Contribution margin $ 60,000 $100,000
Less fixed costs 145,000 40,000
Income (loss) from operations $(85,000) $ 60,000
======== ========
Management is considering the discontinuance of the manufacture and sale of Product T at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Product U. What is the amount of change in net income for the current year that will result from the discontinuance of Product T?
Question 19 options:
$60,000 increase
$85,000 increase
$85,000 decrease
$60,000 decrease
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Question 20 Alaska Snow Blowers Co. released the following information: Production and sales estimates for June are as follows:
Estimated inventory (units), June 1 8,000
Desired inventory (units), June 30 9,000
Expected sales volume (units):
Area X 3,000
Area Y 4,000
Area Z 5,500
Unit sales price $20
The budgeted total sales for June is:
Question 20 options:
$200,000
$230,000
$270,000
$250,000
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Question 21 Venkat Manufacturing provides the following information: The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows:
Standard Costs
Fixed overhead (based on 10,000 hours) 3 hours @ $.80 per hour
Variable overhead 3 hours @ $2 per hour
Actual Costs
Total variable cost, $18,000
Total fixed cost, $8,000
The amount of the factory overhead volume variance is:
Question 21 options:
$2,000 favorable
$2,000 unfavorable
$2,500 unfavorable
$0
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Question 22 The unfavorable volume variance may be due to all but the following factors:
Question 22 options:
Failure to maintain an even flow of work
machine breakdowns
unexpected increases in cost of utilities
failure to obtain enough sales orders
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Question 23 In a process costing system, production costs are:
Question 23 options:
adjusted and allocated by jobs.
not inventoried.
directly shown on the income statement.
accumulated by departments.
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Question 24 Which of the following best describes the term equivalent units?
Question 24 options:
partially completed units expressed in terms of fully complete units of output
partially completed units of output that will be sold as is
substitute of units that are partially completed
different types of units that have same selling price
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Question 25 Which of the following statements correctly describes the term conversion costs?
Question 25 options:
the cost to convert finished goods to sales to customers
the cost incurred for direct and indirect materials during production
the cost of direct materials, direct labor, and manufacturing overhead costs incurred during production
the cost of direct labor combined with manufacturing overhead
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Question 26 Madras Clothiers sells hand-sewn shirts for $40 per shirt. It incurs monthly fixed costs of $5,000. The contribution margin ratio is calculated to be 20%. What is the variable cost per shirt?
Question 26 options:
$32 per shirt
$48 per shirt
$40 per shirt
$38 per shirt
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Question 27 Brielle LLC sold 2,000 units in October at a price of $35 per unit. The variable cost is $20 per unit. Calculate the total contribution margin for Brielle.
Question 27 options:
$70,000
$30,000
$40,000
$20,000
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Question 28 Shamina sells hand-knit scarves at a flea market. Each scarf sells for $25. Shamina pays $30 to rent a vending space for one day. The variable costs are $15 per scarf. How many scarves should she sell each day in order to break even?
Question 28 options:
4 scarves
3 scarves
5 scarves
2 scarves
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Question 29 Shamina sells hand-knit scarves at the flea market. Each scarf sells for $25. Shamina pays $30 to rent a vending space for one day. The variable costs are $15 per scarf. What total revenue amount does she need to earn to break even?
Question 29 options:
$85
$75
$50
$100
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Question 30 Jakob Fletcher was a professional classical guitar player until his motorcycle accident that left him disabled. After long months of therapy, he hired an experienced maker of stringed instruments and started a small shop to make and sell Spanish guitars. The guitars sell for $700 and the fixed monthly operating costs are as follows:
Rent and utilities $1,210
Wages and benefits to maker of string instruments 2,500
Other expenses 480
Colin's accountant told him about contribution margin ratios and he understood clearly that for every dollar of sales, $0.65 went to cover his fixed costs, and that anything past that point was pure profit.
Colin wishes to earn $4,000 of operating profit each month. Calculate the number of guitars Colin will have to sell to achieve the target profit.
Question 30 options:
39 guitars
33 guitars
15 guitars
18 guitars
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Question 31 Which of the following statements is true if the variable cost per unit increases while the sale price per unit and total fixed costs remain constant?
Question 31 options:
The breakeven point decreases.
The contribution margin increases.
The breakeven point remains the same.
The breakeven point increases.
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Question 32 Jakob Fletcher was a professional classical guitar player until his motorcycle accident that left him disabled. After long months of therapy, he hired an experienced maker of stringed instruments and started a small shop to make and sell Spanish guitars. The guitars sell for $700 and the fixed monthly operating costs are as follows:
Rent and utilities $800
Wages and benefits to string instrument maker 2,500
Other expenses 480
Jakob's accountant told him about contribution margin ratios and he understood clearly that for every dollar of sales, $0.60 went to cover his fixed costs, and that anything past that point was pure profit.
Jakob is planning to increase the selling price to $820. What impact will the increase in selling price have on the breakeven point in units?
Question 32 options:
It will stay the same.
It will go down from 11 to 9 units.
. It will go up from 9 to 12 units.
It will go down from 9 to 7 units.
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Question 33 Evans Company has estimated the following amounts for its next fiscal year:
Total fixed expenses $832,500
Sale price per unit 40
Variable expenses per unit 25
What will happen to the breakeven point (in units) if Evans can reduce fixed expenses by $22,500?
Question 33 options:
The breakeven point will decrease by 1,500 units.
The breakeven point will decrease by 562 units.
The breakeven point will decrease by 900 units.
The breakeven point will increase by 562 units.
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Question 34 Venkat Manufacturing uses a predetermined overhead allocation rate based on the number of machine hours. At the beginning of 2015, they estimated total manufacturing overhead costs to be $1,050,000, total number of direct labor hours to be 5,000, and total number of machine hours to be 25,000 hours. What was the predetermined overhead allocation rate?
Question 34 options:
$35 per machine hour
$210 per direct labor hour
$42 per machine hour
$35 per direct labor hour
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Question 35 Venkat Manufacturing uses a predetermined overhead allocation rate based on a percentage of direct labor cost. At the beginning of 2014, Olympia estimated total manufacturing overhead costs at $1,050,000 and total direct labor costs at $840,000. In June, 2014, Job 511 was completed. Job stats are as follows:
Direct materials cost $27,500
Direct labor cost $13,000
Direct labor hours 400 hours
Units of product produced 200
What is the amount of manufacturing overhead costs allocated to Job 511?
Question 35 options:
$16,250
$10,400
$5,000
$34,375
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Question 36 Venkat Manufacturing uses a predetermined overhead allocation rate based on a percentage of direct labor cost. At the beginning of 2015, Venkat estimated total manufacturing overhead costs at $1,050,000 and total direct labor costs at $840,000. In June, 2015, Venkat completed Job 511. Job stats are as follows:
Direct materials cost $27,500
Direct labor cost $13,000
Direct labor hours 400 hours
Units of product produced 200
How much was the total job cost of Job 511?
Question 36 options:
$40,500
$56,750
$50,900
$74,875
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Question 37 Venkat Manufacturing uses a predetermined overhead allocation rate based on percentage of direct labor cost. At the beginning of 2014, Irene estimated total manufacturing overhead costs at $1,050,000 and total direct labor costs at $840,000. In June, 2014, Job 711 was completed. Job stats are as follows:
Direct materials cost $27,500
Direct labor cost $13,000
Direct labor hours 400 hours
Units of product produced 200
How much was the cost per unit of finished product?
Question 37 options:
$374.38
$202.50
$254.50
$283.75
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Question 38 Banglore Metals had a devastating suffered a fire at the start of the year which resulted in loss of property including the accounting records. Some data for the year were retrieved and extracts from it are shown below:
Total manufacturing overhead estimated at the beginning of the year $105,840
Total direct labor costs estimated at the beginning of the year $186,000
Total direct labor hours estimated at the beginning of the year 3,600 direct labor hours
Actual manufacturing overhead costs for the year $99,760
Actual direct labor costs for the year $142,000
Actual direct labor hours for the year 2,950 direct labor hours
The company bases its manufacturing overhead allocation on direct labor hours. How much manufacturing overhead was allocated to production during the year? (Round your intermediate calculations to one decimal place)
Question 38 options:
$105,840
$86,730
$152,417
$186,000
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Question 39 Ellie Medical Labs uses a predetermined overhead allocation rate based on machine hours. It has provided the following information for the year 2014:
Actual manufacturing overhead costs incurred $90,000
Manufacturing overhead costs allocated to production $42,500
Actual direct materials cost $220,000
Actual direct labor cost $46,000
Actual direct labor hours 2,000
Actual machine hours 30,000
Based on the above information, calculate the manufacturing overhead rate applied by Ellie:
Question 39 options:
$1.42 per machine hour
$1.53 per machine hour
$7.33 per machine hour
$3.00 per machine hour
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Question 40 Morgana Web Consultancy used estimated direct labor hours of 250,000 and estimated manufacturing overhead costs of $1,000,000 in establishing its 2015 predetermined overhead allocation rate. Actual results showed:
Actual manufacturing overhead $900,000
Allocated manufacturing overhead $875,000
What was the number of direct labor hours worked during 2015?
Question 40 options:
225,000 hours
243,056 hours
250,000 hours
218,750 hours