1. (TCO 4) Which of the following will have no effect on the break even point in units? (Points : 4)
The selling price increases
The variable cost per unit increases
The sales volume increases
Total fixed costs increase
2. (TCO 4) Circle K Furniture has a contribution margin ratio of 16%. If fixed costs are $176,800, how many dollars of revenue must the company generate in order to reach the break even point? (Points : 4)
3. (TCO 4) Paula Corporation sells a single product at a price of $275 per unit. Variable cost per unit is $135 and fixed costs total $356,860. If sales are expected to be $825,000, what is Paula s margin of safety? (Points : 4)
4. (TCO 5) In variable costing, when does fixed manufacturing overhead become an expense? (Points : 4)
In the period when the product is sold
In the period when the expense is incurred
In the period when other expenses are at the lowest level
5. (TCO 5) Variable costing income is a function of: (Points : 4)
Units sold only.
Units produced only
Both units sold and units produced.
Neither units sold nor units. produced
6. (TCO 5) Peak Manufacturing produces snow blowers. The selling price per snow blower is $100. Costs involved in production are:
Direct Material per unit $20
Direct Labor per unit 12
Variable manufacturing overhead per unit 10
Fixed manufacturing overhead per year $148,500
In addition, the company has fixed selling and administrative costs of $150,000 per year. During the year, Peak produces 45,000 snow blowers and sells 30,000 snow blowers. How much is cost of goods sold using full costing? (Points : 4)
7. (TCO 5) The cost objective is the (Points : 4)
reason for allocating the cost.
calculation based on budgeted amounts.
product, service, or department that is to receive the allocation.
maximum amount to be allocated to any single department.
8. (TCO 5) An allocation base (Points : 4)
is the minimum amount to be allocated to a cost object.
coordinates the manufacturing overhead costs as they are incurred.
will always be less than the variable costs for a product.
relates the cost pool to the cost objectives.
9. (TCO 6) The building maintenance department for Jones Manufacturing Company budgets annual costs of $4,200,000 based on the expected operating level for the coming year. The costs are allocated to two production departments. The following data relate to the potential allocation bases:
Production Dept. 1 Production Dept. 2
Square footage 15,000 45,000
Direct labor hours 25,000 50,000
If Jones assigns costs to departments based on square footage, how much total costs will be allocated to Production Department 1? (Points : 4)
10. (TCO 7) A company is trying to decide whether to sell partially completed goods in their current state or incur additional costs to finish the goods and sell them as complete units. Which of the following is not relevant to the decision? (Points : 4)
The selling price of the completed units.
The costs incurred to process the units to this point.
The selling price of the partially completed units.
The costs that will be incurred to finish the units.
11. (TCO 7) BigByte Company has 12 obsolete computers that are carried in inventory at a cost of $13,200. If these computers are upgraded at a cost of $7,500, they could be sold for $15,300. Alternatively, the computers could be sold as is for $9,000. What is the net advantage or disadvantage of reworking the computers? (Points : 4)
12. (TCO 7) Olde Store has 12,000 cans of crab meat just a week past the expiration date. Each can cost $0.31. The cans could be sold as is for $0.20 each, or relabeled and sold as gourmet cat food. The cost of relabeling the cans would be $0.04 per can and the cans would then sell for $0.29 per can. What should be done with the cans and why? (Points : 4)
The cans should be thrown away since there will be a loss with the other alternatives.
The cans should be relabeled into cat food since the sales price increases $0.09 per can and the cost is only $0.04 per can.
The cans should be put on clearance since there is no reason to put more money into something that is already selling below cost.
It doesn t matter what you do since all alternatives result in a loss.