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Study Resources (Accounting)

119) Common fixed costs that are allocated between departments are generally A) direct fixed costs of the department. B) relevant to the decision of whether to discontinue the department. C) irrelevant to the decision of whether to discontinue the department. D) direct fixed costs of other departments. 120) Fixed costs that are allocated among all.
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157) Cornell Enterprises currently produces several products. Model L78 is showing a net operating loss as indicated by the following condensed income statement prepared for the year ended December 31. You have been hired by Cornell Enterprises to help analyze the decision as to whether to eliminate Model L78. Upon investigation,.
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244) Stanley's Candies is considering building a new plant in Europe. It predicts sales at the new plant to be 40,000 units at $4.00/unit. Below is a listing of estimated expenses. CategoryTotal Annual Expenses% of Annual Expense that are Fixed Materials$20,00010% Labor$30,00020% Overhead$50,00040% Marketing/Admin$10,00060% A European firm was contracted to sell the product and will receive.
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65) Mountaintop golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $50 million of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $25,000,000 for the golfing season. About 400,000.
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79) Which of the following is an underlying assumption of the cost-volume-profit graph? A) Total fixed expenses will change during the accounting period. B) The sales mix of products is constantly changing. C) Volume is the only cost driver. D) Inventory levels are constantly changing. 80) The area to the right of the breakeven.
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139) The income statement for Germain Appliances is divided by its two product lines, Toasters andMicrowaves, as follows: ToasterMicrowaveTotal Sales revenue$600,000$255,000$855,000 Variable expenses$450,000     $210,000     $660,000 Contribution margin$150,000$45,000$195,000 Fixed expenses$75,000$75,000$150,000 Operating income (loss)$75,000$(30,000)     $45,000 If Germain Appliances can eliminate fixed costs of $32,000 by discontinuing the Microwave line, then discontinuing it should result in which of the following? A) Increase in total.
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11) CVP analysis assumes that the only factor that affects costs is a change in sale price. 12) Total contribution margin less total fixed expenses equals A) contribution margin ratio. B) operating income. C) gross profit. D) sales revenue. 13) The unit contribution margin is computed by A) subtracting the variable cost per unit from the sales.
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99) In pricing a product, managers should consider which of the following? A) Only fixed costs B) Only variable costs C) Only period costs D) None of the above 100) All of the following factors affect the amount a customer is willing to pay for a product, except A) the selling company's costs. B) the competition's price..
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73) Heinz Manufacturing produces Item Q with variable manufacturing costs of $12/unit. The selling price of Item Q is $15/unit. The fixed manufacturing overhead cost is $72,000. A normal production run includes 100,000 units. Heinz Manufacturing has discovered an additional process to change Item Q into Item QR. Additional costs.
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67) Jeff's Widget Corporation produces and sells a part used in the production of bicycles. The unit costs associated with this part are as follows: Direct materials$.14 Direct labor.30 Variable manufacturing overhead.20 Fixed manufacturing overhead.05 Total cost $.69 Saturn Company has approached Jeff's Widget Corporation with an offer to purchase 20,000 units of this part at.
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31) Variable costs are irrelevant to a special decision when those variable costs differ between alternatives. 32) Managers should consider the potential effect of a special order on long-run profits and operations. 33) When deciding whether to accept a special order, managers need to consider whether they have available excess capacity. 34) If.
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172) Lewis Enterprises management has budgeted the following amounts for its next fiscal year: Total fixed expenses$500,000 Selling price per unit$1,000 Variable expenses per unit$750 Requirements: a.If Lewis Enterprises can reduce fixed expenses by $25,000, how will breakeven sales in units be affected? b.If Lewis Enterprises spends an additional $1,000 on advertising, sales volume should increase.
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51) In the last reporting period, Helena's Heavenly Fixture Company recorded 100,000 units sold for the first time in the history of the company. The price per unit was $89.99 and variable costs per unit at $36.39. Showing all work in the space provided, compute the contribution margin. Next, compute.
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167) The contribution margin per unit of constraint is calculated as A) contribution margin per unit × constraint per unit. B) contribution margin per unit × units per constraint. C) contribution margin per unit ÷ units per constraint. D) contribution margin per unit + constraint per unit. 168) Companies with production constraints and irrelevant fixed.
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  1) Irrelevant costs are costs that do not affect short-term decisions. 2) Relevant information is future data that do not differ among alternatives. 3) Management accountants gather and analyze relevant information to compare alternatives. 4) One key to analyzing short-term business decisions is to focus on relevant revenues, costs and profits. 5) One key.
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89) Assume the following amounts: Total fixed costs$24,000 Selling price per unit$20 Variable costs per unit$15 If sales revenue per unit increases to $22 and 12,000 units are sold, what is the operating income? A) $264,000 B) $60,000 C) $108,000 D) $84,000 90) If the selling price per unit is $42, the unit contribution margin is $15, and total.
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204) Jackie's Snacks sells fudge, caramels, and popcorn. It sold 12,000 units last year. Popcorn outsoldfudge by a margin of 2 to 1. Sales of caramels were the same as sales of popcorn. Fixed costs for Jackie's Snacks are $14,000. Additional information follows: ProductUnit Sales PricesUnit Variable Cost Fudge$5.00$4.00 Caramels$8.00$5.00 Popcorn$6.00$4.50 Breakeven sales in dollars.
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61) Pluto Incorporated provided the following information regarding its single product: Direct materials used$240,000 Direct labor incurred$420,000 Variable manufacturing overhead$160,000 Fixed manufacturing overhead$100,000 Variable selling and administrative expenses$60,000 Fixed selling and administrative expenses$20,000 The regular selling price for the product is $80. The annual quantity of units produced and sold is 40,000 units (the costs above relate.
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163) Star Corporation management has budgeted the following amounts for its next fiscal year: Total fixed expenses$450,000 Selling price per unit$50 Variable expenses per unit$25 If Star Corporation spends an additional $20,000 on advertising, sales volume should increase by 3,000 units. What effect will this have on operating income? A) Increase of $75,000 B) Increase of.
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153) Scott Incorporated has been in business for several months. Because of increased competition in the region for part adapters, the managers at Scott Incorporated is considering cutting sales price from $32 per adapter to $28 per adapter. New sales price per poster$28 Variable price per adapter$21 New contribution margin per adapter$7 If.
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123) CVP analysis helps managers prepare for and respond to economic changes, such as increasing costs and pressure to drop sales price. 124) If all other factors are constant, any decrease in fixed costs will decrease the breakeven point. 125) Holding all other factors constant, the breakeven point will always double if.
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21) What is contribution margin equal to on a contribution margin income statement? A) Fixed expenses plus variable expenses B) Fixed expenses minus variable expenses C) Sales revenues minus variable expenses D) Sales revenues minus fixed expenses 22) Dairy Days Ice Cream sells ice cream cones for $4 per customer. Variable costs are $3.
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89) Which of the following describes the products and services of companies that are price-setters? A) They tend to be unique. B) They are priced by managers using a target-costing emphasis. C) They tend to have a lot of competitors. D) They tend to be commodities. 90) Stockholders' expectations of company profits are affected by.
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149) All About Animals has two product lines: Cat food and Dog food. Contribution margin income statement data for the most recent year follow: TotalCat FoodDog Food Sales revenue$385,000$300,000$85,000 Variable expenses$205,000     $165,000     $40,000 Contribution margin$180,000$135,000$45,000 Fixed expenses$102,000     $50,000$52,000 Operating income (loss)$78,000$85,000$(7,000) If $12,000 of fixed costs will be eliminated by discontinuing the Dog food line, how will operating income be.
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254) Garfield Corporation is considering building a new plant in Canada. It predicts sales at the new plant to be 50,000 units at $5.00/unit. Below is a listing of estimated expenses: CategoryTotal Annual Expenses% of Annual Expense that are Fixed Materials$50,00010% Labor$90,00020% Overhead$40,00030% Marketing/Admin$20,00050% A Canadian firm was contracted to sell the product and will receive.
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258) Heavenly Cupcakes has a monthly target operating income of $12,000. Variable expenses are 40% of sales and monthly fixed expenses are $8,000. Requirements: a.What is the monthly margin of safety in dollars if the business achieves its operating income goal? b.What is the monthly margin of safety as a percentage of.
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41) Marie's Magic Shoppe provides the following information about its single product. Targeted operating income$38,000 Selling price per unit$25.00 Variable cost per unit$12.00 Total fixed cost$85,000 What is the contribution margin ratio? A) 192% B) 52% C) 13% D) 48% 42) Antonio's Flowers sells bouquets for $65 each. The variable costs for each kit are $45. The total contribution margin.
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133) If the fixed costs increase while the sales price per unit and variable costs per unit remain constant, which of the following statements is true? A) The contribution margin stays the same and the breakeven point increases. B) The contribution margin decreases and the breakeven point increases. C) The contribution margin stays.
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21) The format of the income statement most useful in decision-making is which of the following? A) Absorption costing format B) Traditional format C) Contribution margin format D) Single-step format 22) Ida Enterprises is considering replacing a machine that is presently used in its production process. The following information is available: Old MachineReplacement Machine Original cost$60,000$35,000 Remaining.
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41) Sky High Seats manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but currently produces and sells 75,000 seats per year. The following information relates to the current production of the product: Sale price per unit$400 Variable costs per unit: Manufacturing$220 Marketing and administrative$50 Total fixed.
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129) Boots Plus has two product lines: Hiking boots and Fashion boots. Income statement data for the most recent year follow: TotalHikingFashion Sales revenue$480,000$340,000$140,000 Variable expenses355,000235,000120,000 Contribution margin125,000105,00020,000 Fixed expenses76,000 38,000 38,000 Operating income (loss)$49,000$67,000$(18,000) Assuming the Fashion line is discontinued, total fixed costs remain unchanged, and the space formerly used to produce the Fashion line is used to.
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11) An "opportunity cost" is best described by which of the following? A) Benefits foregone by choosing a particular alternative course of action B) Costs that were incurred in the past and cannot be changed C) The distribution of all products to be sold D) Expected future costs that differ among alternatives 12) A "relevant.
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71) Heinz Manufacturing produces Item Q with variable manufacturing costs of $12/unit. The selling price of Item Q is $15/unit. The fixed manufacturing overhead cost is $72,000. A normal production run includes 100,000 units. Heinz Manufacturing has discovered an additional process to change Item Q into Item QR. Additional costs.
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224) A company's margin of safety is computed as A) actual sales - expected sales. B) expected sales - actual sales. C) expected sales - sales at breakeven. D) sales at breakeven - expected sales. 225) All else being equal, a company with a high operating leverage will have A) relatively low fixed costs. B) relatively high.
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118) Grain Alternative Corporation has a predicted operating income of $80,000. The managerial accountant reported that total variable expenses are $25,000 and its total fixed expenses are $24,000. The company has a unit contribution margin of $20 on its sole product. Calculate the number of units needed to reach the.
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51) Samson Incorporated provided the following information regarding its only product: Sale price per unit$50.00 Direct materials used$160,000 Direct labor incurred$185,000 Variable manufacturing overhead$120,000 Variable selling and administrative expenses$70,000 Fixed manufacturing overhead$65,000 Fixed selling and administrative expenses$12,000 Units produced and sold20,000 Assume no beginning inventory Assuming there is excess capacity, what would be the effect on operating income of accepting.
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