Accounting Expert Answers & Study Resources : Page 20

96) A company produces 300 microwave ovens per month, each of which includes one electrical circuit. The company currently manufactures the circuit in-house but is considering outsourcing the circuits at a contract price of $48 each. Currently, the cost of producing circuits in-house includes variable costs of $26 per circuit.

36) Roberts Company has fixed costs of $12,000. Their contribution margin ratio is 50% and ratio of selling expenses to sales is 30%. What is the breakeven point in sales dollars? A) $24,000 B) $3600 C) $2400 D) $40,000 TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 37) Fixed.

31) Iglesias Company completed Job 12 on 30 November. The details of Job 12 are given below:   Direct labour cost $910 Direct materials cost $1140 Machine hours 10 Direct labour hours 29 Predetermined overhead allocation rate $93 per machine hour   What is the total cost of Job 12? A) $2050 B) $2060 C) $2980 D) $4747 32) Hermione Company completed Job GH6 last month. The cost.

76) The Badminton Company has 4000 machine hours available annually to manufacture racquets. The following information is available for the two different racquets produced by Badminton:   Pro   Unit sales price $300 Unit variable costs $150 Annual demand 1800 units Machine time 1.25 hours per unit Mid   Unit sales price $125 Unit variable costs $80 Annual demand 5000 units Machine time 6 hours per unit   How many units of each.

101) Seven Seas Company manufactures 10 luxury yachts per month. Included in each yacht is a compact media center. Seven Seas manufactures media center in-house, but is considering the possibility of outsourcing that function. At present, the variable cost per unit is $275, and the fixed costs are $41,000 per.

96) Full-product cost includes all manufacturing costs plus selling expenses, but does not include administrative expenses. 97) Business managers can use activity-based costing data to assist them in pricing and product mix decisions and in cost management. 98) Target pricing is based on the cost to produce a product, plus a profit.

41) Lara is going to receive $10,000 a year at the end of each of the next five years from her insurer to meet her education cost. Using a discount rate of 14%, the present value of the receipts can be stated as: A) PV = $10,000 (PV factor, i =.

46) In a CVP graph, what does the line which begins at the lower left corner represent? A) Total fixed cost B) Total sales revenue C) Total variable cost D) Both the total variable cost and the total sales revenue 47) On a CVP graph, there is a point where the two diagonal lines intersect..

61) Macaulay Company has three product lines—D, E, and F. The following information is available:     D E F Sales $90,000 $50,000 $30,000 Variable costs (40,000) (10,000) (10,000) Contribution margin $50,000 $40,000 20,000 Fixed expenses (15,000) (10,000) (24,000) Operating profit (loss) $35,000 $30,000 ($4000)   Macaulay Company is thinking of dropping product line F because it is reporting an operating loss. Assuming fixed costs are unavoidable, if Macaulay Company drops product line F and rents the.

26) When calculating the predetermined manufacturing overhead rate, what is the correct basis of calculation? A) Estimated overhead costs divided by the number of days in a year B) Actual overhead costs of the prior year divided by the actual amount of the cost driver or allocation base C) Estimated amount of the.

31) Perfect Fit Company sells hand-sewn shirts for $55 per shirt. It incurs monthly fixed costs of $7000. The contribution margin ratio is calculated to be 20%. What is the variable cost per shirt? A) $70.00 per shirt B) $55 per shirt C) $44.00 per shirt D) $66.00 per shirt 32) Pluto Company sold 2100.

76) Allston Products sells a special kind of effects pedal for musical performers. Each unit sells for $20.00. Additional data for the month of April 2016, are as follows:   Direct materials $4 per unit Direct labour $8 per unit Variable manufacturing overhead $23,000 per month Fixed manufacturing overhead $15,000 per month Operating expenses $21,000 per month       Beginning inventory 0 units Units produced 10,000 units Units sold 8500 units Ending inventory 700 units   Using absorption costing, how much is.

106) A company produces 1000 packs of chicken feed per month. Sales price is $6 per pack. Variable cost is $1.00 per unit, and fixed costs are $1600 per month. Management is considering adding a vitamin supplement to improve the value of the product. The variable cost will go up.

56) A company has two different products that are sold in different markets. Financial data are as follows:     Product A Product B Total Revenue $18,000 $9500 $27,500 Variable cost (9000) (9700) (18,700) Fixed cost (allocated) ($2000) ($2000) (4000) Operating profit $7000 ($2200) $4800   Assume that fixed costs are all unavoidable and that dropping one product would not impact sales of the other. If Product B is dropped, what would be.

6) Which of the following is the term for a cost that is part variable and part fixed? A) Fixed cost B) Sunk cost C) Mixed cost D) Variable cost 7) Which of the following is the term for a cost that changes in total in direct proportion to a change in volume? A) Fixed cost B).

41) Some companies use contribution margin rather than sales revenues as the basis of incentives for motivating sales persons because it will lead them to sell more of the higher margin goods. 42) Breakeven is the point where the sales revenues are exactly equal to the fixed costs. 43) Breakeven is the.

26) Peterson Company has both fixed and variable costs. If the volume doubles, the total of all costs combined will double. 27) Within the relevant range for production costs, the total fixed costs and the variable cost per unit remain the same. MULTIPLE CHOICE. Choose the one alternative that best completes the.

71) The combination of products that make up total sales, and the proportion of sales among the products is referred to as 'sales mix'. 72) A company sells products in two size packages—regular and long. The two products sell in equal numbers. The contribution margin of the regular is $12 and.

1) Which of the following is NOT a fixed cost? A) Property rates B) Direct materials cost C) Salary of plant manager D) Straight-line depreciation 2) Which of the following statements is CORRECT with respect to variable cost per unit, within the relevant range? A) It will decrease as production increases. B) It will remain the same.

11) In job order costing, the journal entry to issue indirect materials to production should include which of the following? A) Credit to Manufacturing overhead B) Credit to Finished goods inventory C) Credit to Work in process inventory D) Credit to Materials inventory 12) Which of the following correctly describes the term conversion costs? A) The.

91) CM Manufacturing has provided the following unit costs pertaining to a component they manufacture and use in the production of one of their main products:   Direct materials $410 Direct labour (variable) 110 Variable manufacturing overhead 80 Fixed manufacturing overhead 30   A supplier has offered to provide the component to CM Manufacturing for $650 per unit. If CM Manufacturing.

21) Rica Company is a price-taker and uses target pricing. Refer to the following information:   Production volume 601,000 units per year Market price $30 per unit Desired operating profit 15% of total assets Total assets $13,800,000   Variable cost per unit $19 per unit Fixed cost per year $5,500,000 per year   With the current cost structure, Rica cannot achieve its profit goals. It will have to reduce either the.

31) Paragon Products sells a special kind of navigation equipment for $1300. Variable costs are $900 per unit. When a special order arrived from a foreign contractor to buy 42 units at a reduced price of $1000 per unit, there was a discussion among management. The management accountant said that.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 21) The mixed cost per unit is constant throughout the relevant range of activity. 22) Fixed costs per unit decrease as production levels decrease. 23) Peterson Company has both fixed and variable costs. If the volume doubles, the.

51) Colin was a professional classical guitar player until his motorcycle accident that left him disabled. After long months of therapy, he hired an experienced luthier (maker of stringed instruments) and started a small shop to make and sell Spanish guitars. The guitars sell for $700 and the fixed monthly.

16) Anthony Company's highest point of total cost was $75,000 in June. Their point of lowest cost was $50,000 in December. The company makes a single product. Production volume in June and December were 13,000 and 8000 units, respectively. What is the fixed cost per month? A) $34,375 B) $35,000 C) $10,000 D) $50,000 17).

1) Which of the following BEST describes a post-audit? A) An analysis of an investment's cash flows prior to committing to the initial investment B) An audit of an operating unit of a company C) An audit performed after financial statements have been issued D) An analysis of an investment that is made after.

11) Assume that John's mobile phone service provider charges $7 per month and $0.3 per minute per call. If John's current bill is $90, how many calling minutes did John use? A) 277 minutes B) 254 minutes C) 300 minutes D) 330 minutes 12) Nancy was reviewing the water bill for her dog day care.

81) In making product mix decisions under constraining factors, a company should maximise sales of the product with the highest contribution margin per unit. 82) Sand Company manufactures two styles of lamps: a Bedford Lamp and a Lowell Lamp. The following per unit data are available:     Bedford Lamp Lowell Lamp Sale price $30 $50 Variable costs $20 $25 Machine hours.

36) In a manufacturing operation, property rates and insurance for the plant should be debited to Manufacturing overhead. 37) When manufacturing overhead is allocated, the amount is recorded as a debit to Work in process and a credit to Manufacturing overhead. 38) When manufacturing overhead costs are incurred, the amounts are recorded.

86) Gnome Company is trying to decide whether to continue to manufacture a particular component or to buy the component from an outside supplier. Which of the following is RELEVANT to this decision? A) The insurance on the manufacturing facility which will continue regardless of the decision B) The cost of the.

111) Victory Company makes a special kind of racing tyre. Variable costs are $220 and fixed costs are $30,000 per month. Victor sells 500 units per month at a price of $300. If Victory upgrades the quality of the tyre, they believe they can boost the price up to $340..

6) The effect of a plant closing on employee morale is an example of which of the following? A) A quantitative factor B) A qualitative factor C) A variable cost D) A sunk cost 7) Which of the following is irrelevant when making a decision? A) The expected increase in contribution margin of one product line.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 6) Accounting firms, building contractors and healthcare providers are companies that use job order costing. 7) Process costing is used by companies that produce large numbers of identical units in a continuous fashion. MULTIPLE CHOICE. Choose the one.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 66) Browning Company sells two products—X and Y. Product X is sold for $29 per unit and has a variable cost per unit of $15. Product Y is sold for $32 per unit and has a.

56) Which of the following will lower the breakeven point assuming no other changes? A) An increase in total fixed costs B) An increase in the sales price per unit C) An increase in the variable costs per unit D) A decrease in the sales price per unit 57) Colin was a professional classical guitar.

26) Peacock Ltd sells 2200 kayaks per year at a price of $480 per unit. It sells in a highly competitive market and uses target pricing. The company has calculated its target full product cost at $820,000 per year. Fixed costs are $320,000 per year and cannot be reduced. How.

41) Meson Production is a price-taker. They produce large spools of electrical wire in a highly competitive market, so it practises target pricing. The current market price is $825 per unit. The company has $3,100,000 in assets and shareholders expect a return of 6% on assets. The company provides the.

36) Yummy Foods sells jars of special spices used in Spanish cooking. The variable cost is $2 per unit. Fixed costs are $10,000,000 per year. It has $40,000,000 of assets and investors expect a return of 5% on their assets. Yummy Foods sells 4,000,000 units per year. They use cost-plus.

11) When a business is considering whether to replace old equipment with newer equipment, the cost of operating the old equipment—compared to the cost of operating the new equipment—is information relevant to the business decision. 12) A sunk cost is a cost that was previously incurred and is irrelevant to the.

66) Clay Company manufactures two styles of lamps—a Bedford Lamp and a Lowell Lamp. The following per unit data are available:     Bedford Lamp Lowell Lamp Sale price $30 $35 Variable costs $18 $23 Machine hours required for 1 lamp 2 4   Total fixed costs are $40,000. Machine hour capacity is 20,000 hours per year. Assuming that the company can sell as many.

51) Which of the following statements describes a scenario when management should consider dropping a business division? A) The division's avoidable fixed costs are greater than its contribution margin. B) The division's avoidable fixed costs are less than its contribution margin. C) The division has consistently reported an operating loss. D) The division's unavoidable.

116) Verdant Avionics makes aircraft instrumentation. Their basic navigation radio requires $140 in variable costs and requires $4 000 per month in fixed costs. If they process the radio further to enhance its functionality, it will require an additional $20 per unit of variable costs, and $300 per month in.

1) Fixed costs that do NOT differ between two alternatives are: A) considered opportunity costs. B) irrelevant to the decision. C) important only if they represent a material dollar amount. D) relevant to the decision. 2) All of the following are relevant to the decision to replace equipment EXCEPT the: A) original cost of old equipment. B).

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 21) Which of the following describes the allocation base for allocating manufacturing overhead costs? A) The factor that reflects the relationship between goods produced and the amount of overhead costs incurred B) The estimated base amount of manufacturing.

71) Custom Furniture manufactures a small table and a large table. The small table sells for $900, has variable costs of $580 per table and takes 10 direct labour hours to manufacture. The large table sells for $1500, has variable costs of $980 and takes eight direct labour hours to.

16) In a special sales order decision, incremental fixed costs which would be incurred because of an additional purchase of equipment would be considered to be: A) irrelevant to the decision. B) opportunity costs. C) sunk costs. D) relevant to the decision. 17) Paragon Products sells a special kind of navigation equipment for $1 200..

61) A small business produces a single product and reports the following data:   Price $10.59 per unit Variable cost $5 per unit Fixed cost $24,000 per month Volume 13,000 per month   If the company reduces its price to $7.75, it believes that the volume will go up to 15,000 units. How would this change affect operating profit? A) It will go up by $48,670. B) It.

46) If a company is a price-taker, it has considerable flexibility in setting its products' prices. 47) Polynesia Company manufactures sonars for fishing boats. Model 70 sells for $300. Polynesia produces and sells 5 600 of them per year. Cost data are as follows:   Variable manufacturing $100 per unit Variable marketing $16 per unit Fixed manufacturing $280 000 per year Fixed.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 16) When materials are requisitioned for a job, the materials inventory account is debited. 17) Work in process inventory is debited for the incurrence of both direct and indirect labour in a job costing system. 18) Indirect materials.