A typical use of managerial accounting is to:
A typical use of managerial accounting is to:
help investors and creditors assess the financial position of the company.
help management get a clean audit report
help the marketing manager decide which product promotion to implement
help the SEC decide whether management is in compliance of its policies.
Question 2Three costs incurred by Pitt Company are summarized below:
1,000 units 2,000 units
Cost A $10,000 $15,000
Cost B $21,000 $21,000
Cost C $16,000 $32,000
Which of these costs are variable?
A, B, and C
A and B
A only
C only
Question 3True or False: Revenues and costs that differ are relevant and should be considered in incremental analysis.
True
False
Question 4Bellfont Company produces door stoppers. August production costs are below:
Door Stoppers produced 80,000
Direct material (variable) $20,000
Direct labor (variable) 40,000
Supplies (variable) 20,000
Supervision (fixed) 26,800
Depreciation (fixed) 24,800
Other (fixed) 5,000
In September, Bellfont expects to produce 100,000 door stoppers. Assuming no structural changes, what is Bellfont’s production cost per door stopper for September?
Round to two decimal places.
Question 5Aaron’s chairs is in the process of preparing a production cost budget for August. Actual costs in July for 120 chairs were:
Materials cost $4,710
Labor cost 2,540
Rent 1,500
Depreciation 2,500
Other fixed costs
3,200
Materials and labor are the only variable costs. If production and sales are budgeted to change to 140 chairs in August, how much is the expected total variable cost on the August budget?
Question 6If an incremental analysis is applied to evaluate two alternatives and it is determined that incremental revenues equal incremental costs, which of the following would be used to make the appropriate decision?
Fixed Costs
Qualitative Characteristics
Variable Costs
Sunk Costs
Question Stellar Company has the following sales, variable cost, and fixed cost. If sales increase by $10,000 then their profit increases/decreases by how much?
Sales $50,000
Variable Costs $8,100
Fixed Costs $26,000
Question 8Susan is trying to decide whether or not to attend college during the next 12-week session. She has the following options:
1. Attend college full-time at a cost of $1,200.
2. Attend college part-time at a cost of $700 and work part-time earning $1,800.
3. Work full-time earning $4,600.
What is Susan’s incremental profit if she chooses option 3 over option 2?
Question 9The high-low method is very reliable, because it examines the two extremes of activity levels.
True
False
Question 10Professional University teaches a large range of undergraduate courses. It is interested in determining the cost equation for the facilities cost as a function of student credit hours so that it an more accurately budget its facilities costs as enrollment grows. Information for the high and low cost semesters and volumes for last 5 years appears below
Semester Student Credit Hours Facilities Cost
Spring 2007 250,000 $500,000
Fall 2004 300,000 $530,000
Using the high low method, with student credit hours as the activity driver, what is the equation for facilities cost (FC) as a function of student credit hours?
FC = $350,000 + $0.60 / student credit hour
FC = -$585,100 + $1.67 / student credit hour
FC = $1.77 / student credit hour
FC = $2 / student credit hour
Question 11Randy’s tireland makes a product that sells for $69 per unit and has $52 per unit in variable costs. Annual fixed costs are $24,000. If Rambles sells 10 units less than breakeven, how much loss would the company recognize on its income statement? (As the question asks “how much loss” you don’t have to put the negative sign. For example, suppose the loss is 100, then write the answer as 100 rather than -100.)
Round to two decimal places.
Question 12Ritz Furniture has a contribution margin ratio of 0.11. If fixed costs are $163,900, how many dollars of revenue must the company generate in order to reach the break-even point?
Question 13U.S. Telephone Cellular sells phones for $100. The unit variable cost per phone is $50 plus a selling commission of 10% (based on the unit sales price per phone). Fixed manufacturing costs total $1,090 per month, while fixed selling and administrative costs total $2,320. How many phones must be sold to achieve the breakeven point?
Round to two decimal places.
Question 14A higher margin of safety is desirable. It indicates that there is less risk of business losses.
True
False
Question 15___________________ is a measure of operating leverage. It is the difference between a company’s total sales revenue and variable costs.
Contribution Margin Analysis
Incremental Analysis
Margin of Safety Analysis
Regression Analysis
Question 16Product A has a contribution margin per unit of $500 and required 2 hours of machine time. Product B has a contribution margin per unit of $1,000 and requires 5 hours of machine time. How much of each product should be produced given there are 100 hours of available machine time?
50 units of A and 25 units of B.
25 units of B.
50 units of A.
None of the above
Question 17Cost-Volume-Profit Analysis assumptions include which of the following:
A. Costs can be accurately separated into their variable and fixed components.
B. Both unit variable costs and total fixed costs remain constant.
C. Neither unit variable costs nor total fixed costs remain constant.
A and B are correct
A and C are correct
Question 18Abagail Corp. uses activity-based costing system with three activity cost pools. The following information is provided:
Costs: Wages and salaries $ 217,000
Depreciation 104,000
Utilities 113,000
Activity Cost Pools
Assembly Setting Up Other
Wages and salaries 0.51 30% 10%
Depreciation 0.38 45% 20%
Utilities 0.28 40% 30%
How much total cost would be allocated to the Assembly activity cost pool?
Question 19Which of the following is not a goal of Managerial Accounting?
Provide information managers need for planning.
Provide information managers need for market wide interest rates.
Provide information managers need for control.
Provide information managers need for decision making.
Question 20 Which one of the following is least likely to be a fixed cost?
Rent for buildings
Rent for land
Cost of commodity inputs
Cost of property, plant and equipment
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