1) Ruben intends to sell his customers a special round-trip airline ticket package. He is
able to purchase the package from the airline carrier for $150 each. The round-trip
tickets will be sold for $200 each and the airline intends to reimburse Ruben for any
unsold ticket packages. Fixed costs include $5,000 in advertising costs.
What is the contribution margin per ticket package?
A) $50
B) $100
C) $150
D) $200
2) Which of the following statements is true of activity-based costing?
A) There is a clear cause-and-effect relationship between costs and the cost driver in the
long run.
B) There is no variety of cost drivers and cost pools.
C) The system focuses on activities in together and not on individual activities.
D) A single cost driver should be identified for all the activities.
3) In making the decision to buy the model 230 machine rather than the model 380
machine, the sunk cost was:
A) $305,000
B) $266,000
C) $278,000
D) $207,000
4) Market-share variance = $350,000 (U); Market-size variance = $300,000 (F);
Sales-mix variance = $600,000 (F); calculate the sales-quantity variance.
A) $350,000 (F)
B) $650,000 (F)
C) $550,000 (F)
D) $50,000 (U)
5) Springfield Manufacturing produces electronic storage devices, and uses the
following three-part classification for its manufacturing costs: direct materials, direct
manufacturing labor, and indirect manufacturing costs. Total indirect manufacturing
costs for January were $300 million, and were allocated to each product on the basis of
direct manufacturing labor costs of each line. Summary data (in millions) for January
for the most popular electronic storage device, the Big Bertha, was:
Required:
a.Compute the manufacturing cost per unit for each product produced in January.
b.Suppose production will be reduced to 30,000 units in February. Speculate as to
whether the unit costs in February will most likely be higher or lower than unit costs in
January; it is not necessary to calculate the exact February unit cost. Briefly explain
your reasoning.
6) Baseballic Corporation manufactures baseball uniforms and uses budgeted
machine-hours to allocate variable manufacturing overhead. The following information
relates to the company’s manufacturing overhead data:
What is the flexible-budget variance for variable manufacturing overhead?
A) $6,500 unfavorable
B) $6,500 favorable
C) $11,250 unfavorable
D) $11,250 favorable
7) An actual cost is ________.
A) is the cost incurred
B) is a predicted or forecasted cost
C) is anything for which a cost measurement is desired
D) is the collection of cost data in some organized way by means of an accounting
system
8) In some industries, such as legal and consulting, most costs are locked in ________.
A) when they are incurred
B) during the design stage
C) during the customer-service stage
D) during the marketing stage
9) Bennet Company employs 20 individuals. Eighteen employees are paid $18 per hour
and the rest are salaried employees paid $3,000 a month. Which of the following is the
total cost function of personnel?
A) y = a + bX
B) y = b
C) y = bX
D) y = a
10) Zitriks Corp. manufactures two sizes of ceramic paperweights, regular and jumbo.
The following information applies to their expectations for the planning period:
Expected direct costs amounts to $960,000 for the period. Support cost requirements of
both products are substantially different from one another. Zitriks uses an ABC costing
system.
The inspections activity-cost driver rate is ________.
A) $5.50
B) $6.00
C) $6.50
D) $5.00