1) Which of the following is an example of division-sustaining costs?
A) research and development cost
B) corporate administration costs
C) corporate brand advertising
D) shipment costs
2) Beta Corp reported the following:
Required:
a.Compute contribution margin.
b.Compute gross margin.
c.Compute operating income.
3) One reason for assigning selling and distribution costs to products for analytical
purposes is ________.
A) to justify a varied product-mix
B) that these costs should be included in the cost of goods sold in the income statement
C) to ensure that all costs are considered
D) that all direct costs must be assigned
4) When the firm uses the target-costing approach to pricing, the target cost per unit is
the difference between the per unit target price and the per unit target ________.
A) contribution margin
B) operating income
C) production costs
D) gross margin
5) Dalrymple Company produces a special spray nozzle. The budgeted indirect total
cost of inserting the spray nozzle is $80,000. The budgeted number of nozzles to be
inserted is 40,000. What is the budgeted indirect cost allocation rate for this activity?
A) $0.50
B) $1.00
C) $1.50
D) $2.00
6) The Fortise Corporation manufactures two types of vacuum cleaners, the Victor for
commercial building use and the House-Mate for residences. Budgeted and actual
operating data for the year 2015 were as follows:
What is the total sales-mix variance in terms of the contribution margin?
A) $200,000 unfavorable
B) $390,000 unfavorable
C) $900,000 favorable
D) $1,260,000 favorable
7) Sensitivity analysis helps managers evaluate risks ________.
A) by showing the effects of changes to the original data or an underlying assumption
B) by identifying inconsistencies in underlying assumptions and actual conditions
C) by removing the effects of foreign currency exposure and other uncontrollable
factors
D) by identifying gaps in the production process using information on setups needed to
manufacture products
8) Quick Connect manufactures high-tech cell phones. Quick Connect has a policy of
adding a 20% markup to full costs and currently has excess capacity. The following
information pertains to the company’s normal operations per month:
Quick Connect Products is approached by an overseas customer to fulfill a
one-time-only special order for 120 units. All cost relationships remain the same except
for a one-time setup charge of $1,500. No additional design, marketing, or distribution
costs will be incurred. What is the minimum acceptable bid per unit on this
one-time-only special order?
A) $24.48
B) $160.48
C) $176.98
D) $200.00
9) Southwestern College is planning to hold a fund raising banquet at one of the local
country clubs. It has two options for the banquet:
OPTION one:Crestview Country Club
a. Fixed rental cost of $1,000
b. $12 per person for food
OPTION two:Tallgrass Country Club
a. Fixed rental cost of $3,000
b. A caterer who charges $8.00 per person for food
Southwestern College has budgeted $1,800 for administrative and marketing expenses.
It plans to hire a band which will cost another $800. Tickets are expected to be $30 per
person. Local business supporters will donate any other items required for the event.
Which option has the lowest breakeven point?
A) Option one
B) Option two
C) Both options have the same breakeven point.
D) The lowest breakeven point cannot be determined.
10) The planned operating income is calculated by ________.
A) dividing net income by tax rate
B) dividing net income by 1 – tax rate
C) multiplying net income by tax rate
D) multiplying net income by 1 – tax rate
11) Dynondo Incorporated planned to use materials of $12 per unit but actually used
materials of $13 per unit, and planned to make 1,500 units but actually made 1,800
units.
The flexible-budget variance for materials is ________.
A) $1,500 favorable
B) $1,800 unfavorable
C) $1,500 unfavorable
D) $1,800 favorable