The fixed cost per unit varies with changes in the level of activity.
a. True
b. False
ABC Corporation has three service departments with the following costs and activity
base:
ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and
activity information are as follows:
How much service department cost will be allocated to the Micro Division?
a. $200,000
b. $145,000
c. $60,000
d. $345,000
May be used in a manufacturing company.
Match each phrase that follows with the term (a-c) it describes.
a. Absorption costing only
b. Variable costing only
c. Both absorption and variable costing
Widgeon Co. manufactures three products: Bales, Tales, and Wales. The selling prices
are $55, $78, and $32, respectively. The variable costs for each product are $20, $50,
and $15, respectively. Each product must go through the same processing in a machine
that is limited to 2,000 hours per month. Bales take 5 hours to process; Tales, 7 hours;
and Wales 1 hour.
Assume that Widgeon produced enough product with the highest contribution margin
per unit to use 1,000 hours of machine time. Product demand does not warrant any
more production of that product. What is the maximum additional contribution margin
that can be realized by utilizing the remaining 1,000 hours on the product with the
second highest contribution margin per hour?
a. $35,000
b. $1,400
c. $4,000
d. $28,000
The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its
projected sales for the next four months were: January – 200,000 units; February –
180,000 units; March – 210,000 units; and April – 230,000 units. The Cardinal Company
wishes to maintain a desired ending finished goods inventory of 20% of the following
month’s sales.
What is the budgeted unit of inventory for March 31?
a. 46,000
b. 36,000
c. cannot be determined from the data given
d. 42,000
The lowest contribution margin per scarce resource is the most profitable.
a. True
b. False
a percentage analysis of increases and decreases in related items on comparative
financial statements
Match each definition that follows with the term (a’“h) it defines.
a. discontinued operations
b. extraordinary items
c. change from one generally accepted accounting principle to another
d. horizontal analysis
e. vertical analysis
f. common-sized financial statements
g. current position analysis
h. profitability analysis
a plan showing the number of units to be produced each month
Match each phrase that follows with the term (a-f) it describes..
a. budget
b. capital expenditures budget
c. sales budget
d. production budget
e. cash budget
f. budgeted balance sheet
The debits to Work in Process’”Assembly Department for April, together with data
concerning production, are as follows:
April 1, work in process:
All direct materials are added at the beginning of the process, and the first-in, first-out
method is used to cost inventories. The materials cost per equivalent unit for April is
a. $2.48
b. $2.08
c. $2.50
d. $5.25
The manufacturing cost of Carrie Industries for the first three months of the year are
provided below:
Using the high-low method, determine the (a) variable cost per unit, and (b) the total
fixed cost.
Standard cost variances are usually not reported in reports to stockholders.
a. True
b. False
Production estimates for July are as follows:
Estimated inventory (units), July 1 8,500
Desired inventory (units), July 31 10,500
Expected sales volume (units), July 76,000
For each unit produced, the direct materials requirements are as follows:
Direct material A ($5 per lb.) 3 lbs.
Direct material B ($18 per lb.) 1/2 lb.
The number of pounds of materials A and B required for July production is
a. 216,000 lbs. of A; 36,000 lbs. of B
b. 216,000 lbs. of A; 72,000 lbs. of B
c. 234,000 lbs. of A; 39,000 lbs. of B
d. 225,000 lbs. of A; 37,500 lbs. of B
Nuthatch Corporation began its operations on September 1 of the current year.
Budgeted sales for the first three months of business are $260,000, $375,000, and
$400,000, respectively, for September, October, and November. The company expects
to sell 30% of its merchandise for cash. Of sales on account, 80% are expected to be
collected in the month of the sale and 20% in the month following the sale.
The cash collections expected in October from accounts receivable are estimated to be
a. $246,400
b. $262,500
c. $210,000
d. $294,500
Timmer Corporation just started business in January. There were no beginning
inventories. During the year, it manufactured 12,000 units of product, and sold 10,000
units. The selling price of each unit was $20. Variable manufacturing costs were $4 per
unit, and variable selling and administrative costs were $2 per unit. Fixed
manufacturing costs were $24,000, and fixed selling and administrative costs were
$6,000.
What would Timmer’s net income be for the year using absorption costing?
a. $114,000
b. $110,000
c. $ 4,000
d. $106,000
Favorable fixed factory overhead volume variances are never harmful, since achieving
them encourages managers to run the factory above normal capacity.
a. True
b. False