Mia Enterprises sells a product for $90 per unit. The variable cost is $40 per unit, while
fixed costs are $75,000. Determine the (a) break-even point in sales units, and (b)
break-even point in sales units if the selling price increased to $100 per unit.
a. SP $90 – VC $40 = CM $50 per unit
$75,000 / $50 = 1,500 units
b. SP $100 – VC $40 = CM $60 per unit
$75,000 / $60 = 1,250 units
Answer:
An account is said to have a debit balance if
A.the amount of the debits exceeds the amount of the credits
B.there are more entries on the debit side than on the credit side
C.there are more entries on the credit side than on the debit side
D.the first entry of the accounting period was posted on the debit side
Answer:
A balance sheet that displays only component percentages is called
A.trend balance sheet
B.comparative balance sheet
C.condensed balance sheet
D.common-sized balance sheet
Answer:
Marshall Supplies is a janitorial supply store. Marshall Supplies uses perpetual
inventory. Use a General Journal to journalize the following four transactions during the
month of July:
(a) On July 4th, Marshall purchases inventory for sale from Tidy Wholesalers for
$8,500.00 with terms 1/10, n/30.
(b) On July 5th, Marshall pays Express Transfer $45 for freight-in on the July 4th order.
(c) On July 12th, Marshall buys an additional $11,985 in inventory from Tidy
Wholesalers with terms 1/10, n/30.
(d) On July 22nd, Marshall pays Tidy Wholesalers the balance due.
Answer:
A machine with a cost of $75,000 has an estimated residual value of $5,000 and an
estimated life of 4 years or 18,000 hours. What is the amount of depreciation for the
second full year, using the double declining-balance method?
A.$17,500
B.$37,500
C.$18,750
D.$16,667
Answer:
Responsibility accounting reports for profit centers will include
A.costs.
B.revenues.
C.expenses and fixed assets.
D.revenues, expenses, net income or loss from operations.
Answer:
If there is a balance in the prepaid rent account after adjusting entries are made, it
represents a(n)
A.deferral
B.accrual
C.revenue
D.liability
Answer:
Which of the following conditions would cause the break-even point to increase?
A.Total fixed costs decrease
B.Unit selling price increases
C.Unit variable cost decreases
D.Unit variable cost increases
Answer:
Tanya Inc.’s static budget for 10,000 units of production includes $60,000 for direct
materials, $44,000 for direct labor, fixed utilities costs of $5,000, and supervisor
salaries of $20,000. A flexible budget for 12,000 units of production would show:
A.the same cost structure in total
B.direct materials of $72,000, direct labor of $52,800, utilities of $5,000, and supervisor
salaries of $20,000
C.total variable costs of $154,800
D.direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and
supervisor salaries of $20,000
Answer:
Which of the following could not be considered a business segment?
A.Region
B.Product
C.Customer Type
D.All of these could be considered business segments.
Answer:
For which of the following businesses would a process cost system be appropriate?
A.An oil refinery
B.Yacht builder
C.Specialty furniture company
D.Custom electronics manufacturer
Answer:
Accompanying the bank statement was a credit memo for a short-term note collected by
the bank for the customer. What entry is required in the company’s accounts?
A.debit Notes Receivable; credit Cash
B.debit Cash; credit Miscellaneous Income
C.debit Cash; credit Notes Receivable
D.debit Accounts Receivable; credit Cash
Answer:
The point where the profit line intersects the horizontal axis on the profit-volume chart
represents:
A.the maximum possible operating loss
B.the maximum possible operating income
C.the total fixed costs
D.the break-even point
Answer:
Which of the following is NOT an example of a cost that varies in total as the number
of units produced changes?
A.Electricity per KWH to operate factory equipment
B.Direct materials cost
C.Straight-line depreciation on factory equipment
D.Wages of assembly worker
Answer:
Eagle Co. manufactures bentwood chairs and tables. Wood for both products is
steam-bent in the same process, but different types of wood are used for each product.
Thus, materials cost is identified separately to each product. One production cycle uses
20 board feet. Labor cost is identified to the process as a whole, as is overhead cost.
Data for the month of July follow:
(a) Compute July’s predetermined rate for the steam-bending process.
(b) Compute July’s direct material costs for chairs and tables.
(c) Compute conversion costs to be applied to chairs and tables in July.
(d) Journalize the following entries:
1 Assignment of direct materials to chairs and tables.
2 Application of conversion costs to chairs and tables.
3 The transfer of completed chairs and tables to the Finishing Department. All of July’s
production was completed in July.
Answer:
Cost flow is in the reverse order in which costs were incurred when using
A.weighted average
B.last-in, first-out
C.first-in, first-out
D.average cost
Answer:
Answer:
During a period of falling prices, which of the following inventory methods generally
results in the lowest balance sheet amount for inventory.
A.average method
B.LIFO method
C.FIFO method
D.can not tell without more information
Answer:
Yankton Company began the year without an investment portfolio. During the year they
purchased investments classified as trading securities at a cost of $13,000. At the end of
the year, the market value of the securities was $11,000. The Yankton Company’s
financial statements for the current year should show
A.a loss of $2,000 on the income statement and net trading securities of $13,000 on the
balance sheet
B.no loss on the income statement and net trading securities of $13,000 on the balance
sheet
C.no loss on the income statement, net trading securities of $11,000 and an unrealized
loss of $2,000 as a stockholders’ equity adjustment on the balance sheet
D.a loss of $2,000 on the income statement and temporary investments of $11,000 on
the balance sheet
Answer:
The numerator used to calculate accounts receivable turnover is
A.total sales
B.net sales
C.accounts receivable at year-end
D.average accounts receivable
Answer:
Identify which section the statement of cash flows (using the indirect method) would
present information regarding the following activities: (Use O for operating, I for
investing, or F for financing):
a. Issued common stock
b. Redeemed bonds
c. Issued preferred stock
d. Purchased patents
e. Net income
f. Paid cash dividends
g. Purchased treasury stock
h. Sold long-term investment.
i. Sold equipment.
j. Purchased buildings
k. Issued bonds
Answer:
Identify each of the following as an (1) increase in owner’s equity, or a (2) decrease in
owner’s equity.
(a) Fees Earned
(b) Wages Expense
(c) Withdrawal
(d) Lawn Care Revenue
(e) Investment
(f) Supplies Expense
Answer:
On October 10th, Nikle Company purchased supplies worth $1,800 on account.
(a) Write the journal entry in the space below.
1-Sep Land 47,500
Cash 47,500
Purchased land for the company
(b) Nikle Company paid this bill on October 25th. Write the journal entry in the space
below.
Answer:
A business issues 20-year bonds payable in exchange for preferred stock. This
transaction would be reported on the statement of cash flows in
A.a separate schedule
B.the cash flows from financing activities section
C.the cash flows from investing activities section
D.the cash flows from operating activities section
Answer:
Selected accounts with some debits and credits omitted are presented as follows:
If the balance of Work in Process at August 31 is $220,000, what was the amount
debited to Work in Process for factory overhead in August, assuming a factory overhead
rate of 30% of direct labor costs?
A.$135,000
B.$10,000
C.$120,000
D.$70,000
Answer:
On September 1, the company pays rent for twelve months in advance and debits an
asset account. At year end, the adjusting entry on the work sheet would
A.increase an expense account
B.decrease a liability account
C.increase an asset account
D.decrease an expense account
Answer:
Which of the following is not a role of accounting in business?
A.To provide reports to users about the economic activities and conditions of a
business.
B.To personally guarantee loans of the business.
C.To provide information to other users to determine the economic performance and
condition of the business.
D.To assess the various informational needs of users and design its accounting system
to meet those needs.
Answer:
Which of the following is not a characteristic of accrual basis of accounting?
A.Revenues and expenses are reported in the period in which cash is received or paid
B.Revenues are reported on the income statement in the period in which they are earned
C.Accrual basis of accounting supports the matching concept
D.Expenses are reported in the same period as the revenues to which they relate
Answer:
If the contribution margin ratio for France Company is 45%, sales were $425,000. and
fixed costs were $100,000, what was the income from operations?
A.$233,750
B.$91,250
C.$191,250
D.$133,750
Answer:
The following information is available from the current period financial statements:
The net cash flow from operating activities using the indirect method is
A.$230,000
B.$188,000
C.$198,000
D.$156,000
Answer:
Factory overhead includes:
A.factory rent and direct labor
B.direct materials and direct labor
C.indirect materials and direct materials
D.indirect labor and indirect materials
Answer:
Answer:
Copper Hill Inc. manufactures laser printers within a relevant range of production of
70,000 to 100,000 printers per year. The following partially completed manufacturing
cost schedule has been prepared:
Number of Printers Produced
70,000 90,000 100,000
Total costs:
Total variable costs $350,000 (d) (j)
Total fixed costs 630,000 (e) (k)
Total costs $980,000 (f) (l)
Cost per unit:
Variable cost per unit (a) (g) (m)
Fixed cost per unit (b) (h) (n)
Total cost per unit (c) (i) (o)
Complete the preceding cost schedule, identifying each cost by the appropriate letter (a)
through (o).
Answer:
Equipment costing $80,000 with a useful life of 10 years and a residual value of $8,000
has been depreciated for 6 years by the straight-line method. Assume a fiscal year
ending December 31.
Answer:
A corporation issues 2,500 shares of common stock for $ 45,000. The stock has a stated
value of $10 per share. The journal entry to record the stock issuance would include a
credit to Common Stock for
A.$25,000
B.$45,000
C.$20,000
D.$ 5,000
Answer: