Connor Company’s fixed costs are $400,000, the unit selling price is $25, and the unit
variable costs are $15. What is the break-even sale (units) if the variable costs are
increased by $2?
a. 50,000 units
b. 30,770 units
c. 40,000 units
d. 26,667 units
shows expected results at several activity levels
Match the phrase that follows with the term (a-e) it describes.
a. static budget
b. flexible budget
c. master budget
d. sales budget
e. production budget
The entry to transfer goods in process from Department X to Department Y includes a
debit to Work in Process’”Department X.
a. True
b. False
The primary accounting tool for controlling and reporting for cost centers is a budget.
a. True
b. False
Bluegill Company sells 45,000 units at $18 per unit. Fixed costs are $62,000 and
income from operations is $298,000. Determine the (a) variable cost per unit, (b) unit
contribution margin, and (c) contribution margin ratio.
If at the end of the fiscal year, the variances from standard are significant, the variances
should be transferred to the
a. work in process account
b. cost of goods sold account
c. finished goods account
d. work in process, cost of goods sold, and finished goods accounts
The contribution margin ratio is
a. the same as the variable cost ratio
b. the same as profit
c. the portion of equity contributed by the stockholders
d. the same as the profit-volume ratio
Lara Technologies is considering a cash outlay of $250,000 for the purchase of land,
which it could lease out for $35,000 per year. If alternative investments are available
that yield a 12% return, the opportunity cost of the purchase of the land is
a. $35,000
b. $30,000
c. $250,000
d. $4,200
Based on the above data, what is the quick ratio, rounded to one decimal point?
a. 1.7
b. 2.9
c. 1.1
d. 1.0
A plantwide factory overhead rate assumes that all overhead is directly related to one
activity representing the entire plant.
a. True
b. False
Schedule of Activity Costs
From the above schedule of activity costs, determine the non-value-added costs.
a. $30,000
b. $50,000
c. $64,000
d. $85,000
Japan Company produces lamps that require 2.25 standard hours per unit at an hourly
rate of $15.00 per hour. Production of 7,700 units required 19,250 hours at an hourly
rate of $14.90 per hour.
What is the direct labor (a) rate variance, (b) time variance, and (c) total cost variance?
The range of activity over which changes in cost are of interest to management is called
the relevant range.
a. True
b. False
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
In a company’s annual report, the section called management discussion and analysis
provides critical information in interpreting the financial statements and assessing the
future of the company.
a. True
b. False
The following information is available for Jase Company:
Which of the following statements is correct?
a. The price-earnings ratio is 20 and a share of common stock was selling for 20 times
the amount of earnings per share at the end of the year.
b. The price-earnings ratio is 5% and a share of common stock was selling for 5% more
than the amount of earnings per share at the end of the year.
c. The price-earnings ratio is 10 and a share of common stock was selling for 125 times
the amount of earnings per share at the end of the year.
d. The market price per share and the earnings per share are not statistically related to
each other.