Property taxes on a factory building would be included as part of the cost of products
manufactured under the absorption costing concept.
a. True
b. False
The contribution margin ratio is computed as contribution margin divided by sales.
a. True
b. False
If fixed costs are $450,000, the unit selling price is $75, and the unit variable costs are
$50, what are the old and new break-even sales (units) if the unit selling price increases
by $10?
a. 6,000 units and 5,294 units
b. 18,000 units and 6,000 units
c. 18,000 units and 12,857 units
d. 9,000 units and 15,000 units
Depreciation expense on factory equipment is part of factory overhead cost.
a. True
b. False
If the actual quantity of direct materials used in producing a commodity differs from the
standard quantity, the variance is a
a. controllable variance
b. price variance
c. quantity variance
d. rate variance
Volume variance measures the use of fixed factory overhead resources.
a. True
b. False
The Excelsior Company has three salespersons. Average sales price per unit sold,
average variable manufacturing costs per unit, and number of units sold for each
salesperson are shown below.
Commissions are earned according to the following schedule:
Prepare a contribution by salesperson report.
Which of the following is not true when determining the selling price for a product?
a. Absorption costing should be used to determine routine pricing which includes both
fixed and variable costs.
b. As long as the selling price is set above the variable costs, the company will make a
profit in short run.
c. Variable costing is effective when determining short run decisions, but absorption
costing is only used for long-term pricing policies.
d. Both variable and absorption pricing plans should be considered, to include several
pricing alternatives.
Constraint
Match the definitions that follow with the term (a’“e) it defines.
a. Demand-based concept
b. Competition-based concept
c. Product cost concept
d. Target costing
e. Production bottleneck
Cupcake mix
Match the items below for a bakery to the type of cost (a-d).
a. Direct materials
b. Direct labor
c. Factory overhead
d. Non-manufacturing cost
Materials used by Jefferson Company in producing Division C’s product are currently
purchased from outside suppliers at a cost of $10 per unit. However, the same materials
are available from Division A. Division A has unused capacity and can produce the
materials needed by Division C at a variable cost of $8.50 per unit. A transfer price of
$9.50 per unit is negotiated and 25,000 units of material are transferred, with no
reduction in Division A’s current sales.
How much will Division A’s income from operations increase?
a. $0
b. $75,000
c. $25,000
d. $50,000
Which of the following budgets allow for adjustments in activity levels?
a. static budget
b. continuous budget
c. zero-based budget
d. flexible budget
Challenger Factory produces two similar products’”regular widgets and deluxe widgets.
The total plant overhead budget is $675,000 with 300,000 estimated direct labor hours.
It is further estimated that deluxe widget production will need 3 direct labor hours for
each unit and regular widget production will require 2 direct labor hours for each unit.
Using the single plantwide factory overhead rate with an allocation base of direct labor
hours, how much factory overhead will Challenger Factory allocate to regular widget
production if budgeted production for the period is 75,000 units and actual production
for the period is 72,000 units?
a. $168,750
b. $324,000
c. $162,000
d. $337,500
If fixed costs are $850,000 and the unit contribution margin is $50, profit is zero when
15,000 units are sold.
a. True
b. False
The following financial information was summarized from the accounting records of
Train Corporation for the current year ended December 31:
The gross profit for the Locomotive Division is
a. $57,960
b. $14,790
c. $27,240
d. $47,280
Kettle Factory produces two similar products’”gloves and mittens. The total plant
budget is $1,050,000 with 600,000 estimated direct labor hours. It is further estimated
that glove production will require 375,000 direct labor hours and mitten production will
require 225,000 direct labor hours.
(a) Determine the single plant factory overhead rate based on direct labor hours.
(b) How much is the factory overhead cost per pair of gloves if each pair requires 2
hours to produce?
(c) How much is the factory overhead cost per pair of mittens if each pair takes
1.5 hours to produce?
(d) How much total factory overhead will be allocated to glove production if 187,500
pairs are budgeted and 190,000 pairs are actually produced during the period?
(e) How much total factory overhead will be allocated to mitten production if 150,000
pairs are budgeted and 140,000 pairs are actually produced during the period?
What do lean manufacturers demand from their vendors?
a. High quality materials
b. Low cost materials
c. On-time deliveries
d. All of the above
A job order cost system would be appropriate for a crude oil refining business.
a. True
b. False
The following information was taken from Slater Company’s balance sheet:
Determine the company’s (a) ratio of fixed assets to long-term liabilities, and (b) ratio of
liabilities to stockholders’ equity. Round your answer to one decimal place.