ACCT EXAM II

Sam's Appliance Outlet has variable expenses of 40% of sales. The manager reported monthly fixed expenses of $270,000. The monthly target operating income is $75,000. What is the monthly margin of safety in dollars if the manager at Sam's Appliance Outlet achieves the operating income goal?

$125,000

Sam's Appliance Outlet has variable expenses of 40% of sales. The manager reported monthly fixed expenses of $240,000. The monthly target operating income is $80,000. What is the monthly margin of safety in dollars if the manager at Sam's Appliance Outlet achieves the operating income goal?

$133,333

MaryJane's Bakery manufactures and sells a variety of baked goods. The selling price per dozen of chocolate glazed dunuts is $8.00. The variable costs to produce the chocolate glazed donuts are $3.75, and total fixed costs are $3,800. What are the breakeven sales in dollars?

$7,160

Tim's Manufacturing manufactures and sells sofas and futons. The following data was reported by the managerial accountant. The company can manufacture 2 sofas per machine hour and 1 futon per machine hour. The company's production capacity is 700 machine hours per month. What is the contribution margin per machine hour for the sofas? Sofas Sales Prices $ 750 Variable costs $ 400 Futons Sales Prices $ 525 Variable costs $ 225

$700

Brandy's Balloon Service currently sells 1,000 balloon bundles per month. The competition in the balloon industry continues to soar within a thirty-mile vicinity of the service location. Variable expenses were $2.00 per balloon and fixed expenses were $5,000. If Brandy changes the price of balloon bundles to $10, how many balloon bundles should she sell to achieve her target operating income of $6,000?

1,375 balloon bundles

Daphne's Planter Company produces and sells planters. The manager reported $10,500 in fixed expenses, operating income of $0 at the breakeven point, and a contribution margin per unit of $60. What is the company's breakeven point in units using the shortcut approach?

175 units

Landstown College changed the budget for the next fiscal year. The new budget includes the following: Total fixed expenses $52,000 Selling price per unit $58 Variable expenses per unit $32 What is the impact on the breakeven sales in units if the new manager reduces fixed expenses by $10,000?

385 decrease in breakeven units

Terry's Frame & Art Shoppe produces and sells picture frames to clients at $8.00 per picture frame. The variable cost to produce each picture frame is $3.25 per picture frame. The fixed costs are $3,000 per month. What is the firm's contribution margin ratio?

59.37%

The Coffee Factory sells two products, supreme and mild. The supreme sells for $120 per case (unit) with variable costs of $90 per unit. The mild sells for $90 per unit with variable costs of $10 per unit. The manager reported $42,600 total fixed costs. The Coffee Factory usually sells three supreme brands for each two mild brands. What is the breakeven point in total units?

852 units

MaryJane's Bakery manufactures and sells a variety of baked goods. The selling price per dozen of chocolate glazed donuts is $8.00. The variable costs to produce the chocolate glazed donuts are $3.75, and total fixed costs are $3,800. How many dozen chocolate glazed donuts must the manager sell to break even?

895 dozen

________ expresses the relationships amongst costs, volume, and organizational profits.

CVP analysis

Variable cost per unit =

Change in cost / Change in activity

What refers to the excess of sales revenue over variable expenses?

Contribution margin

Unit product cost =

Direct Materials + Direct Labor + Variable Manufacturing Overhead + Fixed Manufacturing Overhead

Fixed Manufacturing Overhead=

Fixed Manufacturing Overhead / Number of new units

(Sales revenue × contribution margin ratio) - fixed costs represents

Operating income

Fixed cost =

Total cost - Variable cost element

Which of the following types of costs would remain constant on a per-unit basis?

Total variable costs

________ are treated as product costs under the variable costing method.

Variable production costs

Account Analysis is

a method to determine cost behavior that is based on a manager's judgment in classifying each general ledger account as a variable, fixed, or a mixed cost

A unit of product under absorption costing includes ________.

direct materials, direct labor, variable overhead, and fixed overhead costs

When sales exceed production, the net operating income reported under variable costing is ________.

greater than the net operating income reported under absorption costing

Avoidable fixed costs ________.

include costs that may be eliminated as a result of discontinuing the product

Unavoidable fixed costs ________.

include fixed costs that continue to be incurred even if the product line is discontinued

A committed fixed cost ________.

is a cost over which management has little or no control in the short run

Relevant information ________.

is expected future data and differs amongst the alternatives

An advantage of account analysis is ________.

its simplicity

The ________ is the excess of actual or expected sales over breakeven sales.

margin of safety

The ________ refers to a company's amount of relative fixed and variable costs.

operating leverage

When using a variable costing system, the contribution margin (CM) is calculated as the excess of ________.

revenues over variable costs

Cost-plus pricing ________.

starts with the product's total costs and adds a desired profit to determine a cost-plus price

Total fixed costs ________.

stay constant over a wide range of volume

Total variable costs are costs

that vary in direct proportion to changes in volume.

A special order should be rejected when ________.

the price of the special order is NOT more than variable costs of the order

Total mixed costs consist of graphs that slope

upward but do not begin at the origin they instead intersect at the y-axis at the level of fixed costs