ACCT Midterm Multiple Choice

Smith Office Equipment Company's budgeted manufacturing overhead is $4,200,000. Overhead is allocated on the basis of direct labor hours. The budgeted direct labor hours for the period are 40,000. What is the plantwide overhead rate? $8.75 $105.00 $42.00 $113.75

$105.00 Explanation: $4,200,000 / 40,000 hours = $105.00

Bell Company sells several products. Information of average revenue and costs is as follows: Selling price per unit $33.00 Variable costs per unit: Direct material $6.00 Direct manufacturing labor $1.50 Manufacturing overhead $0.30 Selling costs $2.25 Annual fixed costs $113,000 The company sells 10,000 units. The contribution margin per unit is ________. $25.50 $11.65 $22.95 $25.20

$22.95 Contribution margin per unit = $33.00 − $6.00 − $1.50 −$0.30 − $2.25 = $22.95

Tally Corp. sells softwares during the recruiting seasons. During the current year, 14,000 software packages were sold resulting in $460,000 of sales revenue, $110,000 of variable costs, and $50,000 of fixed costs. Contribution margin per software is ________. $32.86 $29.29 $7.86 $25.00

$25.00 Explanation: ($460,000 − $110,000) / 14,000 = $25.00 per software

Fixed costs equal $16,000, unit contribution margin equals $35, and the number of units sold equal 1,300. Operating income is ________. 45,500 $61,500 $29,500 $16,000

$29,500 Explanation: (1,300 × $35) − $16,000 = $29,500

The following costs were incurred in August: Direct materials... $20,000; Direct Labor...$18,000; Manufacturing overhead...$21,000; Selling expenses...$16,000; Administrative expenses...$21,000 Conversion costs during the month totaled: $96,000 $39,000 $38,000 $59,000

$39,000

X-Industries manufactures 3-D printers. For each unit, $3,100 of direct material is used and there is $2,500 of direct manufacturing labor at $25 per hour. Manufacturing overhead is applied at $30 per direct manufacturing labor hour. Calculate the profit earned on 45 units if each unit sells for $10,000. $63,000 $3,000 $81,750 $104,250

$63,000 Explanation: $3,100 + $2,500 + (($2,500 / $25) × $30) = $8,600 Profit earned on 45 units = ($10,000 − $8,600) × 45 units = $63,000

Family Furniture sells a table for $950. Its fixed costs are $2,500, while its variable costs are $500 per table. It currently plans to sell 180 tables this month. What is the budgeted operating income for the month assuming that Family Furniture sells 180 tables? $81,000 $171,000 $78,500 $168,500

$78,500 Explanation: Budgeted operating income = $171,000 (=180 x $950) − [(180 × $500) + $2,500] = $171,000 − $92,500 = $78,500

For 2020, Franklin Manufacturing uses machine-hours as the only overhead cost-allocation base. The estimated manufacturing overhead costs are $220,000 and estimated machine hours are 25,000. The actual manufacturing overhead costs are $360,000 and actual machine hours are 40,000. Using job costing, the 2020 plantwide manufacturing overhead rate is: (Round the final answer to the nearest cent.) $8.80 per machine-hour $9.00 per machine-hour $14.40 per machine-hour $5.50 per machine-hour

$8.80 per machine-hour

Shim's syllabus says "Purchasing your textbook is considered as an ( 1 ) but not an (2). Choose correct words belong to each parenthesis ! (1) Asset (2)Liability (1) Investment (2) Expense (1) Revenue Expenditure (2) Capital Expenditure (1) Potential Income (2) Expense

(1) Investment (2) Expense

Sparkle Jewelry sells 800 units resulting in $85,000 of sales revenue, $32,000 of variable costs, and $26,000 of fixed costs. The number of units that must be sold to achieve $41,000 of operating income is ________. 909 units 393 units 1,012 units 619 units

1,012 units Explanation: UCM = ($85,000 − $32,000) / 800 = $66.25 The number of units that must be sold to achieve $41,000 of operating income = ($26,000 + $41,000) / $66.25 = 1,012 units

Slickware sells porcelain cups. The breakeven point is 5,000 units. The variable cost per unit is $18 and the fixed costs are $20,000. What is the contribution margin at 5,000 units? 40,000 110,000 20,000 90,000

20,000

Sparkle Jewelry sells 600 units resulting in $75,000 of sales revenue, $32,000 of variable costs, and $26,000 of fixed costs. Breakeven point in units is ________. (Round to the nearest whole unit.) 363 units 810 units 447 units 684 units

363 Units Contribution margin per unit = ($75,000 − $32,000) / 600 = $71.67 Breakeven point = $26,000 / $71.67 = 363 units.

The following costs were incurred in August: Direct materials... $20,000; Direct Labor...$18,000; Manufacturing overhead...$21,000; Selling expenses...$16,000; Administrative expenses...$21,000 Prime costs during the month totaled: 39,000 96,000 38,000 37,000

38,000

Firebird Ltd. sells packaged birdseed for $6.00 per package. Variable product costs are $3.00 per package. Fixed costs are $12,000 per period. How many packages must Firebird sell to earn a target operating income of $7,900? 4,000 packages 3,317 packages 2,633 packages 6,633 packages

6,633 packages Explanation: Correct. Quantity required = (fixed costs + target OpInc) / CM per unit Q = ($12,000 + $7,900) / ($6.00 - $3.00) = 6,633 units.

What is the breakeven point in units, assuming a product's selling price is $300, fixed costs are $18,000, unit variable costs are $20, and operating income is $6,000? 22 units 60 units 65 units 86 units

65 units Explanation: Unit contribution margin = $300 − $20 = $280. Breakeven point in units = $18,000 / $280 = 65 units

Which of the following does NOT belong to Stockholder's equity? Retained earnings Common stock Account payable Treasury stock

Account payable

Which one of the following is not an assumption of CVP analysis? All units produced are sold. All costs are variable costs. Sales mix remains constant. The behavior of costs and revenues are linear within the relevant range.

All costs are variable costs.

Which of the following accounting equation is correct? Liabilities = Stockholder's Equity + Assets Stockholder's Equity = Assets + Liabilities Assets = Liabilities + Stockholder's Equity Assets = Liabilities - Stockholder's Equity

Assets = Liabilities + Stockholder's Equity

Which the following does NOT belong to Big-4 Accounting firm in 2022? EY PwC Deloitte BDO

BDO

The measures most often used in evaluating solvency--the current ratio, quick ratio, and amount of working capital are developed from amounts appearing in the: Statement of cash flows. Income statement. Statement of retained earnings. Balance sheet.

Balance sheet.

Which of the following is NOT a major certificate in accountacy? CIA (Certified Internal Auditor) CPA (Certified Public Accountant) CFS (Certified Fund Specialist) CMA (Certified Management Accountant)

CFS (Certified Fund Specialist)

Which of the following account does NOT belong to Income statement? Cash Revenue Cost of goods sold Salary expense

Cash

Quick assets include Cash, inventories and receivables Cash, marketable securities and receivables Cash, marketable securities and inventories Market securities, receivables and inventories.

Cash, marketable securities and receivables

Which of the followings is NOT a specialized field of accounting? Financial accounting & reporting Corporate Finance Auditing & attestation Management accounting & control

Corporate Finance

The debt ratio is used primarily as a measure of: Short-term liquidity. Profitability. ROA Creditors' long-term risk.

Creditors' long-term risk.

Which of the following is not a measure of short-term liquidity? Debt ratio. Quick ratio. Current ratio. Working capital.

Debt ratio

Which of the following is a measure of long-term credit risk? Gross profit ratio Debt ratio. Price/Earning ratio Current ratio.

Debt ratio.

Which of the following activities does NOT belong to Statement of Cashflow? Cash flow from financing activities Cash flow from operating activities Discounted Cash flow Activities Cash flow from investing activities

Discounted Cash flow Activities

Which one of the followings is the main body of organization setting accounting standards (GAAP) in the U.S.? Financial Accounting Standard Board (FASB) International Accounting Standard Board (IASB) PCAOB (Public Company Accounting Oversight Board) Cost Accounting Standard Board (CASB)

Financial Accounting Standard Board (FASB)

The current ratio will be _______________ the quick ratio. Less than. Always different than. Greater than or equal to. The same as.

Greater than or equal to.

Which of the following account does NOT belong to Liability? Bonds payable Pension obligations Interest expenses Salaries payable

Interest expenses

Which of the followings does NOT belong to 3 major forms of business organizations? Corporation Sole proprietorship LLC (Limited Liability Corporation) Partnership

LLC (Limited Liability Corporation)

Accounting is known as; Debits and credits Language of Business Monkey Business Financial statement

Language of Business

Which of the followings is NOT one of 10 Rules of success according to Elon Musk? Overcome critics Work like Hell Love what you're doing Attract Great People

Love what you're doing

Who is inventor (father) of 'modern' accounting systems? Luca Pacioli Leonardo Davinci Ancient Chinese Ancient Egyptian

Luca Pacioli

Which of the following account does NOT belong to Assets? Inventory Equipment Note Payable Account receivables

Note Payable

Current assets are those assets that can be converted into cash within: Management's discretion. One year or the operating cycle, whichever is longer. One year and never longer. One year or the operating cycle, whichever is shorter.

One year or the operating cycle, whichever is longer.

Which of the following is true about the assumptions underlying basic CVP analysis? Selling price, variable cost per unit, fixed cost per unit, and total fixed costs are known and constant. Only selling price, variable cost per unit, and total fixed costs are known and constant. Only selling price and variable cost per unit are known and constant. Selling price varies with demand and supply of the product.

Only selling price, variable cost per unit, and total fixed costs are known and constant.

All of the following ratios are considered measures of profitability except: Earnings per share Return on assets Price earnings ratio Gross profit rate

Price earnings ratio

Which of the following differentiates job costing from process costing? Process costing is used when each unit of output is identical, and job costing deals with unique products not produced in batches. Job costing is used when each unit of output is identical, and process costing deals with unique products. Job costing is used when each unit of output is identical and not produced in batches, and process costing deals with unique products produced on large scale. Job costing is used by manufacturing industries, and process costing is used by service industries.

Process costing is used when each unit of output is identical, and job costing deals with unique products not produced in batches.

Which of the following does NOT belong to Balance sheet? Assets Stockholder's equities Profit or Loss Liabilities

Profit or Loss

On common size income statements, each component in the income statement is represented as a percentage of: Net income. Sales. Profit. Total assets.

Sales.

Which of the followings is NOT considered as objectives of Cost Management/Managerial Accounting? Systematically reduce costs Improve quality product and service Significantly increase assets Provide information for decisions to support business strategies

Significantly increase assets

Which of the following does NOT belong to a primary financial statement? Statement of cashflow Statement of Bank Reconciliation Balance sheet Income Statement

Statement of Bank Reconciliation

Balance sheet is also known as; Statement of financial positions Statement of Cashflow Results of operations Profit and loss statement

Statement of financial positions

Which of the following is NOT known as income statement? Results of operations Statement retained earnings Profit and loss statement Statement of operations

Statement retained earnings

Which is the true statement? The Contribution Margin income statement is prepared for both internal and external use. In a Contribution Margin income statement, costs and expenses are classified only by function. The Contribution Margin income statement shows contribution margin instead of gross profit. In a traditional income statement, costs and expenses are classified as either variable or fixed.

The Contribution Margin income statement shows contribution margin instead of gross profit.

The measurement that best reflects investors' expectations about future earnings is: Return on equity. The price/earnings ratio. Return on assets. Earnings per share.

The price/earnings ratio.

Which of the following is true of cost-volume-profit analysis? The theory states that total variable costs remain the same over a relevant range. The theory assumes that units manufactured equal units sold. The theory assumes that all costs are variable. The theory states that total costs remain the same over the relevant range.

The theory assumes that units manufactured equal units sold.

Comparative financial statements compare the company's current statements with: Those of other companies in the same industry. Those of the company's principal competitor. The budgeted level of performance for the period. Those of prior periods.

Those of prior periods.

The term classified financial statements refers: To financial statements prepared for use by management, but not for distribution outside of the organization. To the financial statements of all companies working on government projects. To financial statements in which items with certain characteristics are placed together in a group in an effort to develop useful subtotals. Only to the financial statements of defense contractors working on secret projects.

To financial statements in which items with certain characteristics are placed together in a group in an effort to develop useful subtotals.

The debt ratio indicates the percentage of: Revenue consumed by interest expense. Total assets financed by creditors. Total liabilities classified as current. Total assets financed by long-term mortgages.

Total assets financed by creditors.

Which one of the following is Shim's Favorite Quote? The More the Better Without a Big Dream No need to do Hard-work, Without Hard-work, No need to Dream Stay hungry, Stay foolish! Love what you're doing

Without a Big Dream No need to do Hard-work, Without Hard-work, No need to Dream

Which of the following is NOT a strategy to survive and succeed Shim's Class? Practice, Practice & Practice Work Like Hell Show Up On time Listen & Participate

Work Like Hell

Job-costing is likely to be used by: advertising agencies breakfast cereal producers oil refining companies mortgage payment processors

advertising agencies

Which of the following companies will use a process costing system? an oil refining company a manufacturer of ships an advertising firm a custom kitchen cabinet company

an oil refining company

The formula for the plantwide overhead cost rate is: actual annual manufacturing overhead costs divided by budgeted annual quantity of cost-allocation base budgeted annual manufacturing overhead divided by actual quantity of cost-allocation base budgeted annual manufacturing overhead costs divided by budgeted annual quantity of cost-allocation base actual annual manufacturing overhead costs divided by actual annual quantity of cost-allocation base

budgeted annual manufacturing overhead costs divided by budgeted annual quantity of cost-allocation base

The break-even point in units is computed by dividing fixed costs by the contribution margin per unit. unit selling price. total contribution margin contribution margin ratio.

contribution margin per unit.

Cost management and Managerial Accounting: focuses on the organization as a whole, rather than on the organization's segments. Should follow US GAAP (Generally Accepted Accounting Principles) is required by regulatory bodies such as the SEC. has its primary emphasis on the future and concerns about relevancy and usefulness

has its primary emphasis on the future and concerns about relevancy and usefulness

The cost of fire insurance for a manufacturing plant is generally considered to be a: variable cost. product cost. period cost. direct cost.

product cost.

The breakeven point is the activity level where ________. revenues equal variable costs revenues equal the sum of variable and fixed costs revenues equal fixed costs contribution margin equals total costs

revenues equal the sum of variable and fixed costs

Contribution margin equals ________. revenues minus variable costs revenues minus product costs revenues minus fixed costs revenues minus period costs

revenues minus variable costs

Which of the following products would be "costed" using a job costing system? boxes of Kellogg's' corn flakes hundreds of boxes of Expo Dry Erase Markers (low odor) dozens of donuts to be sold in a local coffee shop franchise the restoration of 15 various antique Ford Motor cars

the restoration of 15 various antique Ford Motor cars

The breakeven point decreases if ________. the selling price per unit decreases the variable cost per unit increases the contribution margin per unit decreases the total fixed costs decrease

the total fixed costs decrease

Managers use cost-volume-profit (CVP) analysis to ________. estimate the risks associated with a given job forecast the cost of capital for a given period of time to study the behavior of and relationship among the elements such as total revenues, total costs, and income analyse a firm's profitability and help to decide wealth distribution among its stakeholders

to study the behavior of and relationship among the elements such as total revenues, total costs, and income

Job costing is: used by businesses to price unique products for different jobs used to calculate equivalent units used to calculate the percentage of work completed used by businesses to price identical products

used by businesses to price unique products for different jobs

Within the relevant range, the difference between variable costs and fixed costs is: variable costs per unit fluctuate and fixed costs per unit remain constant. both total variable costs and total fixed costs fluctuate both total variable costs and total fixed costs are constant. variable costs per unit are constant and fixed costs per unit fluctuate.

variable costs per unit are constant and fixed costs per unit fluctuate.

Contribution margin is the amount remaining after: fixed expenses have been deducted from variable expenses. variable expenses have been deducted from sales revenue. cost of goods sold has been deducted from sales revenues. fixed expenses have been deducted from sales revenue.

variable expenses have been deducted from sales revenue.