Managerial Accounting
RBC sells racing bikes for $500 each. The variable cost per bike is $300 and the fixed cost per month is $80,000. In June 2021, RBC sold 500 bikes. What was RBC's net operating income for the month?
$20,000
Which of the following statements about opportunity costs is not correct? -An opportunity cost is the potential benefit that is given up when one alternative is selected over another. -An opportunity cost cannot be changed by any decision made now or in the future. -Opportunity costs are not usually found in accounting records. -Opportunity costs are costs that must be explicitly considered in every decision a manager makes.
An opportunity cost cannot be changed by any decision made now or in the future
Wollogong Group Limited of New South Wales, Australia, acquired its factory building 10 years ago. For several years, the company has rented out a small annex attached to the rear of the building for $30,000 per year. The renter's lease will expire soon, and rather than renewing the lease, the company has decided to use the annex to manufacture a new product. The cost of shipping the new product to customers will be $9 per unit. The shipping cost is
A variable period cost
Manufacturing costs include all of the following categories except ________.
administrative costs
If a firm increases its activity level, ________.
some costs will change, other costs will remain the same
In the equation, Y = a + bX, X represents ________.
the level of activity
Atlas Corporation sells 100 bicycles during a month. The contribution margin per bicycle is $200. The monthly fixed expenses are $8,000. What is the profit from the sale of 100 bicycles?
$12,000
For the month of October, Janus Corporation used $30,000 worth of direct materials in production and incurred direct labor costs of $60,000. Actual manufacturing overhead costs were $40,000, whereas $45,000 was the manufacturing overhead applied to work in process. What is the amount of total manufacturing costs added to production that would appear in the Schedule of Cost of Goods Manufactured for October?
$135,000
The management of Blue Ocean Company estimates that 50,000 machine-hours will be required to support the production planned for the year. It also estimates $300,000 of total fixed manufacturing overhead cost for the coming year and $4 of variable manufacturing overhead cost per machine-hour. What is the predetermined overhead rate?
$10
Which of the following occurs when manufacturing overhead is applied to Work in Process?
Credit to Manufacturing Overhead
Which of the following best describes the journal entry to record the use of direct and indirect labor in production?
Debit Work in Process, debit Manufacturing Overhead, and credit Salaries and Wages Payable
Which of the following occurs when finished jobs are shipped to customers?
Debit to Cost of Goods Sold
Which of the following is true of the contribution approach? -It is mainly used for external reporting purposes. -It separates costs into fixed and variable categories. -It is not useful for merchandising companies. -It calculates gross margin by deducting cost of goods sold from sales.
It separates costs into fixed and variable categories
When all of a company's job cost sheets are viewed collectively they form what is known as a ________.
subsidiary ledger
In the cost formula (Y = a + bX) that is used to estimate the total manufacturing overhead cost for a given period, the letter "a" refers to the estimated ________.
total fixed manufacturing overhead cost
Break-even point is the level of sales at which ______.
total revenue equals total costs
Spartan Corporation estimates that it will incur $200,000 of total manufacturing overhead cost at an estimated activity level of 10,000 direct labor-hours. What is the amount of manufacturing overhead that would be applied to a job that required 200 direct labor-hours?
$4,000
Davidson Company has sales of $100,000, variable cost of goods sold of $40,000, variable selling expenses of $15,000, variable administrative expenses of $5,000, fixed selling expenses of $7,000, and fixed administrative expenses of $9,000. What is Davidson's contribution margin?
$40,000
Cyber Devices manufactures PCTV products that enable people to watch television content on their computers. It sells its product to retailers for $50. A tuner component that goes into each of these devices costs $5 to acquire. The total variable cost at an activity level of 1,000 units equals ________.
$5,000
Wollogong Group Limited of New South Wales, Australia, acquired its factory building 10 years ago. For several years, the company has rented out a small annex attached to the rear of the building for $30,000 per year. The renter's lease will expire soon, and rather than renewing the lease, the company has decided to use the annex to manufacture a new product. The rental revenue forgone is
An opportunity cost
If sales revenue is $100, the contribution margin ratio is 60%, and the fixed expenses are $30. Which of the following is true? A. The profit is $30. B. The variable expenses are $40. C. The contribution margin is $60. D. All of the above.
D. All of the above.
Recall that profit = sales revenue - variable expenses - fixed expenses. If contribution margin = sales revenue - variable expenses, unit price = P, unit variable expenses =V, Q = units sold, and CM = contribution margin, then which of the following formula is correct? A. Profit = contribution margin - fixed expenses B. Profit = (P - V) × Q - Fixed expenses C. Profit = unit CM × Q - Fixed expenses D. All of the above.
D. All of the above.
Which of the following is a key assumption of CVP analysis? A. Selling price is constant. B. Costs are linear. C. In manufacturing companies, the level of inventories does not change. D. All of the above.
D. All of the above.
Which of the following best describes the journal entry to record the withdrawal of raw materials from the storeroom for use as direct and indirect materials in production?
Debit Work in Process, debit Manufacturing Overhead, and credit Raw Materials
Which of the following statements about manufacturing overhead costs is not correct?
Depreciation on factory equipment is recorded with a debit to Depreciation Expense
In a job-order costing system, cost of goods manufactured is usually recorded as a debit to
Finished Goods
In a job-order costing system, indirect labor cost is usually recorded as a debit to
Manufacturing Overhead
Which of the following is always an irrelevant cost? -Differential cost -Sunk cost -Opportunity cost
Sunk cost
A grocery store sells a pound of red delicious apples for $1.50, the variable expenses of selling a pound of apple are $1, and the fixed expenses per month are $300. If the break-even point of selling apples is reached when 600 pounds of apples are sold, which of the following is true?
The profit of selling 610 pounds of apples is $5.
A grocery store sells a pound of red delicious apples for $1.50, the variable expenses of selling a pound of apple are $1, and the fixed expenses per month are $300. Which of the following is NOT true?
The sum of the contribution margin ratio and the variable expense ratio is more than 100%.
When activity increases within the relevant range, the average fixed manufacturing cost per unit will decrease.
True
When activity increases within the relevant range, the total mixed manufacturing cost will increase.
True
When activity increases within the relevant range, the variable manufacturing cost per unit will remain the same.
True
What is the term used when a company applies less overhead to production than it actually incurs?
Underapplied
A ___________ is a cost that is incurred to support a number of cost objects but cannot be traced to them individually.
common cost
Materials that become an integral part of the finished product and whose costs can be conveniently traced to the finished product are called ________.
direct materials
When companies incur selling and administrative costs, those costs ________.
do not flow through the three inventory accounts
Adventure Holiday sells thousands of tour packages each month through its various branches. A branch manager's salary would be a(n) _________ of selling a tour package.
indirect cost
Once the break-even point has been reached, net operating income will increase by the amount of the _____ for each additional unit sold.
unit contribution margin
Which of the following occurs when a job has been completed and transferred to the finished goods warehouse?
Credit to Work in Process
The traditional income statement uses which of the following cost categories?
Cost of goods sold and selling and administrative expenses
Adjusting cost of goods sold for overapplied manufacturing overhead will decrease net operating income.
False
When activity increases within the relevant range, the average mixed manufacturing cost per unit will increase.
False
When activity increases within the relevant range, the total fixed manufacturing cost will increase.
False
When activity increases within the relevant range, the total variable manufacturing cost will decrease.
False
ABC Inc, a manufacturing company, has provided the following data for the month of August. The balance in the Work in Process inventory account was $32,000 at the beginning of the month and $22,000 at the end of the month. During the month, the company incurred direct materials cost of $57,000 and direct labor cost of $31,000. The actual manufacturing overhead cost incurred was $54,000. The manufacturing overhead cost applied to Work in Process was $53,000. The cost of goods manufactured for August was:
$151,000
Wilson Products uses a plantwide predetermined overhead rate of $10 per direct labor-hour. Direct material and direct labor associated with Job X23 are $4,000 and $1,200, respectively. If Job X23 used 100 direct labor-hours to produce 50 audio controllers, what is this job's unit product cost (per audio controller)?
$124
In a small manufacturing facility, one welder is needed for every 200 hours of machine-hours or fewer in a month. The welder is paid a monthly salary of $2,500. If the total monthly requirement is 1,300 machine-hours, the total salaried employee expense is ________.
$17,500
ABC Inc uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 22,000 hours and the total estimated manufacturing overhead was $550,000. At the end of the year, actual direct labor-hours for the year were 20,000 hours and the actual manufacturing overhead for the year was $520,000. Overhead at the end of the year was:
$20,000 underapplied
Atlas Corporation sells 100 bicycles during a month at a price of $500 per unit. The variable expenses amount to $300 per bicycle. How much does profit increase if it sells one more bicycle?
$200
Audio Corporation purchased $20,000 of DVDs during the current year. The company had DVD inventory of $15,000 at the beginning of the year. An end of the year audit revealed that the company had DVD inventory of $10,000. The amount that would be reported as cost of goods sold in the income statement for the current year is ________.
$25,000
Future Corporation has a single product; the product selling price is $100 and variable costs are $60. The company's fixed expenses are $10,000. What is the company's break-even point in sales dollars?
$25,000
Wilson Products uses a plantwide predetermined overhead rate of $10 per direct labor-hour. Direct material and direct labor associated with Job X23 are $4,000 and $1,200, respectively. If Job X23 used 100 direct labor-hours, what is the total cost assigned to this job?
$6,200
Frank Corporation has a single product. Its selling price is $80 and the variable costs are $30. The company's fixed expenses are $5,000. What is the company's break-even point in unit sales?
100 units
RBC sells racing bikes for $500 each. The variable cost per bike is $300 and the fixed cost per month is $80,000. How many bikes RBC has to sell each month so that it does not lose money?
400 bikes
Wollogong Group Limited of New South Wales, Australia, acquired its factory building 10 years ago. For several years, the company has rented out a small annex attached to the rear of the building for $30,000 per year. The renter's lease will expire soon, and rather than renewing the lease, the company has decided to use the annex to manufacture a new product. To have a place to store its finished goods, the company will rent a small warehouse for $500 per month. The rental cost of warehouse is
A fixed period cost
Wollogong Group Limited of New South Wales, Australia, acquired its factory building 10 years ago. For several years, the company has rented out a small annex attached to the rear of the building for $30,000 per year. The renter's lease will expire soon, and rather than renewing the lease, the company has decided to use the annex to manufacture a new product. The company must rent equipment for $4,000 per month to produce the new product. The rental cost of equipment is
A fixed product cost
Wollogong Group Limited of New South Wales, Australia, acquired its factory building 10 years ago. For several years, the company has rented out a small annex attached to the rear of the building for $30,000 per year. The renter's lease will expire soon, and rather than renewing the lease, the company has decided to use the annex to manufacture a new product. As in prior years, the space in the annex will continue to be depreciated at $8,000 per year. The depreciation of the annex space is
A sunk cost
Wollogong Group Limited of New South Wales, Australia, acquired its factory building 10 years ago. For several years, the company has rented out a small annex attached to the rear of the building for $30,000 per year. The renter's lease will expire soon, and rather than renewing the lease, the company has decided to use the annex to manufacture a new product. Electricity for operating machines will be $1.20 per unit. The electricity for machines is
A variable manufacturing overhead cost
Wollogong Group Limited of New South Wales, Australia, acquired its factory building 10 years ago. For several years, the company has rented out a small annex attached to the rear of the building for $30,000 per year. The renter's lease will expire soon, and rather than renewing the lease, the company has decided to use the annex to manufacture a new product. Direct materials cost for the new product will total $80 per unit. The direct materials cost is
A variable product cost
The direct materials required to manufacture each unit of product are listed on a ________.
bill of materials
A normal cost system applies overhead to jobs ________.
by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job
The adjustment for overapplied overhead ________.
decreases cost of goods sold and increases net operating income.
Adventure Holiday sells thousands of tour packages each month through its various branches. A branch manager's salary would be a(n) _________ of the branch.
direct cost
Which of the following is common to both prime cost and conversion cost?
direct labor
________ is sometimes called "touch labor."
direct labor
Items such as indirect materials, indirect labor, maintenance and repairs on production equipment, depreciation, and insurance on manufacturing facilities are included in ________.
manufacturing overhead costs
The ________ requires that the costs incurred to generate a particular revenue should be recognized as expenses in the same period that the revenue is recognized.
matching principle
Companies can improve job cost accuracy by using ________.
multiple predetermined overhead rates
Property taxes associated with a company's administrative facility are considered ________.
nonmanufacturing costs
The measure of how sensitive net operating income is to a given percentage change in volume sales is called _______.
operating leverage
How should the wages of a sheet metal worker in a fabrication plant be classified?
product cost
Differential costs are always ________.
relevant in making business decisions
A fixed cost is a cost which ________.
remains constant in total with changes in the level of activity
All of the following are product costs except ________.
sales commissions
Contribution margin equals ________.
sales minus variable cost