accounting exam 2

variable costs are $70 per unit and fixed costs are $150,000. Sales are estimated to be 10,000 units. How much would absorption costing operating income differ between a plan to produce 10,000 units and 12,000 units?

$25,000 greater for 12,000 units FC/unit=(150,000/10,000)=$15 450,000/12,000=12.50 FC=(15.0-12.50)10,000=$25,000

sales were $75,000, the variable cost of goods sold was $400,000, the variable selling and administrative expenses were $90,000, and fixed costs were $200,000. The contribution margin was:

$260,000 750,000-(400,000+90,000)=260,000

new NI

(CM-change in CM)-all fixed costs

required sales

(FC+Target profit)/CMPU

if the unit selling price is $16, the unit variable cost is $12, and fixed costs are $160,000, what is the break-even sales (units)?

40,000 (160,000)/(16-12)=40,000

based on the data represented above, how many units of sales would be required to realize operating income of $20,000?

45,000 units ((160,000+20,000))/(16-12)=45,000 (FC+TP)/(P-VC)

2. if sales are $500,000, variable costs are $200,000, and fixed costs are $240,000, what is the contribution margin ratio?

60%

San madeo company had the following factory overhead costs Power $120,000 Indirect Labor $60,000 Equip. Dep. $500,000 The factory Budgeted to work 20,000 direct labor hours in the upcoming period. San Madeo uses a single plantwide factory overhead rate based on direct labor hours. What is the overhead cost per unit associated with Product M, if Product M uses 6 direct labor hours per unit in the factory?

A. b. c. $204 d. PMHOR=($680,000/20,000)=$34/DLH MOH(E)=$34*6=$204

contribution margin per unit

CM/units

BEP(q)

FC/CMPU

BEP($)

FC/CMR or BEP(q)*price

operating leverage

OL=CM/NI

Production Department 1 (PD1) and Production Department 2 (PD2) had factory overhead budgets of $26,000 and $48,000, respectively. Each department was budgeted for 5,000 direct labor hours of production activity. Product T required 5 direct labor hours in PD1 and 2 direct labor hours in PD2. What is the factory overhead cost associated with product T, assuming that factory overhead is allocated using the multiple production rate method?

a. b. c. $45.20 d. ($26,000)/(5,000)=$5.2 PMOHR ($48,000)/(5,000)=9.6 PMOHR (5.2*5)+(9.6*2)=$45.20

Which of the following activity bases would best be used to allocate setup activity to products?

a. b. c. d. number of production runs

The following activity rates are associated with moving rail cars by train: $4 per gross ton mile; $50 per rail car switch; $200 per rail car. A train with 20 rail cars traveled 100 miles. Each rail car carried 10 tons of product. Each rail car was switched two times. What is the total cost of moving this train?

a. b. $10,000 c. d.

which of the following statements is most correct?

a. b. activity-based costing can be used by management to determine accurate profitability for each product c. d.

which of the following describes variable costs?

a. b. costs that vary in total in direct proportion to changes in the level of activity c. d.

variable costing

everything but fixed manufacturing costs

during a year in which the number of units manufactured is less than the number of units sold, the operating income reported under the variable costing concept would be:

larger than the operating income reported under the absorption costing concept

during the year in which the number of units manufactured exceeded the number of units sold, the operating income reported under the absorption costing concept would be:

larger than the operating income reported under the variable costing concept

the beginning inventory consists of 6,000 units, all of which are sold during the period. The beginning inventory fixed costs are $20 per unit, and the variable costs per unit are $90 per unit. Assuming no ending inventory, what is the difference in operating income between variable and absorption costing?

variable costing operating income is $120,000 greater than under absorption costing 6,000*20=120,000