acg exam 1

Wilson and Sons, Incorporated presently leases a copy machine under an agreement that calls for a fixed fee each month and a charge for each copy made. Wilson made 6,000 copies and paid a total of $390 in March; in May, the firm paid $300 for 4,000 copies. The company uses the high-low method to analyze costs.

$0.045

The accounting records of Dixon Company revealed the following costs: direct materials used, $260,000; direct labor, $435,000; manufacturing overhead, $376,000; and selling and administrative expenses, $220,000. Dixon's product costs total:

$1,071,000

Cherrywood's Bakery sells three large muffins for every 2 small muffins sold. A small muffin sells for $3.00, with a variable cost of $2.00. A large muffin sells for $5.00, with a variable cost of $2.50. What is the weighted-average contribution margin? (Round intermediate calculations to one decimal place.)

$1.90 per muffin

Beginning in July, Harrison Industries had finished-goods inventory of $54,000. The finished-goods inventory at the end of July was $70,000 and the cost of goods sold during the month was $131,000. The cost of goods manufactured during July was:

$147,000

Blackwood Industries sells a single product for $60 that has a variable cost of $45. Fixed costs amount to $10 per unit when anticipated sales targets are met. If the company sells one unit in excess of its break-even volume, profit will be:

$15

The accounting records of Comacho Company revealed the following costs, among others: Factory insurance$ 39,000Raw material used262,000Customer entertainment18,000Indirect labor52,000Depreciation on salespersons' cars29,000Production equipment rental costs78,000 Costs that would be considered in the calculation of manufacturing overhead total:

$169,000

Guaranteed Appliance Company produces washers and dryers in an assembly-line process. Recnt labor costs included the following: corporate executives, $575,000; assembly-line workers, $197,000; security guards, $57,000; and plant supervisor, $147,000. The total of Guaranteed's direct labor cost was:

$197,000

A recent income statement of Carson Corporation reported the following data: Sales revenue$ 2,500,000Variable costs1,500,000Fixed costs800,000 If the data above are based on the sale of 5,000 units, the break-even sales would be:

$2,000,000

Simpson Repair projects variable labor costs of $21,500 in March when 8,600 units are produced. What is the expected labor cost in April if production is expected to drop to 8,000 units?

$20,000

Total costs are $210,000 when 16,000 units are produced; of this amount, variable costs are $74,000. What are the total costs when 21,000 units are produced?

$233,125

Mayfly LLC's accounting records noted the following costs: Sales commissions, $60,000; plant supervision, $210,000; and administrative expenses, $182,000. Mayfly's period costs total:

$242,000

Shum Manufacturing, which uses the high-low method, makes a product called Jpop. The company incurs three different cost types (A, B, and C) and has a relevant range of operation between 2,500 units and 10,000 units per month. Per-unit costs at two different activity levels for each cost type are presented below. Type AType BType CTotal5,000units$ 8$ 21$ 8$ 377,500units814729 If Shum produces 10,000 units, the total cost would be:

$250,000

The fixed costs per unit are $24 when a company produces 24,000 units of product. What are the fixed costs per unit when 20,000 units are produced?

$28.80

Northern Cuisine sells hot plates for $40 each. Monthly fixed costs were $5,000 and a contribution-margin ratio of 20%. Based on this information, what is the variable cost per hot pot?

$32

You have been asked to work an extra day and will receive $150. However, you already bought a discounted ticket to a theme park for $37 and figure that you will spend an additional $50 at the park. What is the sunk cost if you decide to work?

$37

Ahmed & Company makes and sells two types of shoes, Plain and Fancy. Data concerning these products are as follows: PlainFancyUnit selling price$ 20.00$ 30.00Variable cost per unit12.0029.00 Sixty percent of the unit sales are Plain, and annual fixed expenses are $39,000. The weighted-average unit contribution margin is:

$5.20

Barkoff Enterprises, which uses the high-low method to analyze cost behavior, has determined that machine hours best explain the company's utilities cost. The company's relevant range of activity varies from a low of 600 machine hours to a high of 1,100 machine hours, with the following data being available for the first six months of the year: MonthUtilitiesMachine HoursJanuary$ 8,700800February8,360720March8,950810April9,360920May9,625950June9,150900 The variable utilities cost per machine hour for Barkoff is:

$5.50

Magic Corporation sells three products: R, S, and T. Budgeted information for the upcoming accounting period follows. ProductSales Volume (Units)Selling PriceVariable CostR17,500$ 18$ 10S13,500147T54,0001510 The company's weighted-average unit contribution margin is:

$5.94

The accounting records of Falcon Company revealed the following information: Raw materials used$ 69,000Direct labor134,000Manufacturing overhead369,000Work-in-process inventory, 1/159,000Finished-goods inventory, 1/1198,000Work-in-process inventory, 12/3185,000Finished-goods inventory, 12/31149,000 Falcon's cost of goods manufactured is:

$546,000

Olsen Industries has the following information about maintenance costs in the past six months. MonthMachine HoursAmountJanuary200$ 2,800February3503,000March4504,000April5005,000May6005,200June5805,800 If the company uses the high-low method to analyze costs, Olsen's variable cost is:

$6.00

The accounting records of Upton Company revealed the following information: Cost of goods manufactured$ 754,000Work-in-process inventory, 1/158,000Finished-goods inventory, 1/1125,000Work-in-process inventory, 12/3149,000Finished-goods inventory, 12/31158,000 Upton's cost of goods sold is:

$721,000

Wilson and Sons, Incorporated presently leases a copy machine under an agreement that calls for a fixed fee each month and a charge for each copy made. Wilson made 10,000 copies and paid a total of $810 in March; in May, the firm paid $680 for 8,000 copies. The company uses the high-low method to analyze costs. How much would Wilson pay if it made 9,500 copies?

$777.50

Mann's budget for the upcoming year revealed the following figures: Sales revenue$ 920,000Contribution margin512,000Income62,000 If the company's break-even sales total $822,000, Mann's safety margin would be:

$98,000

At a volume level of 570,000 units, Cardinal Company reported the following information: Sales price $67 Variable cost per unit 21 Fixed cost per unit 3 The company's contribution-margin ratio is closest to:

0.69

Watson Corporation has the following sales mix for its three products: A, 20%; B, 35%; and C, 45%. Fixed costs total $530,000 and the weighted-average contribution margin is $100. How many units of product A must be sold to break-even?

1060

Your brother is trying to sell his bicycle for $200. He refuses to lose more than $50 on the sale because it originally cost him $229 when he purchased it two years ago. Which of the following would be his sunk cost?

229

Northern Glass Company sells glass vases at a wholesale price of $2.50 per unit, variable cost is $1.75 per unit, and monthly fixed costs are $7,500. If current sales are 25,000 units per month, and Northern wants to increase operating income by 20%, how many additional units should be sold (to the nearest unit)?

3,000 vases

The following information relates to Parthenon Company: Sales revenue$ 17,500,000Contribution margin6,440,000Net Income1,120,000 If a manager at Parthenon wanted to determine the percentage impact on income of a given percentage change in sales, the manager would multiply the percentage increase/decrease in sales revenue by:

5.75

The following information relates to Chester Company: Sales revenue$ 17,610,000Contribution margin6,510,000Net Income930,000 Chester's operating leverage factor is closest to:

7.000

A recent income statement of Olsen Corporation reported the following data: Units sold7,400Sales revenue$ 8,880,000Variable costs5,550,000Fixed costs2,670,000 If the company desired to earn a target profit of $930,000, it would have to sell:

8,000 units

A staff assistant at Worthtington Corporation recently determined that the first five units completed in a new manufacturing process took 2,375 hours to complete, or an average of 475 hours per unit. The assistant also found that when the cumulative output produced doubles, the average labor time declines by 20%. How many total hours would Worthington use if it produces a cumulative amount of 40 units?

9728

Which of the following would produce the largest increase in the contribution margin per unit?

A 8% increase in selling price

Rent on a factory building would be considered to be:

A product cost

Tyson Company has an operating leverage factor of 5. Which of the following statements is true?

An 8% change in sales revenue should result in a 40% change in income

When determining the cost of a manufactured product, a factory janitor's wages would be classified as:

An Indirect Cost

When determining the cost of a manufactured product, the cost of lighting the factory would be classified as:

An indirect cost

Where would period costs be found on the financial statements?

As operating expenses on the income statement in the period incurred

Which of the following does not typically appear on an income statement prepared by using a traditional format?

Contribution Margin

Which of the following would occur if a company increased its variable cost per unit?

Contribution margin decreases, break-even point increases

Which of the following occurs if a company was able to reduce its variable cost per unit?

Contribution margin increases, break-even point decreases

Which of the following calculations can be used to measure a company's degree of operating leverage?

Contribution margin ÷ income

Which role is normally involved with preparing financial statements?

Controller

The contribution income statement differs from the traditional income statement in which of the following ways?

Cost-volume-profit relationships can be analyzed more easily from the contribution income statement

Which of the following is not an ethical standard of managerial accounting?

Efficiency

Which of the following does not typically appear on a contribution income statement?

Gross margin

Which of the following are classified as manufacturing overhead?

Indirect labor and indirect materials

Westham Industries is studying the profitability of a change in operation and has gathered the following information: Current Operation Anticipated Operation Fixed costs $39,000$ 53,000 Selling price $15 $27Variable costs $10 $18 Sales (units)9,500 6,000 Should Westham Industries make the change?

No, because the company will be worse off by $7,500

Manufacturing overhead includes all of the following except:

Research and development expenses

Which of the following costs should be ignored when choosing among alternatives?

Sunk Cost

If a company experiences an increase in its fixed costs, which of the following would occur?

The break-even point would increase

Grandma Gifts had the following costs in March when 400 ceramic statues were produced: materials, $4,200; labor cost, $1,600; depreciation, $800; rent, $700; and other fixed costs, $500. Which one of the following is the correct cost?

The variable cost per unit is $14.50

Which of the following is not an element of competency?

To refrain from engaging in an activity that would discredit the accounting profession

Cost structures differ widely among industries and among firms within an industry.

True

Which of the following is an example of overhead in a factory?

Wages of factory maintenance personnel

A 25% increase in production volume will result in:

a 25% increase in total variable costs.

Period costs are:

always recorded as an expense.

Break-even for a multiple product firm ________.

can be calculated by dividing total fixed costs by the contribution margin of a composite unit

All other things being equal, a company that sells multiple products should attempt to structure its sales mix, so the greatest portion of the mix is composed of those products with the highest:

contribution margin

The amount of a unit's sales price that helps to cover fixed expenses is its ________

contribution margin

When sales price decreases and all other variables are held constant, the break-even point will ________

increase

When variable costs increase and all other variables remain unchanged, the break-even point will ________.

increase

All of the following entities would have a need for managerial accounting information except:

none of these responses is correct, as all of these entities would use managerial accounting information.

The salary that is sacrificed by a college student who pursues a degree full time is a(n):

opportunity cost

Fixed costs are costs that:

remain constant as activity changes

As activity decreases, unit variable cost

remains constant.

Operating leverage predicts the effects fixed costs have on changes in operating income when:

sales volume charges

If a company desires to increase its safety margin, it should:

stimulate sales volume.

The relevant range is defined as:

the range of activity in which management of a company expects to operate.

Grandma Gifts had the following costs in March when 400 ceramic statues were produced: materials, $4,200; labor cost, $1,600; depreciation, $800; rent, $700; and other fixed costs, $500. Which of the following costs will stay the same assuming that production changes to 500 units and production still remains within the relevant range?

variable cost per unit