ACC121 Test 2

Freshmart, Incorporated, began operations last year when it produced and sold the same number of units. This year, the company produced 1,000 units and sold 750 units at a selling price of $100 per unit. Fixed overhead costs totaled $30,000 and fixed selling and administrative expenses were $15,000. Variable production costs were $25.00 per unit while variable selling and administrative expenses were $10.00 per unit. Using absorption costing, income was

$11250

Delta Company sells mini-flash drives. The selling price is $10 each and the variable costs are $8. If fixed costs are $3,000, how much in sales dollars must Delta have to break even?

$15000

The cost of the beginning work in process inventory was comprised of $3,000 of direct materials, $10,000 of direct labor, and $10,000 of factory overhead. Costs incurred during the period were comprised of $15,000 of direct materials costs, and $100,000 of conversion costs. The equivalent units of production (EUP) for the period were 9,000 for direct materials and 6,000 for conversion. The costs per EUP were

$2.00 per EUP for direct materials and $20.00 per EUP for conversion

Freshmart, Incorporated, began operations this year. The company produced 1,000 units and sold 1,000 units at a selling price of $100 per unit. Fixed overhead costs totaled $30,000 and fixed selling and administrative expenses were $15,000. Variable production costs were $25.00 per unit while variable selling and administrative expenses were $10.00 per unit. Using absorption costing, income was

$20,000

Jelly Company has a product that sells for $150 per unit and has variable costs of $60 per unit. What is the contribution margin per unit?

$90

If the selling price per unit can be increased, what will be the effect on the break-even point?

The break-even point will decrease.

Line that starts at zero on the vertical axis with a slope based on the selling price per unit

Total Sales

Regression is a statistical method for identifying _____ behavior

cost

Cost-volume-profit analysis is used to predict how changes in _____ levels affect profit.

cost and sales

Hat Company sells two types of hats: knit hats with a selling price of $15 and variable costs of $5, and hard hats with a selling price of $25 and variable costs of $10. Knit hats comprise 80% of all sales. If fixed costs are $22,000, what is the break even point in units? multiple choice

$2000

CompuTop Company sells toy laptop computers for $30 each. If the variable cost for each laptop is $20 and fixed costs total $25,000, how much sales in dollars must it sell to generate a target income of $66,667?

$275,276

A company expects to sell 1,000 units of their product at $20 each. Their variable costs are $5 each and fixed costs are $10,000. What is their expected income?

$5000

The journal entry to record the use of utilities in a factory includes which of the following?

-Debit to Factory Overhead -Credit to Factory Utilities Payable

The journal entry to transfer completed products from production to finished goods inventory includes which two of the following?

-Debit to Finished Goods Inventory -Credit to Work in Process Inventory

The journal entry to purchase materials on credit for factory use includes which of the following?

-Debit to Raw Materials Inventory -Credit to Accounts Payable

The journal entry to assign costs of direct labor used in production includes which two of the following?

-Debit to Work in Process Inventory -Credit to Factory Wages Payable

Fireplace Service company provides fireplace cleaning services and has variable costs of $100 per fireplace cleaning and revenue of $250. Their contribution margin is $

150

During the period, the Mixing Department completed 500 units and transferred them out to the Baking Department. At the end of the period, there were 4,000 units that are 40% complete as to direct materials in the Mixing Department. The equivalent units of production for direct materials equal:

2100

If sales are $1,000,000 and contribution margin is $250,000, the contribution margin ratio is _____%.

25

A company sells three products: Product A, Product B, and Product C. Usually it sells 5,000 units of Product A; 6,000 units of Product B; and 8,000 units of Product C. What is the sales mix for Products A, B and C, respectively?

26.3%, 31.6%, 42.1%

Company A operates at a sales level of 1,200 units with a contribution margin of $30 per unit. Its income is $12,000. What is the company's degree of operating leverage?

3

Remote Company has expected sales of 55,000 units and break-even sales of 50,000 units. If fixed costs are $75,000, what is the margin of safety?

9%

CompuTop Company sells toy laptop computers for $30 each. If the variable cost for each laptop is $20 and fixed costs total $25,000, how many laptops must CompuTop sell to generate a target income of $66,667?

9,167

Over the long run, the starting point for setting selling prices should be established by adding the target markup to the _________ cost per unit.

Absorption

When manager bonuses are tied to income computed under ___________ costing, these managers may be tempted (even enticed) to increase production, since doing so will increase income and their bonuses.

Absorption

An income statement prepared using the ___________ highlights the impact of each cost element for income and is also useful in aiding managers in pricing.

Absorption costing

Direct materials, direct labor, and overhead costs are commonly associated with which production system?

Both job order and process systems

What is the best rationale for why many companies use a hybrid costing system?

Companies are increasingly trying to standardize processes while attempting to meet individual customer needs

Companies can use _____ analysis to predict income based on various changes in fixed or variable costs, selling price and volume.

Cost-volume-profit

An income statement under absorption costing includes all of the following

Direct materials Direct labor Variable overhead Fixed overhead

A trend where inventory levels can be minimal and raw materials are not ordered or received until needed is called

Just-in-time Production

Which of the following methods to is the most accurate?

Regression - uses more data and is the most accurate. no Scatter diagram or High-low method

Which of the following is NOT an assumption in CVP analysis?

Sales mix is not constant.

Total salesselected answer correctLine that starts at the fixed cost level on the vertical axis and increases based on the slope of the variable cost per unit

Total Costs

Managers cannot increase income under ___________ costing by merely increasing production without increasing sales.

Variable

Fixed costs on a per unit basis _____ as production increases

decrease

Absorption cost per unit includes

direct materials, direct labor, and all overhead

variable cost per unit includes

direct materials, direct labor, and only variable overhead

The contribution margin ratio is computed as: Contribution margin _____ Sales.

divided by

A cost that does not change with changes in volume of activity is called a _____ cost

fixed

Cost-volume-profit analysis identifies and measures costs using their _____ components

fixed and variable

A special-order price that is less than fixed and variable costs, can be accepted if the special order price:

is greater than variable costs

When units sold are greater than units produced, income under absorption costing is

less than income under variable costing

A cost that behaves like a combination of fixed and variable costs is called a _____ cos

mixed

Under absorption costing, when ___________ units are produced than are sold, some of the fixed overhead is assigned to ending inventory on the balance sheet.

more

The mass production of similar products in a continuous flow of sequential processes is referred to as ________ operations.

process

When production is less than sales, the use of absorption costing:

produces a lower income than the use of variable costing

Raw materials which will be used as direct materials are initially included in

raw materials inventory.

A cost that has a step pattern when volume changes occur outside the relevant range of operations is called a _____ cost

step-wise

A scatter diagram is a graph of unit volume and cost data where each point reflects _____ produced

total costs and units

The total number of physical units to account for equals the:

total number of units accounted for

The break-even point is the sales level at which:

total sales equals total costs

A cost that changes in proportion to changes in the activity output volume is called a _____ cost

variable