Accounting 202: Exam #2

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Fill in the missing amounts in each of the eight case situations below. Each case is independent of the others. (Hint: One way to find the missing amounts would be to prepare a contribution format-income statement for each case, enter the known data, and then compute the missing items.) a. Assume that only one product is being sold in each of the four following case situations: b. Assume that more than one product is being sold in each of the four following case situations: Case, Sales, Variable, Average CMR, Fixed, NOI (Loss): 1, $500,000, ?, 20%, ?, $7,000 2, $400,000, $260,000, ?, $100,000, ? 3, ?, ?, 60%, $130,000, $20,000 4, $600,000, $420,000, ?, ?, $(5,000)

1, $500,000, *$400,000*, 20%, *$93,000*, $7,000 2, $400,000, $260,000, *35%*, $100,000, *$40,000* 3, *$250,000*, *$100,000*, 60%, $130,000, $20,000 4, $600,000, $420,000, *30%*, *185,000*, $(5,000)

Fill in the missing amounts in each of the eight case situations below. Each case is independent of the others. (Hint: One way to find the missing amounts would be to prepare a contribution format-income statement for each case, enter the known data, and then compute the missing items.) a. Assume that only one product is being sold in each of the four following case situations: Case, Units Sold, Sales, Variable, CMPU, Fixed, NOI (Loss): 1, 15,000, $180,000, $120,000, ?, $50,000, ? 2, ?, $100,000, ?, $10, $32,000, $8,000 3, 10,000, ?, $70,000, $13, ?, $12,000 4, 6,000, $300,000, ?, ?, $100,000, $(10,000)

1, 15,000, $180,000, $120,000, *$4*, $50,000, *$10,000* 2, *4,000*, $100,000, *$60,000*, $10, $32,000, $8,000 3, 10,000, *$200,000*, $70,000, $13, *$118,000*, $12,000 4, 6,000, $300,000, *$210,000*, *$15*, $100,000, $(10,000)

Lindon Company is the exclusive distributor for an automotive product that sells for $40 per unit and has a CM ratio of 30%. The company's fixed expenses are 3180,000 per year. The company plans to sell 16,000 units this year. 1. What are the variable expenses per unit? 2. What is the break-even point in unit sales and in dollar sales? 3, What amount of unit sales and dollar sales is required to attain a target profit of $60,000 per year? 4. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $4 per unit. What is the company's new break-even point in unit sales and in dollar sales? What dollar sales is required to attain a target profit of $60,000?

1. $28 2. DOLLAR: $600,000 UNIT: 15,000 units 3. DOLLAR: $800,000 UNIT: 20,000 units 4. DOLLAR: $450,000 UNIT: 11,250 units

Piedmont Company segments its business into two regions-North and South. The company prepared the contribution format segmented income statement shown below: Total Company, North, South Sales: $600,000, $400,000, $200,000 Variable Expenses: $360,000, $280,000, $80,000 Contribution Margin: $240,000, $120,000, $120,000 Traceable Fixed Expenses: $120,000, $60,000, $60,000 Segment Margin: $120,000, $60,000, $60,000 Common Fixed Expenses: $50,000 Net Operating Income: $70,000 1. Compute the companywide break-even point in dollar sales. 2. Compute the break-even point in dollar sales for the North region. 3. Compute the break-even point in dollar sales for the South region.

1. $425,000 2. $200,000 3. $100,000

The Hartford Symphony Guild is planning its annual dinner-dance. The dinner-dance committer has assembled the following expected costs for the event: Dinner (Per Person): $18 Favors & Program (Per Person): $2 Band: $2,800 Rental of Ballroom: $900 Professional Entertainment During Intermission: $1,000 Tickets & Advertising: $1,300 The committee members would like to charge $35 per person for the evening's activities. 1. Compute the break-even point for the dinner-dance (in terms of the number of persons who must attend). 2. Assume that last year only 300 persons attended the dinner-dance. If the same number attend this year, what price per ticket must be charged in order to break even?

1. *400* People 2. *$40* per Ticket

Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management has designed an activity-based costing system with the following activity cost pools and activity rates: Activity Cost Pool... Activity Rate Supporting Direct Labor... $26 per Direct Labor-Hour Order Processing... $284 per Order Custom Design Processing... $186 per Custom Design Customer Service... $379 per Customer Management would like an analysis of the profitability of a particular customer, Big Sky Outfitters, which has ordered the following products over the last 12 months: Standard Model, Custom Design Number of Gliders: 20, 3 Number of Orders: 1, 3 Number of Customer Designs: 0, 3 Direct Labor-Hours Per Glider: 26.35, 28.00 Selling Price Per Glider: $1,850, $2,400 Direct Materials Cost Per Glider: $564, $634 The compan

1. 35,921.5 2. 8,271

Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for pricing and other purposes. The proprietor of the company believes that costs are driven primarily by the size of customer lawns, the size of customer garden beds, the distance to travel to customers, and the number of customers. In addition, the costs of maintaining garden beds depends on whether the beds are low maintenance beds (mainly ordinary trees and shrubs) or high maintenance beds (mainly flowers and exotic plants). Accordingly, the company uses the five activity cost pools listed below: Activity Cost Pool, Est. Overhead Cost, Expected Activity Caring For Lawn, $72,000, 150,000 sq. ft. Caring For Garden Beds (Low), $26,400, 20,000 sq. ft. Caring For Garden Beds (High), $41,400, 15,000 sq. ft. Travel to Jobs, $3,250, 12,500 Miles Customer Billing & Service, $8,750, 25 Customers COMPUTE THE ACTIVITY RATE

1. Lawn: *0.48* 2. (Low) Garden: *1.32* 3. (High) Garden: *2.76* 4. Job Travel: *0.26* 5. Customer: *350*

Chuck Wagon Grills, Inc., makes a single product—a handmade specialty barbecue grill that it sells for $210. Data for last year's operations follow: Units in Beginning Inventory: 0 Units Produced: 20,000 Units Sold: 19,000 Units in Ending Inventory: 1,000 Variable Costs Per Unit: - Direct Materials: $50 - Direct Labor: $80 - Variable Manufacturing Overhead: $20 - Variable Selling & Administrative: $10 - Total Variable Cost Per Unit: $160 Fixed Costs: - Fixed Manufacturing Overhead: $700,000 - Fixed Selling & Administrative: $285,000 - Total Fixed Costs: $985,000 1. Assume that the company uses variable costing. Compute the unit product cost for one barbecue grill. 2. Assume that the company uses variable costing. Prepare a contribution format income statement for last year

1. Variable: 150, -35,000 2. Absorption: 185, 0

Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable Costs Per Unit: Manufacturing: Direct Materials: $6 Direct Labor: $9 Variable Manufacturing Overhead: $3 Variable Selling & Administrative: $4 Fixed Costs Per Year: Fixed Manufacturing Overhead: $300,000 Fixed Selling & Administrative: $190,000 During the year, the company produced 25,000 units and sold 20,000 units. The selling price of company's product is $50 per unit. 1. Assume that the company uses absorption costing: a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume that the company uses variable costing: a. Compute the unit product cost. b. Prepare an income statement for the year.

1. a. $30, b. $130,000 2. a. $18, b. $70,000

Klumper Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system contains the following six activity cost pools and activity rates: Activity Cost Pool, Activity Rates Supporting Direct Labor... $6.00 per Direct Labor-Hour Machine Processing... $4.00 per Machine-Hour Machine Setups... $50.00 per Setup Production Orders.. $90.00 per Order Shipments... $14.00 per Shipment Product Sustaining... $840.00 per Product Activity data have been supplied for the following two products: K425, M67 Number of Units Produced per Year: 200, 2,000 Direct Labor-Hours: 80, 500 Machine=Hours: 100, 1,500 Machine Setups: 1, 4 Production Orders: 1, 4 Shipments: 1, 10 Product Sustaining: 1, 1 Determine the total overhead cost that would be assigned to each of the products listed above in the activity-based costing system. Determine the total overhead cost that would be assigned teach of t

9.37 each K425 5.27 each M67

The principal difference between variable costing and absorption costing centers on: a. Whether variable manufacturing costs should be included in product costs. B. Whether fixed manufacturing costs should be included in product costs. c. Whether fixed manufacturing costs and fixed selling and administrative costs should be included in product costs. d. Whether selling and administrative costs should be included in product costs.

B. Whether fixed manufacturing costs should be included in product costs.

Florek Inc. produces and sells a single product. The company has provided its contribution format income statement for March. Sales (5,700 Units): $228,000 Variable Expenses: 131,100 Contribution Margin: 96,900 Fixed Expenses: 86,300 Net Operating Income: $10,600 If the company sells 5,900 units, its net operating income should be closest to: a. $14,000 b. $10,600 c. $18,600 d. $10,972

a. $14,000 MATH: 228,000 x (5,900/5,700) = 236,000 131,100 x (5,900/5,700) = 135,700 236,000 - 135,700 = 100,300 - 86,300 = 14,000

Lindsey Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 5,000 units and of Product B is 2,000 units. There are three activity cost pools, with total cost and activity as follows: Activity Cost Pool, Total Cost, Prod A, Prod B, Total Activity #1, $24,000, 200, 800, 1,000 Activity #2, $36,900, 750, 150, 900 Activity #3, $63,000, 1,000, 800, 1,800 The activity-based costing cost per unit of Product A is closest to: a. $14.11 b. $13.77 c. $7.00 d. $17.70

a. $14.11 MATH: 24,000 x (200/1,000) + 36,900 x (750/900) + 63,000 x (1,000/1,800) = 70,550 70,550/5,000 = 14.11

Rollison Corporation has two divisions: Retail Division and Wholesale Division. The following data are for the most recent operating period: Total Company, Retail Division, Wholesale Division Sales: $545,000, $278,000, $267,000 Variable Expenses: $146,820, $66,720, $80,100 Traceable Fixed Expenses: $267,000, $152,000, $115,000 The Wholesale Division's break-even sales in dollars is closest to: a. $164,286 b. $217,686 c. $273,286 d. $469,884

a. $164,286

Upchurch Corporation produces and sells a single product. Data concerning that product appear below: Selling Price Per Unit: $100.00 Variable Expense Per Unit: $34.00 Fixed Expense Per Month: $312,180 Assume the company's target profit is $12,000. The unit sales to attain that target profit is closest to: a. 3,242 units b. 4,912 units c. 9,535 units d. 5,896 units

b. 4,912 MATH: 100 - 34 = 66 66 x A = 312,180 + 12,000 A = 4,912

SecuriCorp operates a fleet of armored cars that make scheduled pickups and deliveries in the Los Angeles area. The company is implementing an activity-based costing system that has four activity cost pools: Travel, Pickup and Delivery, Customer Service, and Other. The activity measures are miles for the Travel cost pool, number of pickups and deliveries for the Pickup and Delivery | cost pool, and number of customers for the Customer Service cost pool. The Other cost pool has no activity measure because it is an organization-sustaining activity. The following costs will be assigned using the activity-based costing system: Driver & Guard Wages: $720,000 Vehicle Operating Expense: $280,000 Vehicle Depreciation: $120,000 Customer Rep. Salaries & Expenses: $160,000 Office Expenses: $30,000 Administrative Expenses: $320,000 Total Cost: $1,630,000 The distribution of resource consumption across the activity cost pools i

Travel: $628,000 Pickup/Delivery: $306,000 Customer Service: $417,000 Other: $279,000 Totals: $1,630,000

Hossack Corporation produces a single product and has the following cost structure: Number of Units Produced Each Year: 3,000 Variable Costs Per Unit: - Direct Materials: $17 - Direct Labor: $85 - Variable Manufacturing Overhead: $1 - Variable Selling & Administrative Expense: $8 Fixed Costs Per Year: - Fixed Manufacturing Overhead: $90,000 - Fixed Selling & Administrative Expense: $270,000 The unit product cost under variable costing is: a. $103 per unit b. $133 per unit c. $111 per unit d. $110 per unit

a. $103 per unit MATH: 17 + 85 + 1 = 103

Sharron Inc., which produces a single product, has provided the following data for its most recent month of operations: Number of Units Produced: 3,000 Variable Costs Per Unit: - Direct Materials: $91 - Direct Labor: $13 - Variable Manufacturing Overhead: $7 - Variable Selling & Administrative Expense: $6 Fixed Costs: - Fixed Manufacturing Overhead: $237,000 - Fixed Selling & Administrative Expense: $165,000 There were no beginning or ending inventories. The variable costing unit product cost was: a. $111 per unit b. $190 per unit c. $117 per unit d. $110 per unit

a. $111 per unit MATH: 91 + 13 + 7 = 111

Bateman Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling Price: $117 Units in Beginning Inventory: 0 Units Produced: 4,700 Units Sold: 4,400 Units in Ending Inventory: 300 Variable Costs Per Unit: - Direct Materials: $36 - Direct Labor: $38 - Variable Manufacturing Overhead: $4 - Variable Selling & Administrative: $11 Fixed Costs: - Fixed Manufacturing Overhead: $89,300 - Fixed Selling & Administrative: $26,400 What is the net operating income for the month under absorption costing? a. $13,200 b. $10,800 c. $7,800 d. $8,900

a. $13,200 MATH: 36 + 38 + 4 + (89,300/4,700) = 97 (4,400 x 117) - (4,400 x 97) = 88,000 88,000 - (4,400 x 11) - 26,400 = 13,200

Trainor Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company's three activity cost pools as follows: Processing, $29,200; Supervising, $13,000; and Other, $26,800. Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below: MHs (Processing), Batches (Supervising) Product E0: 2,500, 300 Product G0: 7,500, 700 Total: 10,000, 1,000 The activity rate for the Supervising activity cost pool under activity-based costing is closest to: a. $13.00 per batch b. $69.00 per batch c. $8.00 per batch d. $11.43 per batch

a. $13.00 per batch MATH: 13,000/1,000 = 13

Carrejo Corporation has two divisions: Division M and Division N. Data from the most recent month appear below: Total Company, Division M, Division N Sales: $404,000, $181,000, $223,000 Variable Expenses: $152,130, $65,160, $86,970 Contribution Margin: $251,870, $115,840, $136,030 Traceable Fixed Expenses: $192,000, $87,000, $105,000 Segment Margin: $59,870, $28,840, $31,030 Common Fixed Expenses: $52,520, $23,530, $28,990 Net Operating Income: $7,350, $5,310, $2,040 Management has allocated common fixed expenses to the Divisions based on their sales. The break-even in sales dollars for Division N is closest to: a. $172,131 b. $219,656 c. $258,230 d. $392,211

a. $172,131 MATH: (223,000 - 86,970) / 223,000 = 61% Sales x 61% = 105,000 Sales = $172,131

Duerr Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs: Costs: Wages & Salaries: $400,000 Depreciation: $180,000 Occupancy: $200,000 Total: $780,000 The distribution of resource consumption across the three activity cost pools is given below: Fabricating, Order Processing, Other, Total Wages & Salaries: 55%, 20%, 25%, 100% Depreciation: 10%, 50%, 40%, 100% Occupancy: 35%, 40%, 25%, 100% How much cost, in total, would be allocated in the first-stage allocation to the Order Processing activity cost pool? a. $250,000 b. $286,000 c. $156,000 d. $312,000

a. $250,000 MATH: (20% x 400,000) + (50% x 180,000) + (40% x 200,000) = 250,000

Hadley Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling Price: $159 Units in Beginning Inventory: 0 Units Produced: 7,800 Units Sold: 7,700 Units in Ending Inventory: 100 Variable Costs Per Unit: Direct Materials: $47 Direct Labor: $50 Variable Manufacturing Overhead: $2 Variable selling and administrative expense: $9 Fixed Costs: Fixed Manufacturing Overhead: $304,200 Fixed Selling and Administrative Expense: $84,700 What is the net operating income for the month under variable costing? a. $3,800 b. $(6,100) c. $3,900 d. $7,700

a. $3,800 MATH: (7,700 x 159) - (7,700 x 99) - (7,700 x 9) = 392,700 392,700 - 304,200 - 84,700 = 3,800

Trainor Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company's three activity cost pools as follows: Processing, $29,200; Supervising, $13,000; and Other, $26,800. Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below: MHs (Processing), Batches (Supervising) Product E0: 2,500, 300 Product G0: 7,500, 700 Total: 10,000, 1,000 What is the overhead cost assigned to Product G0 under activity-based costing? a. $31,000 b. $9,100 c. $21,900 d. $34,500

a. $31,000 MATH: 7,500 x 2.92 + 700 x 13 = 31,000

Laguna Corporation has provided the following data concerning its overhead costs for the coming year: Wages & Salaries: $260,000 Depreciation: $100,000 Rent: $180,000 Total: $540,000 The company has an activity-based costing system with the following three activity cost pools and estimated activity for the coming year: Activity Cost Pool... Total Activity Assembly... 50,000 Labor-Hours Order Processing... 400 Orders Other... Not Applicable The Other activity cost pool does not have a measure of activity; it is used to accumulate costs of idle capacity and organization-sustaining costs.The distribution of resource consumption across activity cost pools is given below: Assembly, Order Processing, Other, Total Wages & Salaries: 60%, 20%, 20%, 100% Depreciation: 5%, 60%, 35%, 100% Rent: 30%, 30%, 40%, 100% The activity rate for the Order Processing activity cost pool is closest to: a. $415 per order b. $405 per ord

a. $415 per order MATH: (20% x 260,000) + (60% x 100,000) + (30% x 180,000) = 166,000/400 = 415

Rollison Corporation has two divisions: Retail Division and Wholesale Division. The following data are for the most recent operating period: Total Company, Retail Division, Wholesale Division Sales: $545,000, $278,000, $267,000 Variable Expenses: $146,820, $66,720, $80,100 Traceable Fixed Expenses: $267,000, $152,000, $115,000 The company's overall break-even sales in dollars is closest to: a. $469,884 b. $364,286 c. $105,599 d. $316,996

a. $469,884 MATH: 267,000 - 115,000 = 152,000 Sales x CM Ratio = 76,300 + 152,000 + 115,000 CM Ratio = (545,000 - 146,820)/545,000 = 73% Sales = $470,273

Florek Inc. produces and sells a single product. The company has provided its contribution format income statement for March. Sales (5,700 Units): $228,000 Variable Expenses: $131,100 Contribution Margin: $96,900 Fixed Expenses: $86,300 Net Operating Income: $10,600 If the company sells 5,400 units, its net operating income should be closest to: a. $5,500 b. $6,600 c. $8,600 d. $10,972

a. $5,500 MATH: 228,000 x (5,400/5,700) = 216,000 131,100 x (5,400/5,700) = 124,200 216,000 - 124,200 = 91,800 91,800 - 86,300 = 5,500

Hochberg Corporation uses an activity-based costing system with the following three activity cost pools: Activity Cost Pool... Total Activity Fabrication: 30,000 Machine-Hours Order Processing: 300 Orders Other: Not Applicable The Other activity cost pool is used to accumulate costs of idle capacity and organization-sustaining costs. The company has provided the following data concerning its costs: Wages & Salaries: $340,000 Depreciation: $160,000 Occupancy: $220,000 Total: $720,000 The distribution of resource consumption across activity cost pools is given below: Fabrication, Order Processing, Other, Total Wages & Salaries: 30%, 60%, 10%, 100% Depreciation: 15%, 50%, 35%, 100% Occupancy: 15%, 55%, 30%, 100% The activity rate for the Fabrication activity cost is closest to: The activity rate for the Fabrication activity cost pool is closest to: a. $5.30 per machine-hour b. $3.60 per machine-hour c. $7.20 per

a. $5.30 per machine-hour MATH: (30% x 340,000) + (15% x 160,000) + (15% x 220,000) = 159,000/30,000 = 5.3

Gough Corporation has two divisions: Domestic and Foreign. Data from the most recent month appear below: Total Company, Domestic, Foreign Sales: $668,000, $347,000, $321,000 Variable Expenses: $220,530, $72,870, $147,660 Contribution Margin: $447,470, $274,130, $173,340 Traceable Fixed Expenses: $335,000, $201,000, $134,000 Segment Margin: $112,470, $73,130, $39,340 Common Fixed Expenses: $73,480 Net Operating Income: $38,990 The break-even in sales dollars for the company as a whole is closest to: a. $609,794 b. $502,579 c. $107,216 d. $436,424

a. $609,794 MATH: (TYPO) CM Ratio = (447,470/66,800) = 67% Sales x 67% = 73,480 + 201,000 + 134,000 Sales = $609,671

Which of the following is NOT a correct definition of the Break-Even Point? a. The point where total sales equals total expenses. b. The point where total profit equals total fixed expenses. c. The point where total contribution margin equals total fixed expenses. d. The point where total profit equals zero.

b. The point where total profit equals total fixed expenses.

Betterton Corporation uses an activity-based costing system to assign overhead costs to products. In the first stage, two overhead costs-equipment depreciation and supervisory expense-are allocated to three activity cost pools-Machining, Order Filling, and Other-based on resource consumption. Data to perform these allocations appear below: Overhead Costs: Equipment Depreciation: $49,000 Supervisory Expense: $3,000 Distribution of Resource Consumption Across Activity Cost Pools: Machining, Order Filling, Other Equipment Depreciation: 0.50, 0.30, 0.20 Supervisory Expense: 0.10, 0.40, 0.50 In the second stage, Machining costs are assigned to products using machine-hours (MHs) and Order Filling costs are assigned to products using the number of orders. The costs in the Other activity cost pool are not assigned to products. Activity data for the company's two products follow: MHs (Machining), Orders (Order Filling) Pr

a. $7.95 per order MATH: 0.3 x 49,000 + 0.4 x 3,000 = 15,900/2,000 = 7.95

Blackner Corporation produces and sells a single product. Data concerning that product appear below: Selling Price Per Unit: $220.00 Variable Expense Per Unit: $70.40 Fixed Expense Per Month: $492,184 The break-even in monthly dollar sales is closest to: a. $723,800 b. $918,060 c. $1,538,020 d. $492,140

a. $723,800 MATH: 3,290 x 220 = 723,800

Khanam Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling Price: $97 Units in Beginning Inventory: 500 Units Produced: 8,400 Units Sold: 8,500 Units in Ending Inventory: 400 Variable Costs Per Unit: - Direct Materials: $20 - Direct Labor: $37 - Variable Manufacturing Overhead: $1 - Variable Selling & Administrative: $11 Fixed Costs: - Fixed Manufacturing Overhead: $67,200 - Fixed Selling & Administrative: $161,500 The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. What is the net operating income for the month under absorption costing? a. $8,500 b. $9,300 c. $3,200 d. $15,100

a. $8,500 MATH: 20 + 37 + 1 + (67,200/8,400) = 66 (8,500 x 97) - (8,500 x 66) = 263,500 263,500 - (8,500 x 11) - 161,500 = 8,500

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: Units in Beginning Inventory: 0 Unit Produced: 7,300 Units Sold: 7,200 Units in Ending Inventory: 100 Variable Costs Per Unit: - Direct Materials: $29 - Direct Labor: $49 - Variable Manufacturing Overhead: $5 - Variable Selling & Administrative: $4 Fixed Costs: - Fixed Manufacturing Overhead: $94,900 - Fixed Selling & Administrative: $79,200 What is the absorption costing unit product cost for the month? a. $96 per unit b. $83 per unit c. $87 per unit d. $100 per unit

a. $96 per unit MATH: 29 + 49 + 5 _ (94,900/7,300) = 96

Holdt Inc. produces and sells a single product. The selling price of the product is $230.00 per unit and its variable cost is $66.70 per unit. The fixed expense is $212,290 per month. The break-even in monthly unit sales is closest to: a. 1,300 b. 3,183 c. 1,802 d. 923

a. 1,300 MATH: CMPU = 230 - 66.7 = 163.3 CM = FC 163.3 x A = 212,290 212,290/163.3 = 1,300

Outback Outfitters sells recreational equipment. One of the company's products, a small camp stove, sells for $50 per unit. Variable expenses are $32 per stove, and fixed expenses associated with the stove total $108,000 per month. 1. Compute the break-even point in unit sales and in dollar sales. 2. If the variable expenses per stove increase as a percentage of the selling price, will it result in a higher or a lower break-even point? Why? (Assume that the fixed expenses remain unchanged.) 3. At present, the company is selling 8,000 stoves per month. The sales manager is convinced that a 10% reduction in the selling price would result in a 25% increase in monthly sales of stoves. Prepare two contribution format income statements, one under present operating conditions, and one as operations would appear after the proposed changes. Show both total and per unit data on your statements. 4. Refer to the data in (3)

a. 11,000 Stoves MATH: (45-32) x A = 108,000 + 3,500 A = 11,000

Blackner Corporation produces and sells a single product. Data concerning that product appear below: Selling Price Per Unit: $220.00 Variable Expense Per Unit: $70.40 Fixed Expense Per Month: $492,184 The break-even in monthly unit sales is closest to: a. 3,290 units b. 6,991 units c. 4,173 units d. 2,237 units

a. 3,290 units MATH: 220 - 70.40 = 149.6 149.6 x A = 492,184 492,184/149.6 = 3,290

Contribution margin is the amount remaining after: a. Variable expenses have been deducted from sales revenue. b. Fixed expenses have been deducted from sales revenue. c. Fixed expenses have been deducted from variable expenses. d. Cost of goods sold has been deducted from sales revenues.

a. Variable expenses have been deducted from sales revenue.

The contribution margin ratio of Baginski Corporation's only product is 53%. The company's monthly fixed expense is $617,980 and the company's monthly target profit is $23,000. The dollar sales to attain that target profit is closest to: a. $1,166,000 b. $1,209,396 c. $339,719 d. $327,529

b. $1,209,396 MATH: CM - FC = 23,000 CM = FC + 23,000 Sales x 53% = 617,980 + 23,000 Sales = 1,209,396

Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling Price: $90 Units in Beginning Inventory: 0 Units Produced: 3,400 Units Sold: 3,000 Units in Ending Inventory: 400 Variable Costs Per Unit: Direct Materials: $21 Direct Labor: $38 Variable Manufacturing Overhead: $6 Variable selling and administrative expense: $4 Fixed Costs: Fixed Manufacturing Overhead: $54,400 Fixed Selling and Administrative Expense: $3,000 What is the net operating income for the month under absorption costing? a. $6,400 b. $12,000 c. $5,600 d. $(20,400)

b. $12,000 MATH: 21 + 38 + 6 + (54,400/3,400) = 81 (3,000 x 90) - (3,000 x 81) = 27,000 27,000 - (3,000 x 4) - 3,000 = 12,000

Rollison Corporation has two divisions: Retail Division and Wholesale Division. The following data are for the most recent operating period: Total Company, Retail Division, Wholesale Division Sales: $545,000, $278,000, $267,000 Variable Expenses: $146,820, $66,720, $80,100 Traceable Fixed Expenses: $267,000, $152,000, $115,000 The Retail Division's break-even sales in dollars is closest to: a. $469,884 b. $200,000 c. $251,211 d. $300,395

b. $200,000

Futter Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs: Costs: Wages & Salaries: $440,000 Depreciation: $180,000 Occupancy: $220,000 Total: $840,000 The distribution of resource consumption across the three activity cost pools is given below: Fabricating, Order Processing, Other, Total Wages & Salaries: 55%, 35%, 10%, 100% Depreciation: 20%, 35%, 45%, 100% Utilities: 10%, 50%, 40%, 100% How much cost, in total, would be allocated in the first-stage allocation to the Fabricating activity cost pool? (Use occupancy for utilities). a. $84,000 b. $300,000 c. $238,000 d. $462,000

b. $300,000 MATH: (55% x 440,000) + (20% x 180,000) + (10% x 220,000) = 300,000

b. $300,000 MATH: (50 - 32) x A = 108,000 A = 6,000 6,000 x 50 = 300,000

Garcia Veterinary Clinic expects the following operating results next year: Sales (Total): $600,000 Variable Expenses (Total): $120,000 Fixed Expenses (Total): $300,000 What is Garcia's break-even point next year in sales dollars? a. $240,000 b. $375,000 c. $400,000 d. $420,000

b. $375,000 MATH: 600,000 - 120,000 = 480,000 480,000/600,000 = 80% Sales x 80% = 300,000 Sales = 300,000/0.8 = 375,000

Elison Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling Price: $111 Units in Beginning Inventory: 0 Units Produced: 7,500 Units Sold: 7,200 Units in Ending Inventory: 300 Variable Costs Per Unit: Direct Materials: $24 Direct Labor: $34 Variable Manufacturing Overhead: $1 Variable selling and administrative expense: $5 Fixed Costs: Fixed Manufacturing Overhead: $217,500 Fixed Selling and Administrative Expense: $115,200 What is the net operating income for the month under variable costing? a. $8,700 b. $5,700 c. $14,400 d. $(12,000)

b. $5,700 MATH: (7,200 x 111) - (7,200 x 59) - (7,200 x 5) = 338,400 338,400 - 217,500 - 115,200 = 5,700

Brees Inc., a company that produces and sells a single product, has provided its contribution format income statement for April. Sales (6,200 Units): $136,400 Variable Expenses: 80,600 Contribution Margin: 55,800 Fixed Expenses: 48,700 Net Operating Income: $7,100 If the company sells 5,800 units, its total contribution margin should be closest to: a. $55,800 b. $52,200 c. $6,642 d. $47,000

b. $52,200 MATH: 136,400 x (5,800/6,200) = 127,600 80,600 x (5,800/6,200) = 75,400 127,600 - 75,400 = 52,200

Brees Inc., a company that produces and sells a single product, has provided its contribution format income statement for April. Sales (6,200 Units): $136,400 Variable Expenses: $80,600 Contribution Margin: $55,800 Fixed Expenses: $48,700 Net Operating Income: $7,100 If the company sells 6,800 units, its total contribution margin should be closest to: a. $55,800 b. $61,200 c. $69,642 d. $45,000

b. $61,200 MATH: 136,400 x (6,800/6,200) = 149,600 80,600 x (6,800/6,200) = 88,400 149,600 - 88,400 = 61,200

Abbe Corporation uses activity-based costing. The company makes two products: Product A and Product B. The annual production and sales of Product A is 800 units and of Product B is 600 units. There are three activity cost pools, with total cost and activity as follows: Activity Cost Pool, Total Cost, Prod A, Prod B, Total Activity #1: $17,460, 600, 600, 1,200 Activity #2: $19,987, 1,700, 600, 2,300 Activity #3: $29,884, 400, 120, 520 The activity rate for Activity 2 is closest to: a. $11.76 b. $8.69 c. $29.27 d. $33.31

b. $8.69 MATH: 19,987/2,300 = 8.69

Khanam Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling Price: $97 Units in Beginning Inventory: 500 Units Produced: 8,400 Units Sold: 8,500 Units in Ending Inventory: 400 Variable Costs Per Unit: - Direct Materials: $20 - Direct Labor: $37 - Variable Manufacturing Overhead: $1 - Variable Selling & Administrative: $11 Fixed Costs: - Fixed Manufacturing Overhead: $67,200 - Fixed Selling & Administrative: $161,500 The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. What is the net operating income for the month under variable costing? a. $8,500 b. $9,300 c. $3,200 d. $15,100

b. $9,300 MATH: (8,500 x 97) - (8,500 x 58) - (8,500 x 11) = 238,000 238,000 - 67,200 - 161,500 = 9,300

The contribution margin ratio is equal to: a. Total Manufacturing Expenses / Sales b. (Sales - Variable Expenses) /Sales c. 1 - (Gross Margin / Sales) d. 1 - (Contribution Margin / Sales)

b. (Sales - Variable Expenses) /Sales

Trainor Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company's three activity cost pools as follows: Processing, $29,200; Supervising, $13,000; and Other, $26,800. Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below: MHs (Processing), Batches (Supervising) Product E0: 2,500, 300 Product G0: 7,500, 700 Total: 10,000, 1,000 What is the overhead cost assigned to Product E0 under activity-based costing? a. $21,000 b. $9,100 c. $11,200 d. $4,500

c. $11,200 MATH: 2,500 x 2.92 + 300 x 13 = 11,200

Hossack Corporation produces a single product and has the following cost structure: Number of Units Produced Each Year: 3,000 Variable Costs Per Unit: - Direct Materials: $17 - Direct Labor: $85 - Variable Manufacturing Overhead: $1 - Variable Selling & Administrative Expense: $8 Fixed Costs Per Year: - Fixed Manufacturing Overhead: $90,000 - Fixed Selling & Administrative Expense: $270,000 The unit product cost under absorption costing is: a. $231 per unit b. $103 per unit c. $133 per unit d. $102 per unit

c. $133 per unit MATH: 17 + 85 + 1 + (90,000/3,000) = 133

Elison Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling Price: $111 Units in Beginning Inventory: 0 Units Produced: 7,500 Units Sold: 7,200 Units in Ending Inventory: 300 Variable Costs Per Unit: Direct Materials: $24 Direct Labor: $34 Variable Manufacturing Overhead: $1 Variable selling and administrative expense: $5 Fixed Costs: Fixed Manufacturing Overhead: $217,500 Fixed Selling and Administrative Expense: $115,200 What is the net operating income for the month under absorption costing? a. $8,700 b. $5,700 c. $14,400 d. $(12,000)

c. $14,400 MATH: (7,200 x 111) - (7,200 x 88) = 165,600 165,600 - (7,200 x 5) - 115,200 = 14,400

Spartan Systems reported total sales of $300,000, at a price of $20 and per unit variable expenses of $12, for the sales of their single product. Total, Per Unit Sales: $300,000, $20 Variable Expenses: $180,000, $12 Contribution Margin: 4120,000, $8 Fixed Expenses: $100,000 Net Operating Income: $20,000 What is the amount of contribution margin if sales volume increases by 30%? a. $19,500 b. $15,000 c. $156,000 d. $120,000

c. $156,000 MATH: 300,000 x 130% = 390,000 180,000 x 130% = 234,000 390,000 + 234,000 = 156,000

Ragins Corporation produces a single product and has the following cost structure: Number of Units Produced Each Year: 1,000 Variable Costs Per Unit: - Direct Materials: $85 - Direct Labor: $69 - Variable Manufacturing Overhead: $5 - Variable Selling & Administrative Expense: $6 Fixed Costs Per Year: - Fixed Manufacturing Overhead: $60,000 - Fixed Selling & Administrative Expense: $27,000 The variable costing unit product cost is: a. $219 per unit b. $154 per unit c. $159 per unit d. $252 per unit

c. $159 per unit MATH: 85 + 69 + 5 = 159

Moyle Corporation has provided the following data from its activity-based costing accounting system: Activity Cost Pools, Total Cost, Total Activity Designing Products, $396,900, 2,450, Product Design Hours Setting Up Batches, $8,580, 390, Batch Set-Ups Assembling Products, $115,520, 7,220, Assembly Hours The activity rate for the "designing products" activity cost pool is closest to: a. $396,900 per product design hour b. $62 per product design hour c. $162 per product design hour d. $52 per product design hour

c. $162 per product design hour MATH: 396,900/2,450 = 162

Trainor Corporation uses activity-based costing to assign overhead costs to products. Overhead costs have already been allocated to the company's three activity cost pools as follows: Processing, $29,200; Supervising, $13,000; and Other, $26,800. Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below: MHs (Processing), Batches (Supervising) Product E0: 2,500, 300 Product G0: 7,500, 700 Total: 10,000, 1,000 The activity rate for the Processing activity cost pool under activity-based costing is closest to: a. $5.00 per MH b. $6.33 per MH c. $2.92 per MH d. $11.13 per MH

c. $2.92 per MH MATH: 29,200/10,000 = 2.92

Bowe Corporation's fixed monthly expenses are $21,000 and its contribution margin ratio is 61%. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $74,000? a. $7,860 b. $45,140 c. $24,140 d. $53,000

c. $24,140 MATH: 61% = CM/74,000 = 45,140 45,140 - 21,000 = 24,140

Abbe Corporation uses activity-based costing. The company makes two products: Product A and Product B. The annual production and sales of Product A is 800 units and of Product B is 600 units. There are three activity cost pools, with total cost and activity as follows: Activity Cost Pool, Total Cost, Prod A, Prod B, Total Activity #1: $17,460, 600, 600, 1,200 Activity #2: $19,987, 1,700, 600, 2,300 Activity #3: $29,884, 400, 120, 520 The cost per unit of Product B is closest to: a. $25.90 b. $11.49 c. $34.73 d. $48.09

c. $34.73 MATH: 600 x 14.53 + 600 x 8.65 + 120 x 57.47 = 20,840/600 = 34.73

Upchurch Corporation produces and sells a single product. Data concerning that product appear below: Selling Price Per Unit: $100.00 Variable Expense Per Unit: $34.00 Fixed Expense Per Month: $312,180 Assume the company's target profit is $14,000. The dollar sales to attain that target profit is closest to: a. $326,180 b. $593,248 c. $494,212 d. $959,353

c. $494,212 CM = FC + 14,000 (100 - 34) x A = 312,180 + 14,000 A = (312,180 + 14,000)/(100 - 34) x 4,942 4,942 x 100 = 494,200

Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling Price: $90 Units in Beginning Inventory: 0 Units Produced: 3,400 Units Sold: 3,000 Units in Ending Inventory: 400 Variable Costs Per Unit: Direct Materials: $21 Direct Labor: $38 Variable Manufacturing Overhead: $6 Variable selling and administrative expense: $4 Fixed Costs: Fixed Manufacturing Overhead: $54,400 Fixed Selling and Administrative Expense: $3,000 What is the net operating income for the month under variable costing? a. $12,000 b. $(20,400) c. $5,600 d. $6,400

c. $5,600 MATH: 21 + 38 + 6 = 65 (3,000 x 90) - (3,000 x 65) - (3,000 x 4) = 63,000 63,000 - 54,400 - 3,000 = 5,600

Abbe Corporation uses activity-based costing. The company makes two products: Product A and Product B. The annual production and sales of Product A is 800 units and of Product B is 600 units. There are three activity cost pools, with total cost and activity as follows: Activity Cost Pool, Total Cost, Prod A, Prod B, Total Activity #1: $17,460, 600, 600, 1,200 Activity #2: $19,987, 1,700, 600, 2,300 Activity #3: $29,884, 400, 120, 520 The activity rate for Activity 3 is closest to: a. $41.76 b. $28.69 c. $57.47 d. $33.31

c. $57.47 MATH: 29,884/520 = 57.47

Moonen Corporation produces and sells a single product whose contribution margin ratio is 57%. The company's monthly fixed expense is $487,350 and the company's monthly target profit is $10,000. The dollar sales to attain that target profit is closest to: a. $855,000 b. $277,790 c. $872,544 d. $283,490

c. $872,544 MATH: Sales x 57% = 487,350 + 10,000 487,350/0.57 = 872,544

Data concerning Nazario Corporation's single product appear below: Selling Price Per Unit: $230.00 Variable Expense Per Unit: $85.10 Fixed Expense Per Month: $188,370 The break-even in monthly unit sales is closest to: a. 819 b. 2,214 c. 1,300 d. 1,444

c. 1,300 MATH 230 - 85.1 = 144.9 144.9 x A = 188,370 188,370/144.9 = 1,300

Which of the following would probably be the most accurate measure of activity to use for allocating the costs associated with a factory's shipping department? a. Machine-Hours b. Direct Labor-Hours c. Number of Orders Processed d. Cost of Materials Purchased

c. Number of Orders Processed

d. $1.24 per MH MATH: 49,000 x 0.5 + 3,000 x 0.1 = 24,800/20,000 = 1.24

Muhn Corporation has two divisions: Division K and Division L. Data from the most recent month appear below: Total Company, Division K, Division L Sales: $409,000, $248,000, $161,000 Variable Expenses: $216,770, $131,440, $85,330 Contribution Margin: $192,230, $116,560, $75,670 Traceable Fixed Expenses: $133,000, $75,000, $58,000 Segment Margin: $59,230, $41,560, $17,670 Common Fixed Expenses: $40,900, $24,800, $16,100 Net Operating Income: $18,330, $16,760, $1,570 Management has allocated common fixed expenses to the Divisions based on their sales. The break-even in sales dollars for Division K is closest to: a. $212,340 b. $246,596 c. $370,000 d. $159,574

d. $159,574 MATH: CM Ratio = (116,560/248,000) = 47% Sales x 47% = 75,000 Sales = $159,574

Bartelt Inc., which produces a single product, has provided the following data for its most recent month of operations: Number of Unit Produced: 8,000 Variable Costs Per Unit: - Direct Materials: $40 - Direct Labor: $77 - Variable Manufacturing Overhead: $8 - Variable Selling & Administrative Expense: $7 Fixed Costs: - Fixed Manufacturing Overhead: $464,000 - Fixed Selling & Administrative Expense: $448,000 There were no beginning or ending inventories. The absorption costing unit product cost was: a. $125 per unit b. $246 per unit c. $117 per unit d. $183 per unit

d. $183 per unit 40 + 77 + 8 + (464,000/8,000) = 183

d. $24,800 MATH: 49,000 x 0.5 + 3,000 x 0.1 = 24,800

d. $33,005 MATH: 17,000 x 1.24 + 1,500 x 7.95 = 33,005

Abbe Corporation uses activity-based costing. The company makes two products: Product A and Product B. The annual production and sales of Product A is 800 units and of Product B is 600 units. There are three activity cost pools, with total cost and activity as follows: Activity Cost Pool, Total Cost, Prod A, Prod B, Total Activity #1: $17,460, 600, 600, 1,200 Activity #2: $19,987, 1,700, 600, 2,300 Activity #3: $29,884, 400, 120, 520 The cost per unit of Product A is closest to: a. $29.90 b. $41.29 c. $34.73 d. $58.11

d. $58.11 MATH: 600 x 14.55 x 1,700 x 8.69 + 400 + 57.47 = 46,491/800 = 58.11

Bateman Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling Price: $117 Units in Beginning Inventory: 0 Units Produced: 4,700 Units Sold: 4,400 Units in Ending Inventory: 300 Variable Costs Per Unit: - Direct Materials: $36 - Direct Labor: $38 - Variable Manufacturing Overhead: $4 - Variable Selling & Administrative: $11 Fixed Costs: - Fixed Manufacturing Overhead: $89,300 - Fixed Selling & Administrative: $26,400 What is the net operating income for the month under variable costing? a. $8,900 b. $9,700 c. $10,800 d. $7,500

d. $7,500 MATH: (4,400 x 117) - (4,400 x 78) - (4,400 x 11) = 123,200 123,200 - 89,300 - 26,400 = 7,500

d. $7,695 MATH: 3,000 x 24 + 500 x 7.95 = 7,695

Hadley Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling Price: $159 Units in Beginning Inventory: 0 Units Produced: 7,800 Units Sold: 7,700 Units in Ending Inventory: 100 Variable Costs Per Unit: Direct Materials: $47 Direct Labor: $50 Variable Manufacturing Overhead: $2 Variable selling and administrative expense: $9 Fixed Costs: Fixed Manufacturing Overhead: $304,200 Fixed Selling and Administrative Expense: $84,700 What is the net operating income for the month under absorption costing? a. $3,800 b. $(6,100) c. $3,900 d. $7,700

d. $7,700 (7,700 x 159) - (7,700 x 138) = 161,700 161,700 - (7,700 x 09) - 84,700 = 7,700

Last year Easton Corporation reported sales of $720,000, a contribution margin ratio of 30% and a net loss of $24,000. Based on this information, the break-even point was: a. $640,000 b. $880,000 c. $744,000 d. $800,000

d. $800,000 MATH: 720,000 x 30% - FC = -2,400 FC = 240,000 CM = FC Sales x 30% = 240,000 Sales = $800,000

Which terms would make the following sentence true? Manufacturing companies that benefit the most from activity-based costing are those where overhead costs are a ___ percentage of total product cost and where there is ___ diversity among the various products that they produce. a. Low; Little b. Low; Considerable c. High; Little d. High; Considerable

d. High; Considerable

Garth Corporation sells a single product. If the selling price per unit and the variable expense per unit both increase by 10% and fixed expenses do not change, then: CMPU, CMR, Break-Even in Units a) Increases, Increases, Decreases b) No Change, No Change, No Change, c) No Change, Increases, No Change d) Increases, No Change, Decreases a. Option A b. Option B c. Option C d. Option D

Accounting 202: Exam #2

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