ACG Exam 1

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 -60 -5 -25

15

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

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? -10.47 -28.80 -20 -18 -24

28.8

Raimstein Company sold 2,000 units in March at a price of $35 per unit and variable cost of $20 per unit. What is the total contribution margin? -20,000 -40,000 -70,000 -30,000 -none

30,000

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)?

3000 vases

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

Bluewing, Incorporated sells a single product for $14. At a volume level of 60,000 units, variable costs are $9 per unit and fixed costs total $420,000. If fixed costs do not change, Bluewing's break-even point would be:

84000 UNITS

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

Contribution margin

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

Contribution margin decreases, break-even point increases

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 element of competency?

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

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 costs per unit

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

Where would period costs be found on the financial statements?

as operating expenses on the income statement in the period incurred

Break-even for a multiple product firm ________.

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

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

decrease

Which of the following is NOT a period cost? -marketing expenses -research and development expenses -direct labor expenses -distribution expenses

direct labor expenses

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

efficiency

Managerial accounting:

focuses primarily on the needs of personnel within the organization

Which of the following are classified as manufacturing overhead?

indirect labor and indirect materials

Which of the following are classified as manufacturing overhead? -all materials -factory and direct labor -indirect labor and indirect materials -direct labor and direct materials

indirect labor and indirect materials

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

A manager who wants to determine the percentage impact on income of a given percentage change in sales would multiply the percentage increase/decrease in sales revenue by the:

operating leverage factor

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

opportunity cost

In a manufacturing plant, which is an example of indirect labor?

plant manager

When manufacturing products, direct labor and direct materials are classified as:

product costs, and expensed when the goods are sold

Fixed costs are costs that:

remain constant as activity changes

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

sunk costs

If a company experiences a decrease in fixed costs, which of the following would occur?

the break-even point would decrease

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

wages of factory maintenance personnel

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

A 25% increase in production volume will result in:

a 25% increase in total variable costs

When determining the cost of a manufactured product, a salesperson's salary would be classified as:

a period cost

Rent on a factory building would be considered to be:

a product cost

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

an indirect cost

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

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

contribution margin / net income

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

gross margin

Narchie sells a single product for $60. Variable costs are 70% of the selling price, and the company has fixed costs that amount to $630,000. Current sales total 26,000 units. Each unit that Narchie sells will:

increase profit by $18

As activity decreases, unit variable cost:

remains constant

Narchie sells a single product for $50. Variable costs are 70% of the selling price, and the company has fixed costs that amount to $332,100. Current sales total 16,500 units. Narchie will break-even by:

selling 22,140 units

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

stimulate sales volume

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 (period costs: non-production/manufacturing costs... sales commission + admin expenses)

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

increase

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 (explanation:(530,000/100%) =5300 5300(.20)= 1060 units )

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

contribution margin

If the sales mix in a multi-product environment shifts to a higher volume in low contribution margin products, the break-even point will ________.

increase because the per composite unit contribution margin will decrease

Manufacturing overhead includes all of the following except: -Overtime premium for factory workers -Property taxes for the factory -Glue used in the manufacturing process -Research and development expenses

research and development expenses

The difference between budgeted sales revenue and break-even sales revenue is the:

safety margin

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

sales volume changes

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 one of the following is the correct cost?

the variable cost per unit is $14.50

Cost structures differ widely among industries and among firms within an industry. (t/f)

true

Variable costs are costs that

vary directly with changes in activity