Cost Accounting Test 3 Review MC

Martin Enterprises has a predicted operating income of $140,000. Its total variable expenses are $50,000 and its total fixed expenses have doubled from $20,000 to $40,000. The unit contribution margin for the company's sole product is $10. The number of units that Martin Enterprises needs to sell to achieve the predicted operating income would be

$18,000

The Settler's Chuck Wagon sells tickets for dinner and a show for $50 each. The cost of providing dinner is $23 per ticket and the fixed cost of operating the theater is $115,000 per month. The company can accommodate 13,500 patrons each month. What is the projected monthly income if 5,500 patrons visit the theater each month?

$33,500

Total fixed costs $24,000 Selling price per unit $20 Variable costs per unit $15 If sales revenue per unit increases to $22 and 12,000 units are sold, what is the operating income?

$60,000

Sales revenue needed in order to breakeven formula

(Fixed cost + operating income) ----------------------------------- contribution margin ratio

Total costs for Locke & Company at 120,000 units are $289,000, while total fixed costs are $145,000. The total variable costs at a level of 250,000 units would be

300,000

Mom and Pop's Ice Cream Shoppe sells ice cream cones for $5.00 per customer. Variable costs are $2.25 per cone. Fixed costs are $3,000 per month. What is the company's contribution margin ratio?

55%

Wallace Industrial sells two products, large forklifts and small forklifts. A large forklift sells for $50,000 per unit with variable costs of $26,000 per unit. Small forklifts sell for $30,000 per unit with variable costs of $12,000 per unit. Total fixed costs for the company are $1,600,000. Wallace Industrial typically sells one large forklifts for every two smalls. What is the breakeven point in total units?

80

Which of the following is not an acceptable method of accounting for by-products? a. The revenue from the sale of by-products is credited to "Other Income." b. The by-product is valued at its opportunity costs of purchasing or replacing the product. c. The revenue from the sale of by-products is deducted from the costs of the main products. d. The by-product is valued at a standard price; any fluctuations in the price are isolated in a variance account. e. All of the above methods are acceptable approaches to accounting for by-products.

All of the above methods are acceptable approaches to accounting for by-products

Assuming no other changes in the cost-volume-profit relationship, which of the following will decrease the breakeven point in units?

An increase in the selling price per unit

First step in constant gross margin percentage, Net realizable value (NRV) method is to allocate joint, to compute

Gross margin percentage

If the variable cost per unit decreases while the sales price per unit and total fixed costs remain constant, which of the following statements is true?

The contribution margin increases and the breakeven point decreases

Which of the following is a true statement regarding joint costs? Joint costs are easily traced to individual products. - Joint costs are easily traced to individual products. - The primary reason for allocating joint costs is to determine whether a product should be sold immediately or processed further. - The primary reason for allocating joint costs is for inventory valuation for financial report-ing. - Joint costs consist only of overhead, never of materials or direct labor. - None of the above statements are true

The primary reason for allocating joint costs is for inventory valuation for financial report-ing FOR GAAP!!!!

The secondary product recovered in the course of manufacturing a primary product during a joint process is:

a by-product

Which costs of a joint process would be allocated to the joint products?

all production costs!! DM, DL, OH

Which of the following represents the excess of the selling price per unit of a product over the variable cost of obtaining and selling each unit?

unit contribution margin

The joint cost allocation method that yields the same gross margin percentage for each product is the

constant gross margin percentage method

In a joint process of production, two or more products that yield high volume of sales as compared to total sales of other products are classified as

joint product

Difference between final sales value and separable costs is equal to

net realizable value

The joint cost allocation method that assigns joint production costs based on the proportionate share of eventual revenues less further processing costs is the

net realizable value method

A joint cost allocation method is based on relative value of total sales, at point of split off is classified as

sales value at split off method

With respect to variable costs per unit, which of the following statements is true? - They will decrease as production increases within the relevant range. - They will increase as production decreases within the relevant range. - They will decrease as production decreases within the relevant range. - They will remain the same as production levels change within the relevant range.

they will remain the same as production levels change within relevant range

A ______ cost is a cost whose total amount changes in direct proportion to a change in volume

variable