MA test

Total costs for ABC Distributing are $300,000 when the activity level is 10,000 units. If fixed costs are $180,000, what is their variable cost per unit? $120,000 $1.2 $3 Their variable costs cannot be determined from the information presented

$1.2

Total costs for ABC Distributing are $250,000 when the activity level is 10,000 units. If variable costs are $5 per unit, what are their fixed costs? $240,000 $200,000 $260,000 Their fixed costs cannot be determined from the information presented

$200,000

Maintenance costs at Integrity Co. factory are listed below: Months Machine-Hours Maintenance Cost March 3,135 $48,340 April 3,095 $47,993 May 3,133 $48,345 June 3,157 $48,548 July 3,065 $47,733 August 3,076 $47,830 September 3,084 $47,880 October 3,125 $48,247 November 3,098 $48,014 Management believes that maintenance cost is mixed cost that depends on machine-hours. Use the high-low method to estimate the variable and fixed components of this cost. Compute the variable component first and round off to the nearest whole cent. Compute the fixed component and round off to the nearest whole dollar. These estimates would be closest to: $8.81 per machine-hour; $20,718 per month $0.11 per machine-hour; $48,192 per month $8.86 per machine-hour; $20,577 per month $15.48 per machine-hour; $48,103 per month

$8.86 per machine-hour; $20,577 per month

The budgeted income statement is prepared using which budget's information? Sales budget Production budget Sales and administrative expense budget All of these budgets

All of these budgets

FinePrint loses revenues from regular customers by accepting a special order from Abbie Jenkins when operating at capacity. The loss of revenue just described is an example of which of the following ? A revenue cost An opportunity cost An unavoidable cost A sunk cost

An opportunity cost

Which of the following statement is correct? At the break-even point, the total contribution margin and total expenses are equal. At the break-even point, the total fixed expenses and total variable expenses are equal. At the break-even point, the total contribution margin and fixed expenses are equal.

At the break-even point, the total contribution margin and fixed expenses are equal.

Which of the following statements is true regarding average fixed costs? Average fixed costs per unit remain fixed regardless of level of activity. Average fixed costs per unit rise as the level of activity rises. Average fixed costs per unit fall as the level of activity rises. Average fixed costs per unit cannot be determined.

Average fixed costs per unit fall as the level of activity rises.

the integrity co. manufactures 2,000 webcams per month. the full manufacturing costs per webcams as follows: Direct materials $2 Direct labor $8 Variable manufacturing overhead $6 Average fixed manufacturing overhead $6 Total $22 The Accountability Corp has offered to sell Integrity Co. 2,000 webcams for $15 per unit. If Integrity accepts the offer, $10,000 of fixed overhead will be eliminated Integrity should: Make the webcams; the savings is $12,000 Make the webcams; the savings is $2,000 Buy the webcams; the savings is $12,000 Buy the webcams; the savings is $24,000

Buy the webcams; the savings is $12,000

Which of the following relationships is correct? All of the answer choices are correct. Variable cost ratio + CM ratio = 1 CM ratio = (selling price per unit - variable cost per unit)/selling price per unit Total sales revenue = total CM /CM ratio

CM ratio = (selling price per unit - variable cost per unit)/selling price per unit

Which of the following is not an operating budget? Sales budget Direct labor budget Production budget Cash budget

Cash budget

Integrity Co. produces and sells a single product. Data concerning that product appear below: Integrity is currently selling 2,000 units per month. Fixed expenses are $131,000 per month. The marketing manager believes that an $18,000 increase in the monthly advertising (a fixed expense) budget would result in a 170 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change? Selling price is 180. variable cost is 90 Increase of $2,700 Increase of $15,300 Decrease of $18,000 Decrease of $2,700

Decrease of 2,700

Sunk costs are the result of past decisions; therefore, they are always relevant to future decisions True False

False

Which of the following statements regarding not-for-profit organization is correct? Budgeting is not important for not-for-profit organizations because they're mission-based entities Most of operating expenses for a nonprofit are cash spending Not-for-profit organizations do not need to follow any accounting guidance for fianncial reporting All of the answer choices are correct

Most of operating expenses for a nonprofit are cash spending

_______________ are the costs associated with not choosing the other alternative. Sunk costs Opportunity costs Differential costs Avoidable costs

Opportunity costs

________ is the act of using another company to provide goods or services that your company requires. Allocating Outsourcing Segmenting Leasing

Outsourcing

The most appropriate and commonly followed sequences of preparing budget schedules is to prepare the sales budget, followed by the purchase budget True False

True

Which of the following statements is true when making a decision between two alternatives? Fixed costs are never relevant Opportunity costs are typically not relevant Variable costs may not be relevant when the decision alternatives have the same activity levels Variable costs are not be relevant when the decision alternatives have different activity levels

Variable costs may not be relevant when the decision alternatives have the same activity levels

The units required in production each period are computed by which of the following methods? adding budgeted sales to the desired ending inventory and subtracting beginning inventory. adding beginning inventory, budgeted sales, and desired ending inventory adding beginning inventory to budgeted sales and subtracting desired ending inventory adding budgeted sales to the beginning inventory and subtracting the desired ending inventory

adding budgeted sales to the desired ending inventory and subtracting beginning inventory.

If a cost is identical under each alternative under consideration within a given decision context, the cost is considered an avoidable cost an irrelevant cost a sunk cost an opportunity cost

an irrelevant cost

In the cost equation Y = a + bx, a represents which of the following? fixed costs variable costs variable cost per unit fixed cost per unit

fixed costs

A scatter graph is used to test the assumption that the relationship between cost and activity level is? curvilinear cyclical unpredictable linear

linear

Which of the following is not a part of budgeting? planning finding bottlenecks providing performance evaluations preventing net operating losses

preventing net operating losses

Which of the following is an operating budget? cash budget production budget tax budget capital budget

production budget

Which of the following budget is prepared first? production budget sales budget cash receipts budget cash payments budget

sales budget

Which type of incurred costs are not relevant in decision-making (i.e., they have no bearing on future events) and should be excluded in decision-making? avoidable costs unavoidable costs sunk costs differential costs

sunk costs

Accountability Corp. provides tax return services to its clients. In 2022, Accountability provided tax preparation services to 500 clients Total fixed costs were $265,000 with total variable costs of $180,000. Assuming Accountability can serve up to 1,000 clients based on its current capacity. What is the total fixed cost if Accountability provides tax returns to 800 clients? $424,000 $265,000 Not enough information is provided $712,000

$265,000

Accountability Corp. provides tax return services to its clients. In 2022, Accountability provided tax preparation services to 500 clients Total fixed costs were $265,000 with total variable costs of $180,000. Assuming Accountability can serve up to 1,000 clients based on its current capacity. What is the total variable cost if Accountability provides tax returns to 800 clients? Not enough information is provided $288,000 $712,000 $180,000

$288,000

A company's contribution margin per unit is $25. If the company increases its activity level from 200 units to 350 units, how much will its total contribution margin increase? $5,000 $8,750 $1,250 $3,750

$3,750

Accountability corp. provides tax return services to its clients. In 2022, Accountability provided tax preparation services to 500 clients Total fixed costs were $265,000 with total variable costs of $180,000. Assuming Accountability can serve up to 1,000 clients based on its current capacity. What is the variable cost per unit if Accountability provides tax returns to 800 clients? $691.25 $360 Not enough information is provided $890

$360

Integrity Co. sells two products, Model 101 and Model 202. For every one unit of Model 101, they sell they sell two units of Model 202. Sales and cost information for the two products is shown. What is the contribution margin for a composite unit based on the sales mix? Model 101: Sales price = 25, variable cost =11 Model 202: sales price = 28, variable cost = 7 $14 $21 $35 $56

$56

A company wants to earn an income of $60,000 after-taxes. If the tax rate is 32%, what must be the company's pre-tax income in order to have $60,000 after-taxes? 143,000 $79,200 $19,200 $88,235

$88,235

A company's product sells for $150 and has variable costs of $60 associated with the product. What is its contribution margin per unit? $90 $60 $150 $40

$90

Integrity Co. sells a single product for $20 per unit. If variable expenses are 60% of sales and fixed expenses total $9,600, the break-even point sales in unit will be: 1,200 1,600 4,800 24,000

1,200

If a company has fixed costs of $6,000 per month and their product that sells for $200 has a contribution margin ratio of 30%, how many units must they sell in order to break even? 2,000 180 200 100

100

Integrity Co. sells a single product for $30 per unit. If the contribution margin ratio is 40% and fixed expenses total $9,600, the dollar sales to earn a profit of $40,000 would be: $800 $4,133 $82,667 $124,000

124,000

Integrity Co. sells a single product for $30 per unit. If the contribution margin ratio is 30% and fixed expenses total $9,600, the break-even point dollar sales will be: 1,067 9,600 32,000 Cannot be determined.

32,000

Integrity Co. sells a single product with a contribution margin per unit $2. The monthly fixed expenses are expected to be $26,000. How many units must be sold this year to earn a profit of $40,000? 23,000 30,000 33,000 13,000

33,000

Company A wants to earn $5,000 profit in the month of January. If their fixed costs are $10,000 and their product has a per-unit contribution margin of $250, how many units must they sell to reach their target income? 60 40 20 120

60

A company's product sells for $150 and has variable costs of $60 associated with the product. What is its contribution margin ratio? 10% 90% 40% 60%

60%

Which of the following factors is not an advantage of preparing operating budgets? Improved basis of performance evaluation Improved planning Improved communications Improved employee loyalty

Improved employee loyalty

Accountability Corp. manufactures a product with the following full unit costs at a volume of 2,000 units: Direct materials $ 100 Direct labor 40 Manufacturing overhead (30% variable) 75 Selling expenses (50% variable) 25 Administrative expenses (10% variable) 40 Total per unit $280 Authenticity Co. recently approached Accountability management with an offer to purchase 225 units of the product for $275 each. Pink Bunny currently sells the product to dealers for $400 each. Pink Bunny's capacity is sufficient to produce the extra 225 units. No selling expenses would be incurred on the special order. If Accountability's management accepts the offer, profits will: Increase by $33,400 Decrease by $24,412.50 Decrease by $60,000 Increase by $24,412.50

Increase by $24,412.50 (Step 1: Incremental rev: 225 units * $275 = 61,875 Step 2: Less Incremental costs: Direct materials: 225 units * $100 = 22500 Direct labor: 225 units * $40 = 9000 Manufacturing overhead: 225 units * $75 * 30% = 5062.50 Administrative expenses: 225 units * $40 *10% = 900 Total incremental costs: $37462.50 Step 3: Inc. rev - Inc. costs: 61,875 - 37462.50 = $24,412.50)

The direct materials budget is prepared using which budget's information? Cash receipts budget Production budget Cash payments budget Raw materials budget

Production budget

Which of the following costs is most likely to be a fixed cost for a furniture manufacturer? Rent on corporate office Production labor used to produce desks Wood used to produce desks Sales staff commission

Rent on corporate office

Which of the following costs is most likely to be a variable cost? Salaries of administrative staff property taxes Shipping costs on merchandise sold Health insurance cost for company executives

Shipping costs on merchandise sold

What is the main difference between static and flexible budgets? The fixed manufacturing overhead is adjusted for units sold in the flexible budget. The variable manufacturing overhead is adjusted in the static budget. There is no difference between the budgets. The variable costs are adjusted in a flexible budget.

The fixed manufacturing overhead is adjusted for units sold in the flexible budget.

Youngstown Construction plans to discontinue its roofing segment. Last year, this segment generated a contribution margin of $65,000 and incurred $70,000 in fixed costs. Discontinuing the segment will allow the company to avoid half of the fixed costs. What effect is expected to occur to the company's overall profit? a decrease of $5,000 a decrease of $30,000 an increase of $5,000 an increase of $30,000

a decrease of $30,000

When should a segment be dropped? only when the decrease in total contribution margin is less than the decrease in fixed cost only when the decrease in total contribution margin is equal to fixed cost only when the increase in total contribution margin is more than the decrease in fixed cost only when the decrease in total contribution margin is less than the decrease in variable cost

only when the decrease in total contribution margin is less than the decrease in fixed cost

Which of the following is not a qualitative decision that should be considered in an outsourcing decision? employee morale product quality company reputation relevant costs

relevant costs

Fixed costs vary in response to changes in activity level remain constant on a per-unit basis increase on a per-unit basis as activity increases remain constant as activity changes

remain constant as activity changes

Variable costs remain constant on a per-unit basis but change in total based on activity level remain constant on a per-unit basis and remain constant in total regardless of activity level decrease on a per-unit basis as activity level increases remain constant in total regardless of activity level within a relevant range

remain constant on a per-unit basis but change in total based on activity level

Which budget is the starting point in preparing financial budgets? the budgeted income statement the budgeted balance sheet the capital expense budget the cash receipts budget

the budgeted income statement

Which of the following methods of cost estimation relies on only two data points? the high-low method scatter graph least-squares regression

the high-low method

In the cost equation Y = a + bx, Y represents which of the following? fixed costs variable costs total costs

total costs

In the cost equation Y = a + bx, b represents which of the following? fixed costs variable costs variable cost per unit fixed cost per unit

variable cost per unit