Accounting Test

When 10,000 units are produced, variable costs are $6 per unit. Therefore, when 20,000 units are produced: A) variable costs will total $120,000 B) variable costs will total $60,000 C) variable unit costs will increase to $12 per unit D) variable unit costs will decrease to $3 per unit

A. variable costs will total $120,000

When 10,000 units are produced, variable costs are $14 per unit. Therefore, when 5,000 units are produced fixed cost: A. will increase to $28 per unit. B. will remain at $14 per unit. C. will decrease to $7 per unit. D. will total $280,000.

A. will increase to $28 per unit.

If each furnace requires a hose that costs $20 and 2,000 furnaces are produced for the month, the total cost for hoses is: a. considered to be a direct fixed cost b. considered to be a direct variable cost c. considered to be an indirect fixed cost d. considered to be an indirect variable cost

B. considered to be a direct variable cost.

A company with sales of $100,000, variable costs of $70,000, and fixed costs of $50,000 will reach its break-even point if unit sales are increased by $20,000

False

If a company increases fixed costs, then the break-even point will be lower

False

If contribution margin decreases by $1 per unit then operating profits will increase by $1 per unit.

False

If the selling price per unit is $20 and the contribution margin percentage is 30%, then the variable cost per unit must be $6

False

If variable cost per unit increase, then the break-even point will decrease.

False

Selling Price per unit $30, variable cost per unit $20, and the fixed cost of $50,000 will reach its break-even point if unit sales are increased by $20,000.

False

When 50,000 units are produced the fixed cost is $10 per unit. Therefore, when 100,000 units are produced fixed costs will remain at $10 per unit.

False

Firm A has a depreciation expense of $60 and a tax rate of 40%. Firm B has the same revenues, expenses, and tax rate as firm A, with the exception that firm B has no depreciation expense. Firm A's cash flow will be $36 more than firms B's.

True

Firm A has depreciation expense of $60 and a tax rate of 40%. Firm B has the same revenues, expenses and tax rate as firm A, with the exception that firm B has no depreciation expense. Firm A's net income will be $36 greater than firm B's.

True

The revenue volume variance can be larger than the total revenue varience.

True

Christi Manufacturing provided the following information for last month. Sales $10,000 Variable Costs 4,000 Fixed Costs 5,000 Operating Income $1,000 If sales double next month, what is the projected operating income? a. $7,000 b. $4,000 c. $9,000 d. $12,000

a. $7,000

Which of the following will increase a company's break-even point? a. Increasing variable cost per unit b. Increasing contribution margin per unit c. Reducing its total fixed costs d. Increasing the selling price per unit

a. Increasing variable cost per unit

The break-even point point decreases if a. variable cost per unit increases b. total fixed costs decrease. c. contribution margin per unit decreases. d. selling price per unit decreases

b. total fixed costs decrease.

Kim Manufacturing provided the following information for last month. Sales $12,000 Variable Costs 12,000 Fixed Costs 1,000 Operating Loss ($1,000) If sales double next month, what is the projected operating income? a. $1,000 income b. $2,000 loss c. $1,000 loss d. $2,000 income

c. $1,000 loss

Kaiser Kraft Korner sells a single product, 8,000 units were sold resulting in $80,000 of sales revenue; $32,000 of variable costs, and $18,000 of fixed costs. Contribution margin per unit is a. $4.00 b. $4.29 c. $6.00 d. none of the above Break-even point in units is a. 2,000 units b. 3,000 units c. 5,000 units d. none of the above The number of units that must be sold to achieve $60,000 of operating income is a. 10,000 units b. 13,000 units c. 12,000 units d. none of the above If sales increase by $15,000, operating income will increase by a. $9,000 b. $15,000 c. $6,000 d. impossible to compute

c. $6.00; b. 3,000 units; a. 10,000 units; d. impossible to compute

Stephanie's Bridal Shoppe sells wedding dresses. The average selling price of each dress is $1,000, variable costs are $400, and fixed costs are $60,000. What is the Bridal Shoppe's operating income when 200 dresses are sold? a. $30,000 b. $20,000 c. $60,000 d. $80,000 How many dresses are sold when operating income is zero? a. 225 dresses b. 150 dresses c. 100 dresses d. 90 dresses How many dresses must the Bridal Shoppe sell in order to yield after-tax net income of $18,000, assuming the tax rate is 40%? a. 225 dresses b. 200 dresses c. 150 dresses d. 145 dresses

c. $60,000; c. 100 dresses; c. 150 dresses

Tire and Spoke Manufacturing currently produces 1,000 bicycles per month. The following per unit data apply for sales to regular customers: Direct Materials $65 Direct Manufacturing Labor 5 Variable Manufacturing Overhead 14 Fixed Manufacturing Overhead 10 Total Manufacturing Costs $94 The Plant has capacity for 3,000 bicycles and is considering expanding production to 2,000 bicycles, What is the per unit cost of producing 2,000 bicycles? a. $79 per unit b. $74 per unit c. $84 per unit d. $89 per unit

c. $84 per unit

The Singer Company manufacturing several different products and uses variable costing. Unit costs associated with Product ICT101, which sell for $180 each are as follows: Direct Materials $50 Direct Manufacturing Labor 10 Variable Manufacturing Overhead 18 Fixed Manufacturing Overhead 28 Sales Commissions (4.4% of sales) 8 Administrative Salaries 16 Total $130 What are the variable costs per unit associated with Product ICT101? a. $78 b. $70 c. $86 d. $92 What are the fixed costs per unit associated with Product ICT101? a. $52 b. $48 c. $44 d. $28 When Singer is one unit below break-even, operating income is _____? When Singer is one unit above break-even, operating income is _____?

c. $86; c. $44;

The cash flow statement does NOT include a. cash inflows from the collection of receivables. b. cash outflows paid toward raw material purchases c. all sales revenues. d. interest paid and received.

c. all sales revenues.

The cash budget is a schedule of expected cash receipts and disbursements that a. requires an aging of accounts receivable and accounts payable b. is a self-liquidating cycle c. is prepared immediately after the sales forecast. d. predicts the effect on the cash position at given levels of operations.

d. predicts the effect on the cash position at given levels of operations.