Acct 203 Midterm

(43) In a process costing​ system, A. separate​ work-in-process inventory accounts are maintained for each process or department. B. a job cost record is maintained for each job. C. costs are transferred when jobs are complete. D. ​work-in-process inventory employs one general ledger account with a subsidiary ledger. (Ch. 18)

A. separate​ work-in-process inventory accounts are maintained for each process or department.

(49) The beginning inventory costs and the product costs of the current period are combined to determine the average cost of equivalent units of production under the​ ________. A. ​weighted- method B. ​first-in, first-out method C. equivalent units method D. conversion costs method (Ch. 18)

A. ​weighted- method

(16) The following information is available from Avery​ Company, a manufacturer of security​ cameras: Cost of Goods Manufactured $364,000 Total Units Produced 1,300 Number of Units Sold 900 Cost of Goods Sold $290,000 The unit product cost for a security camera​ is: A. $322 B. $1 C. $297 D. $280 (Ch. 16)

D. $280 COGM / Units produced = unit product cost $364,000 / 1,300 units = $280 per unit

(48) The production cost reports show the calculations for the physical flows and the​ ________ flows of the products. A. supply B. cost C. price D. cash (Ch. 18)

B. cost

(40) Groot Promotional Services uses a job order system for costing and billing promotional services for dance and ballet performances. Groot has four public relations specialists plus an office staff. At the beginning of the​ year, Groot estimated the total cost of salaries and benefits for the public relations specialists at $684,000 and a total of 7,200 billable hours for the year. All remaining office and administrative costs were estimated at $432,000. The allocation base for office and administrative costs is billable hours. In​ June, Groot signed a contract for a Russian ballet performance. It estimated the new contract would require 34 hours of specialist time. What is the total cost estimate for this​ contract? A. $5,270.00 B. $3,230.00 C. $1,190.00 D. $ 2,040.00 (Ch. 17)

($684,000 + 432,000) / 7,200 hours = $155 34 hours x $155 = $5,270 total costs

(84) Sunshine Blender Company sold 7,000 units in October at a sales price of $45 per unit. The variable cost is $15 per unit. Calculate the total contribution margin. A. $210,000 B. $315,000 C. $52,500 D. $ 105,000 (Ch. 20)

A $210,000 7,000 x $45 = 315,000 Revenue 7,000 x $15 = 105,000 Variable Costs 315,000 - 105,000 = $210,000 CM

Sales Price (Ch. 19)

= Full product cost + Desired net profit

​(80) Mcleod, Inc. incurred fixed costs of $300,000. Total​ costs, both fixed and​ variable, are $550,000 when 58,000 units are produced. It sold 40,000 units during the year. Calculate the variable cost per unit.​ (Round your answer to the nearest​ cent.) A. $4.31 B. $9.48 C. $13.75 D. $5.17 (Ch. 20)

A $550,000 - 300,000 = 250,000 Variable costs 250,000 variable costs / 58,000 units produced = $4.31 variable cost per unit

(91) Zander Company has fixed costs of $16,000. The​ company's contribution margin ratio is 52​%. What is the breakeven point in sales​ dollars? (Round your answer to the nearest​ dollar.) A. $30,769 B. $8,320 C. $88,889 D. $ 2,880 (Ch. 20)

A ($16,000 + $0) / .52 = $30,769

(78) A cellphone service provider charges $6.50 per month and $0.40 per minute per call. If a​ customer's current bill is $65​, how many minutes did the customer​ use? (Round any intermediate calculations and your final answer to the nearest whole​ minute.) A. 146 minutes B. 179 minutes C. 130 minutes D. 163 minutes (Ch. 20)

A 65 - 6.5 = 58.5 58.5 / .40 = 146.25 146 minutes

(90) Yarn​ Basket, Ltd., sells hand−knit scarves. Each scarf sells for $30. The company pays $250 to rent a vending space for one day. The variable costs are $10 per scarf. What total revenue amount does the company need to earn to break​ even? (Round any percentages to two decimal places and your final answer to the nearest​ cent.) A. $374.98 B. $2.40 C. $30.00 D. $15.00 (Ch. 20)

A CM = Net sales - variable costs CM Ratio = CM / Net sales revenue Breakeven sales in dollars = (Fixed Costs + $0) / CM Ratio $30 - $10 = $20 $20 / $30 = .67 ($250 + $0) / .67 = $374 = $374.98

(89) Harmony Company sells hand−knit scarves. Each scarf sells for $35. The company pays $85 to rent vending space for one day. The variable costs are $10 per scarf. How many scarves should the company sell each day in order to break​ even? (Round your answer up to the nearest whole​ scarf.) A. 4 scarves B. 50 scarves C. 3 scarves D. 9 scarves (Ch. 20)

A Contribution Margin = Sales - Variable Costs Breakeven = (Fixed Costs + $0) / Contribution margin per unit $35 - $10 = $25 ($85 + $0) / $25 = 3.4 4 Scarves

(82) The phone bill for a company consists of both fixed and variable costs. Refer to the four−month data below and apply the high−low method to answer the question. Minutes Total Bill January 480 $3,000 February 210 $2,695 March 180 $2,660 April 300 $2,830 What is the variable cost per​ minute? (Round your answer to the nearest​ cent.) A. $1.13 B. $0.88 C. $0.11 D. $6.25 (Ch. 20)

A Variable Cost per unit = Change in cost / change in volume of activity (3,000 - 2,660) / (480 - 180) = $1.13

(66) An activity−based costing system is developed in four​ steps: a. Compute the predetermined overhead allocation rate for each activity. b. Identify activities and estimate their total indirect costs. c. Identify the allocation base for each activity and estimate the total quantity of each allocation base. d. Allocate indirect costs to the cost object. Which of the following is the correct order for performing these​ steps? A. ​b, c,​ a, d B. ​b, a,​ c, d C. ​c, a,​ b, d D. ​a, b,​ c, d (Ch. 19)

A b. Identify activities and estimate their total indirect costs. c. Identify the allocation base for each activity and estimate the total quantity of each allocation base. a. Compute the predetermined overhead allocation rate for each activity. d. Allocate indirect costs to the cost object.

(81) The relevant production range for Challenger​ Trailers, Inc. is between 100,000 units and 190,000 units per month. If the company produces beyond 190,000 units per​ month, ________. A. both the fixed costs and the variable cost per unit may change B. the fixed costs may​ change, but the variable cost per unit will remain the same C. the fixed costs and the variable cost per unit will not change D. the fixed costs will remain the​ same, but the variable cost per unit may change (Ch. 20)

A both the fixed costs and the variable cost per unit may change

(57) During the​ month, Barrera Manufacturing incurred​ (not paid) $54,000 in direct labor costs in Department​ 1, $20,000 direct labor costs in Department​ 2, and$3,500 of indirect labor costs. Which of the following is not part of the summary journal entry to record these​ transactions? Process costing is used. A. debit to Work−in−Process Inventory for $77,500 B. debit to Work−in−Process Inventory—Department 1 for $54,000 C. debit to Manufacturing Overhead for $3,500 D. credit to Wages Payable for $ 77,500 (Ch. 18)

A debit to Work−in−Process Inventory for $77,500 54,000 direct labor + 20,000 direct labor + 3,500 indirect labor cost = 77,500 total WIP inventory

(7) Which of the following correctly describes the accounting for administrative expenses of a manufacturing​ company? A. Administrative expenses are period costs and are expensed as incurred. B. Administrative expenses are product costs and are expensed as incurred. C. Administrative expenses are product costs and are expensed when the manufactured product is sold. D. Administrative expenses are period costs and are expensed when the manufactured product is sold. (Ch. 16)

A Administrative expenses are period costs and are expensed as incurred.

(56) Coat−All-Paint Company used a predetermined overhead allocation rate to allocate $75,000 and $55,000 of indirect costs to the Coloring Department and the Mixing ​Department, respectively. The journal entry to record the allocation of overhead costs to the Coloring Department is​________. Process costing is used. A. debit Work−in−Process Inventory—​Coloring, $75,000​; credit Manufacturing​ Overhead, $75,000 B. debit Manufacturing​ Overhead, $75,000​; credit Work−in−Process Inventory—​Mixing, $ $75,000 C. debit Manufacturing​ Overhead, $55,000​; credit Work−in−Process Inventory—​Mixing, $55,000 D. debit Work−in−Process Inventory—​Coloring, $55,000​; credit Manufacturing​ Overhead, $55,000 (Ch. 18)

A debit Work−in−Process Inventory—​Coloring, $75,000​; credit Manufacturing​ Overhead, $75,000

(10) The following information relates to Carried Away Hot Air​ Balloons, Inc.: Advertising Costs $11,000 Sales Salary 11,400 Sales Revenue 620,000 ​President's Salary 60,000 Office Rent 59,000 Manufacturing Equipment Depreciation 2,500 Indirect Materials Used 7,300 Indirect Labor 10,500 Factory Repair and Maintenance 980 Direct Materials Used 20,860 Direct Labor 30,900 Delivery Vehicle Depreciation 890 Administrative Salaries 22,100 How much was Carried​ Away's manufacturing​ overhead? A. $21,280 B. $17,800 C. $18,780 D. $51,760 (Ch. 16)

A. $21,280 Manufacturing Equipment Depreciation 2,500 Indirect Materials Used 7,300 Indirect Labor 10,500 Factory Repair and Maintenance 980 == 21,280

(14) Franklin Manufacturing provided the following information for the month ended March​ 31: Sales Revenue $21,000 Beginning Finished Goods Inventory 15,000 Ending Finished Goods Inventory 12,500 Cost of Goods Manufactured 19,600 Compute cost of goods sold. A. $22,100 B. $19,600 C. $17,100 D. $ 32,100 (Ch. 16)

A. $22,100 Beginning FG Inventory 15,000 + COGM 19,600 = COG available for sale 34,600 - Ending FG Inventory 12,500 =COGS 22,100

(32) The records at Smith and​ Jones, Inc. show that Job 110 is charged with $13,000 of direct materials and $12,000 of direct labor. Smith and​ Jones, Inc. allocate manufacturing overhead at 80​% of direct labor cost. What is the total cost of Job No.​ 110? A. $34,600 B. $35,400 C. $12,000 D. $25,000 (Ch. 17)

A. $34,600 $9,600 = $12,000 DL x .8 allocation rate $13,000 DM $12,000 DL = $34,600 Total costs

(30) Aaron, Inc. estimates direct labor costs and manufacturing overhead costs for the coming year to be $790,000 and $530,000​, respectively. Aaron allocates overhead costs based on machine hours. The estimated total labor hours and machine hours for the coming year are 20,000 hours and 6,000 ​hours, respectively. What is the predetermined overhead allocation​ rate? (Round your answer to the nearest​ cent.) A. $88.33 per machine hour B. $26.50 per labor hour C. $1.49 per labor hour D. $131.67 per machine hour (Ch. 17)

A. $88.33 per machine hour $530,000 / 6,000 machine hours = $88.33 per machine hour

(53) The Assembly Department of​ Interface, Inc., manufacturer of​ computers, had 3,000 units of beginning inventory in​ September, and 7,000 units were transferred to it from the Production Department. The Assembly Department completed 3,500 units during the month and transferred them to the Packaging Department. The weighted−average method is used. Calculate the total number of units to account for by the Assembly Department. A. 10,000 units B. 7,000 units C. 4,000 units D. 3,000 units (Ch. 18)

A. 10,000 units To account for = Beg bal + Amount transferred in 3,000 + 7,000 = 10,000 units to account for

(60) Happy​ Trails, Inc. manufactures railway coaches and uses the FIFO method of process costing to record costs. The Work−in−Process Inventory of the Heating Department on October 1 was 73​% complete for materials and 25​% complete for conversion costs. On October​ 31, its ending Work−in−Process Inventory was 81​% complete for materials and 43​% complete for conversion costs. This means that for the ending​ inventory, ________% of the materials and​ ________% of the conversion costs were added during October. A. 81​;43 B. 73;43 C. 27​;25 D. 43​;81 (Ch. 18)

A. 81​;43 End of the month, the accounts are 81% and 43% complete, so this much was done throughout

(25) The journal entry to issue $600 of direct materials and $30 of indirect materials to production involves​ debit(s) to the​ ________. A. Work−in−Process Inventory account for $600 and Manufacturing Overhead account for $30 B. Manufacturing Overhead account for $630 C. Work−in−Process Inventory account for $630 D. Work−in−Process Inventory account for $600 and Finished Goods Inventory account for $30 (Ch. 17)

A. Work−in−Process Inventory account for $600 and Manufacturing Overhead account for $30

(21) Which of the following companies is most likely to use process​ costing? A. a breakfast cereal company B. a building contractor C. an accounting firm D. a music studio (Ch. 17)

A. a breakfast cereal company

(24) Manufacturing Overhead is a temporary account used to​ ________ indirect production costs during the accounting period. A. accumulate B. approximate C. allocate D. assign (Ch. 17)

A. accumulate

(23) The entry to record the purchase of raw materials on account would include a​ ________. A. debit to the Raw Materials Inventory account B. debit to the Work−in−Process Inventory account C. credit to the Raw Materials Inventory account D. credit to the Work−in−Process Inventory account (Ch. 17)

A. debit to the Raw Materials Inventory account

(3) Period costs are the​ ________. A. operating costs that are expensed in the accounting period in which they are incurred. B. product costs that must be paid in the accounting period in which they are incurred. C. costs related to production of products. D. same as manufacturing overhead costs. (Ch. 16)

A. ? operating costs that are expensed in the accounting period in which they are incurred. Period costs are non manufacturing costs such as selling expenses(marketer's salary) and administrative expenses(rent on admin building) that expensed when incurred

​(61)Bella, Inc. manufactures two kinds of bags—totes and satchels. The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base. Estimated overhead costs for the year are $24,250. Additional estimated information is given below. Totes and Satchels Direct materials cost per unit $32 $45 Direct labor cost per unit $53 $61 Number of units 530 360 Calculate the predetermined overhead allocation rate.​ (Round your answer to two decimal​ places.) A. 86.33​% B. 48.45​% C. 1.42​% D. 90.56​% (Ch. 19)

B 53 x 530 = 28090 61 x 360 = 21960 28090 + 21960 = 50050 24,250 / 50050 = .4845 48.45%

​(62) Borsetta, Inc. manufactures two kinds of bag—totes and satchels. The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base. Estimated overhead costs for the year are $24,250. Additional estimated information is given below. Totes Satchels Direct materials cost per unit $32 $42 Direct labor cost per unit $54 $60 Number of units 500 370 Calculate the amount of overhead to be allocated to​ Satchels, if the actual units produced and direct labor costs equal the estimated amounts.​ (Round any percentages to two decimal places and your final answer to the nearest​ dollar.) A. $13,308 B. $10,942 C. $449 D. $ 22, 200 (Ch. 19)

B 54 x 500 = 27,000 60 x 370 = 22,200 27,000 + 22,200 = 49,200 24,250 / 49,200 = 49.29 49.29 x 370 x 60 = 10,942

(20) Fuchsia, Inc. provides automobile repair services in the local community. The company provides the following information for the month of​ March: Building Rent Expense $5,000 Depreciation Expense—Equipment 1,600 Supplies Expense 9,000 Utilities Expense 2,300 Fuchsia provided services to 1,400 clients in the month of March and generated $20,500 as revenue. How much is the cost per​ service? (Round your answer to the nearest​ cent.) A. $6.36 B. $12.79 C. $8.91 D. $3.57 (Ch. 16)

B Cost per service = total costs / # of services provided Total costs 17,900 (5,000 + 1,600 + 9,000 + 2,300) / Total services 1,400 = 12.7857 $17,900 / 1,400 clients = 12.79

(74) Closet Links Clothing Company provided the following manufacturing costs for the month of June. Direct labor cost $130,000 Direct materials cost 90,000 Equipment depreciation ​(straight−​line) 23,000 Factory insurance 16,000 Factory​ manager's salary 11,800 ​Janitor's salary 3,000 Packaging costs 19,800 Property taxes 15,000 From the above​ information, calculate Closet​ Link's total variable costs. A. $308,600 B. $239,800 C. $220,000 D. $ 68,800 (Ch. 20)

B DL 130,000 + DM 90,000 Packaging Costs 19,800 =239,800

(63) A radial tire manufacturer produces products in two departments—Divisions A and B. The company uses separate predetermined overhead allocation rates for each department to allocate its overhead. Divisions A and B have estimated manufacturing overhead costs of $160,000 and $340,000​, respectively. Division A uses machine hours as the allocation​ base, and Division B uses direct labor hours as the allocation base. The total estimated machine hours were 35,000​, and direct labor hours were 21,000 for the year. Calculate the departmental predetermined overhead allocation rates.​ (Round your answer to the nearest​ cent.) A. Division A$9.71​, Division B—$7.62 B. Division A—$4.57​, Division B—$16.19 C. Division A—$16.19​, Division B—$4.57 D. Division A—$7.62​, Division B—$ 9.71 (Ch. 19)

B Division A- 160,000 / 35,000 = 4.57 Division B- 340,000 / 21,000 = 16.19

(69) Which of the following is the correct formula to calculate the target​ cost? A. Target Cost​ = Target Sales Price B. Target Cost​ = Target Sales Price − Desired Net Profit C. Target Cost​ = Target Sales Price​ + Desired Net Profit D. Target Cost​ = Desired Net Profit​ + Research and Development Expenses (Ch. 19)

B Target Cost​ = Target Sales Price − Desired Net Profit

(75) The fixed costs per unit will​ ________. A. increase as production increases B. increase as production decreases C. remain the same as production levels change D. decrease as production decreases (Ch. 20)

B increase as production decreases

(8)The following information relates to​ Wagner, Inc.: Advertising Costs $12,000 Administrative Salaries 10,800 Delivery Vehicle Depreciation 1,300 Factory Repair and Maintenance 1,000 Indirect Labor 14,000 Indirect Materials 13,500 Manufacturing Equipment Depreciation 2,200 Office Rent 54,000 ​President's Salary 2,700 Sales Revenue 550,000 Sales Salary 5,500 How much were​ Wagner's period​ costs? A. $555,500 B. $86,300 C. $8,200 D. $ 30,700 (Ch. 16)

B $86,300 Advertisement 12,000 Administration 10,800 Delivery Vehicle Depreciation 1,300 Office Rent 54,000 President's Salary 2,700 Sales Salary 5,500 = $86,300

(88) Clay Earth Company sells ceramic pottery at a wholesale price of $7.00 per unit. The variable cost of manufacture is $2.50 per unit. The fixed costs are $5,300 per month. It sold 4,400 units during this month. Calculate Clay​ Earth's operating income​ (loss) for this month. A. ​($5,300​) B. $14,500 C. ​($14,500​) D. $ 25,500 (Ch. 20)

B $14,500 Revenue $30,800 (4,400 x $7) - Variable costs $11,000 (4,400 x $2.5) = Contribution $19,800 - Fixed costs $5,300 = Operating Income $14,500

(36) Underallocated overhead occurs when​ ________. A. estimated overhead costs are greater than actual overhead costs B. allocated overhead costs are less than actual overhead costs C. actual overhead costs are less than allocated overhead costs D. estimated overhead costs are greater than budgeted overhead costs (Ch. 17)

B. allocated overhead costs are less than actual overhead costs

(76) Tentacle Television Antenna Company provided the following manufacturing costs for the month of June. Direct labor cost $134,000 Direct materials cost 88,000 Equipment depreciation ​(straight−​line)21,000 Factory insurance 10,000 Factory​ manager's salary 10,600 ​Janitor's salary 4,000 Packaging costs 19,200 Property taxes 14,000 From the above​ information, calculate​ Tentacle's total fixed costs. A. $38,600 B. $59,600 C. $300,800 D. $ 55,600 (Ch. 20)

B Depreciation 21,000 + Factory Insurance 10,000 + Factory Manager's Salary 10,600 + Janitors Salary + 4,000 Property Taxes 14,000 = 59,600

(4) Which of the following is a period cost for a manufacturing​ company? A. raw materials B. office rent C. wages of factory janitor D. insurance cost of production equipment (Ch. 16)

B Office rent

(17) Payton Corporation provided the following information for the​ year: Beginning Balance—​Work-in-Process Inventory $24,000 Ending Balance—​Work-in-Process Inventory 55,000 Beginning Balance—Direct Materials 82,000 Ending Balance—Direct Materials 59,000 Purchases—Direct Materials 361,000 Direct Labor 472,000 Indirect Labor 21,000 Depreciation on Factory Plant and Equipment 24,000 Plant Utilities and Insurance 271,000 What was the amount of the cost of goods manufactured for the​ year? A. $1,369,000 B. $1,141,000 C. $1,203,000 D. $1,172,000 (Ch. 16)

B. $1,141,000 Beginning DM 82,000 + Purchases of Direct Materials 361,000 = DM available for use 443,000 - Ending DM 59,000 = DM used 384,000 + Direct Labor 472,000 + Manufacturing Overhead 316,000 (24,000 + 21,000 +271,000) = Total Manufacturing costs to account for 1,172,000 (384,000 + 472,000 + 316,000) Begin WIP 24,000 + Manufacturing costs incurred 1,172,000 = Manufacturing costs to account for 1,196,000 - Ending WIP 55,000 = COGM 1,141,000

(31) Iglesias, Inc. completed Job 12 on November 30. The details of Job 12 are given​ below: Direct labor cost $830 Direct materials cost $1,100 Machine hours 9 hours Direct labor hours 23 hours Predetermined overhead allocation rate $80 per machine hour What is the total cost of Job​ 12? A. $1,820 B. $2,650 C. $1,550 D. $ 1,930 (Ch. 17)

B. $2,650 $80 x 99 machine hours = $720 MOH + $830 DL + $1,100 DM = $2,650

(5) Castillo​ Corporation, a​ manufacturer, reports costs for the year as​ follows: Direct Materials Used $795,000 Wages to Line Workers 540,000 Office Rent 20,500 Indirect Materials Used 315,000 How much is the total period costs for​ Castillo? A. $540,000 B. $20,500 C. $315,000 D. $795,000 (Ch. 16)

B. $20,500 Office Rent $20,500

(39) Highland, Inc., an engineering​ firm, uses a job order costing system to accumulate client−related costs. The predetermined overhead allocation rate is 60​% of staff labor cost. The work by engineers is charged to jobs at a rate of $32 per staff labor hour. A recent job for a client used 60 staff labor hours. How much was the total job​ cost? A. $36 B. $3,072 C. $1,152 D. $1,920 (Ch. 17)

B. $3,072 $32 x 60 hours = $1,920 1,920 x .6 = $1,152 == $3,072

(38) On January 1 Primary Manufacturing had a beginning balance in Work−in−Process Inventory of $80,300 and a beginning balance in Finished Goods Inventory of $21,000. During the​ year, Primary incurred manufacturing costs of $352,000. In​ addition, the following transactions occurred during the​ year: Job A−12 was completed for a total cost of $122,000 and was sold for $127,000. Job A−13 was completed for a total cost of 202,000 and was sold for $212,000. Job A−15 was completed for a total cost $62,000 but was not sold as of year−end. The Manufacturing Overhead account had an unadjusted credit balance of $10,000​, and was adjusted to zero at year−end. What was the final balance in the Cost of Goods Sold​ account? A. $324,000 debit balance B. $314,000 debit balance C. $334,000 debit balance D. $10,000 credit balance (Ch. 17)

B. $314,000 debit balance $122,000 + $202,000 = $324,000 Completed and sold $324,000 - $10,000 Unadjusted MOH Credit = $314,000 Subtract from COGS bc you want to zero it out, which would require you credit COGS due to the overallocation

(18) The following information has been provided by New​ Age, Inc.: Direct Labor $25,200 Direct Materials Used 10,000 Direct Materials Purchased 16,830 Cost of Goods Manufactured 48,100 Ending​ Work-in-Process Inventory 11,400 Corporate​ Headquarters' Property Taxes 1,500 Manufacturing Overhead 19,800 Calculate the beginning balance of the​ Work-in-Process Inventory account. A. $43,600 B. $4,500 C. $59,500 D. $91,700 (Ch. 16)

B. $4,500 COGM 48,100 - DM Used 10,000 - DL 25,200 - MOH 19,800 + Ending WIP 11,400 = Begin WIP 4,500

(33) On January​ 1, Jackson,​ Inc.'s Work−in−Process Inventory account showed a balance of $66,400. During the​ year, materials requisitioned for use in production amounted to $70,700​, of which $67,800 represented direct materials. Factory wages for the period were $208,000 of which $186,000 were for direct labor. Manufacturing overhead is allocated on the basis of​ 60% of direct labor cost. Actual overhead was $116,130. Jobs costing $353,150 were completed during the year. The December 31 balance in Work−in−Process Inventory is​ ________. A. $66,400 B. $78,650 C. $431,800 D. $320,200 (Ch. 17)

B. $78,650 $66,400 Beg WIP + $67,800 DM + $186,000 DL + $111,600 MOH (.6 x 186,0000) = $431,800 - $353,150 completed during the year = $78,650 WIP Dec 31

(59) On September​ 30, the Drying Department of​ Jamoca, Inc. had ending Work−in−Process Inventory that was 28​% complete for materials and 20​% complete for conversion costs. The company uses the FIFO method. This means that for the ending Work−in−Process ​inventory, ________% of materials and​ ________% of the conversion costs were added during September. A. 20​;28 B. 28​;20 C. 72​;80 D. 80​;72 (Ch. 18)

B. 28​;20 Ended month with 28% and 20% complete for each account, so this much was done throughout

(26) Adelphia Manufacturing issued $70,000 of direct materials and $8,000 of indirect materials for production. Which of the following journal entries would correctly record the​ transaction? A. Work−in−Process Inventory 78,000 Raw Materials Inventory 78,000 B. Work−in−Process Inventory 70,000 Manufacturing Overhead 8,000 Raw Materials Inventory 78,000 C. Manufacturing Overhead 78,000 Raw Materials Inventory 78,000 D. Raw Materials Inventory 78,000 Finished Goods Inventory 70,000 Work−in−Process Inventory 8,000 (Ch. 17)

B. Work−in−Process Inventory 70,000 Manufacturing Overhead 8,000 Raw Materials Inventory 78,000

(22) Which of the following is the correct order of the four steps of tracking product​ costs? A. adjust→ allocate→ accumulate→ assign B. accumulate→ assign→ allocate→ adjust C. assign→ accumulate→ allocate→ adjust D. allocate→ adjust→ accumulate→ assign (Ch. 17)

B. accumulate→ assign→ allocate→ adjust

(51) Four steps are necessary in preparing a production cost​ report: 1. Compute output in terms of equivalent units of production 2. Assign costs to units completed and units in process 3. Summarize the flow of physical units 4. Compute the cost per equivalent unit of production Place these steps in the correct order. A. ​2, 1,​ 4, 3 B. ​3, 1,​ 4, 2 C. ​1, 3,​ 2, 4 D. ​4, 2,​ 1, 3 (Ch. 18)

B. ​3, 1,​ 4, 2 3. Summarize the flow of physical units 1. Compute output in terms of equivalent units of production 4. Compute the cost per equivalent unit of production 2. Assign costs to units completed and units in process (SCoCcA)

(71) Superior​ Services, Inc. is a consulting firm that offers optimal legal solutions. It allocates indirect costs using a single predetermined overhead allocation rate with direct labor hours as the allocation base. The estimated indirect costs for this year amount to $150,000. The company is expected to work 6,000 direct labor hours during the year. The direct labor rate is $300 per hour. Clients are billed at 120​% of direct labor cost. Last​ month, Superior's consultants spent 180 hours on​ Xyme, Inc. What is the predetermined overhead allocation rate per direct labor​ hour? (Round your final answer to the nearest whole​ dollar.) A. $500 per hour B. $833 per hour C. $25 per hour D. $20 per hour (Ch. 19)

C 150,000 / 6,000 = $25 per hour

(77) Variable cost per​ unit, within the relevant​ range, will​ ________. A. decrease as production increases B. decrease as production decreases C. remain the same as production levels change D. increase as production decreases (Ch. 20)

C remain the same as production levels change

(68) Room Chill Company manufactures ceiling fans and uses an activity−based costing system. Each ceiling fan has 20 separate parts. The direct materials cost is $70.00​, and each ceiling fan requires 22 hours of machine time to manufacture. Additional information is as​ follows:term-15 Activity Allocation Base Predetermined Overhead Allocation Rate Materials handling Number of parts ​$0.06 Machining Machine hours 6.6 Assembling Number of parts 0.3 Packaging Number of finished units 3.4 What is the cost of assembling per ceiling​ fan? (Round any intermediate calculations and your final answer to the nearest​ cent.) A. $21.00 B. $13.20 C. $6.00 D. $70.00 (Ch. 19)

C .3 x 20 = 6

(2) Which of the following is one of the key standards of ethical practice published by the Institute of Management Accountants​ (IMA)? A. social responsibility B. technicality C. confidentiality D. environmental sensitivity (Ch. 16)

C confidentiality (Confidentiality, competence, integrity, and credibility)

(95) A​ company's proportion of fixed costs to variable costs is called its ______. A. mixed cost B. target profit C. cost structure D. relevant range Ch. 20

C Cost structure

(85) Avia Company sells a product for $140 per unit. Variable costs are $110 per​ unit, and fixed costs are $1,300 per month. The company expects to sell 690 units in September. The unit contribution margin​ is: A. $110 per unit B. $140 per unit C. $30 per unit D. $250 per unit (Ch. 20)

C Unit contribution margin = Revenue per unit - variable cost per unit $140 - $110 = $30 per unit

(92) Gitli Company sells its product for $55 and has variable cost of $35 per unit. The total fixed costs are $27,000. What will be the effect on the breakeven point in units if variable cost increases by $10 due to an increase in the cost of direct​ materials? (Round your answer up to the nearest whole​ unit.) A. It will decrease by 167 units. B. It will increase by 167 units. C. It will increase by 1,350 units. D. It will decrease by 1,350 units. (Ch. 20)

C It will increase by 1,350 units (Fixed costs + $0) / CM per unit ($27,000 + $0) / ($55 - $35) = 1,350 units original breakeven ($27,000 + $0) / ($55 - $45) = 2,700 new breakeven Increased by 1,350 units

(93) Awanita Enterprises sells computer flash drives for $3.23 per unit. Unit variable cost is $0.06. The breakeven point in units is 3,400​, and expected sales in units are 4,300. What is the margin of safety in​ dollars? A. $10,982 B. $54 C. $2,907 D. $ 2,853 (Ch. 20)

C ? Margin of Safety in units = expected sales - breakeven sales Margin of Safety in dollars = MoS in Units x sale price per unit 4,300 - 3,400 = 900 900 x $3.23 = $2,907

(19) Hernando​ Manufacturing, Inc. reported the following information for the​ year: Number of Units Produced 153,000 Number of Units Sold 62,500 Cost of Goods Manufactured $270,000 Cost of Goods Sold 52,400 Sales Revenue 134,000 Gross Profit 70,140 Operating Expense 720,000 What was the unit product​ cost? (Round your answer to the nearest​ cent.) A. $0.88 B. $0.84 C. $1.76 D. $ 4.32 (Ch. 16)

C. $1.76 Unit Product cost = COGM / Total Units Produced 270,000 / 153,000 = $1.76 per unit

(50) The Assembly Department of​ ByteSize, Inc., manufacturer of​ computers, incurred $290,000 in direct material costs and $80,000 in conversion costs. The equivalent units of production for direct materials and conversion costs are 1,000 and 600​, respectively. The weighted−average method is used. The cost per equivalent unit of production​ (EUP) for conversion costs is​ ________. (Round your answer to the nearest​ cent.) A. $80.00 per EUP B. $483.33 per EUP C. $133.33 per EUP D. $290.00 per EUP (Ch. 18)

C. $133.33 per EUP $80,000 conversion costs / 600 units = $133.33

(12) Artisan​ Inspiration, Inc. is a merchandiser of stone ornaments. The company sold 6,500 units during the year. The company has provided the following​ information: Sales Revenue $551,000 Purchases​ (excluding Freight​ In) 304,000 Selling and Administrative Expenses 67,000 Freight In 15,000 Beginning Merchandise Inventory 46,000 Ending Merchandise Inventory 43,000 What is the operating income for the​ year? (Round your answer to the nearest whole​ dollar.) A. $322,000 B. $229,000 C. $162,000 D. $ 484,000 (Ch. 16)

C. $162,000 Purchases​ (excluding Freight​ In) 304,000 + Freight In 15,000 + Beginning Merchandise Inventory 46,000 - Ending Merchandise Inventory 43,000 = COGS = 322,000 Sales Revenue - COGS = Gross Profit 551,000 - 322,000 = 229,000 Gross Profit = 229,000 - Selling and Administrative Expenses 67,000 Operating Income = 162,000

(15) Lakeshore Manufacturing provided the following information for the month ended March​ 31: Sales Revenue $26,000 Beginning Finished Goods Inventory 16,000 Ending Finished Goods Inventory 7,500 Cost of Goods Manufactured 14,600 Compute gross profit. A. $19,900 B. $3,900 C. $2,900 D. $ 11,400 (Ch. 16)

C. $2,900 Sales Revenue - COGS ( Beg Inv + COGM - End Inv) = Gross Profit 26,000 - 23,100 (16,000 + 14,600 - 7,500) = 2,900

(13) Super Tread Inc. is a large manufacturer of auto tires. Super Tread has provided the following​ information: Sales Revenue $75,000 Beginning Finished Goods Inventory 22,500 Cost of Goods Sold 42,000 Cost of Goods Manufactured 52,500 Calculate the amount of ending Finished Goods Inventory reported on Super​ Tread's balance sheet. A. $10,500 B. $22,500 C. $33,000 D. $ 75,000 (Ch. 16)

C. $33,000 Beg FG Inventory 22,500 + COGM 52,500 = Goods available for sale 75,000 - Ending Inventory ? = COGS 42,000 75,000 - ? = 42,000 Ending FG = 33,000

(42) Martinez Products manufactures a line of desk chairs.​ Martinez's production operations are divided into two departments— Department 1 and Department 2. The company uses a process costing system. Martinez incurred the following costs during the year to produce 26,400 ​chairs: Department 1 $861,500 Department 2 $289,000 If Martinez sells 23,300 chairs during the​ year, what will be the cost per chair​ produced? (Round your answer to two decimal​ places.) A. $32.63 B. $36.97 C. $43.58 D. $49.38 (Ch. 18)

C. $43.58 $861,500 + $289,000 = $1,150,500 Total costs $1,150,500 / 26,400 units = $43.58

(47) The Refining Department of Crystal Cane​ Sugar, Inc. had 67,000 tons of sugar to account for in December. Of the 67,000 ​tons, 55,000 tons were completed and transferred to the Boiling​ Department, and the remaining 12,000 tons were 50​% complete. The materials required for production are added at the beginning of the process. Conversion costs are added equally throughout the refining process. The weighted−average method is used. Calculate the total equivalent units of production for conversion costs. A. 6,000 units B. 55,000 units C. 61,000 units D. 67,000 units (Ch. 18)

C. 61,000 units 55,000 completed and transferred out + 6,000 (12,000 units halfway done) = 61,000 Conversion costs 61,000 because conversion costs are added throughout the process

(52) The equivalent units of production for transferred in units are always​ 100% because​ ________. A. they are not utilized for production in the subsequent department B. they are considered​ 100% complete with respect to the entire production process C. they were​ 100% complete with respect to the previous department D. they are the finished goods purchased and transferred to the next department (Ch. 18)

C. they were​ 100% complete with respect to the previous department

(45) Under process​ costing, the total production costs incurred in each process must be split between the units that have been completed in that process and transferred to the next process and the​ ________. A. Finished Goods Inventory if it is the first process B. Cost of Goods Sold when the units are sold C. units not completed and remaining in​ Work-in-Process Inventory for that department D. ​Work-in-Process Inventory of the previous department when there are no sales (Ch. 18)

C. units not completed and remaining in​ Work-in-Process Inventory for that department

(27) The accounts of Delphinia​ Dreams, Inc. showed the following balances at the beginning of​ October: Account Debit Raw Materials Inventory $31,000 Work−in−Process Inventory 42,000 Finished Goods Inventory 51,000 Manufacturing Overhead 23,000 During the​ month, direct materials amounting to $24,000 and indirect materials amounting to $7,000 were issued to production. What is the ending balance in the Work−in−Process Inventory account following these two​ transactions? A. $42,000 B. $30,000 C. $66,000 D. $9,000 (Ch. 17)

C. ?? $66,000 WIP 42,000 + DM 24,000 = 66,000

(54) Carbamate Manufacturing produces a pesticide chemical and uses process costing. There are three processing departments—​Mixing, ​Refining, and Packaging. On January​ 1, the Refining Department had 2,000 gallons of partially processed product in production. During​ January, 32,000 gallons were transferred in from the Mixing​ Department, and 29,000 gallons were completed and transferred out. At the end of the​ month, 5,000 gallons of partially processed product remained in the Refining Department. The weighted−average method is used. See additional details below. Refining​ Department, ending balance at January 31 Percent completed for materials​ cost: 90​% Percent completed for conversion​ cost: 76​% What was the total number of equivalent units of production for conversion costs for the month of January for the Refining​ Department? A. 3,800 units B. 4,500 units C. 32,800 units D. 29,000 units (Ch. 18)

C. ?? 32,800 units 29,000 units completed and transferred out + 3,800 (5,000 units partially complete x .76) = 32,800 units

(29) Which of the following correctly describes the term cost​ driver? A. the inflation rate that causes costs to rise B. the average inventory costs incurred at any point of time C. the primary factor that causes a cost to be incurred D. the total​ material, labor, and overhead costs of a completed job (Ch. 17)

C. ?? the primary factor that causes a cost to be incurred

(87) Robusta Coffee Importers sold 2,000 units in October at a sales price of $40 per unit. The variable cost is $25 per unit. The monthly fixed costs are $12,000. What is the operating income earned in​ October? A. $80,000 B. $30,000 C. $50,000 D. $ 18,000 (Ch. 20)

D $18,000 Revenue $80,000 (2,000 x $40) - Variable costs $50,000 (2,000 x $25) = Contribution $30,000 - Fixed costs $12,000 = Operating Income $18,000

(67) Gizmo​ Company, a manufacturer of small​ appliances, had the following​ activities, allocated​ costs, and allocation​ bases: Activities Allocated Costs Allocation Base Account inquiry​ (hours) $64,000 2,600 hours Account billing​ (lines) $40,000 18,000 lines Account verification​ (accounts) $20,000 22,000 accounts Correspondence​ (letters) $11,000 1,400 letters The above activities are carried out at two of its regional offices. Activities Northeast Office Midwest Office Account inquiry​ (hours) 180 hours 300 hours Account billing​ (lines) 15,000 lines 9,000 lines Account verification​ (accounts) 1,800 accounts 600 accounts Correspondence​ (letters) 70 letters 140 letters What is the cost per hour for the account inquiry​ activity? (Round your answer to the nearest​ cent.) A. $0.91 B. $7.86 C. $2.22 D. $ 24.62 (Ch. 19)

D 64,000 / 2,600 = 24.62

​(65) Stealth, Inc. produces two types of​ drones, rotary and fixed wing. Stealth estimated $988,000 of manufacturing​ overhead, and 52,000 machine hours for the year. The allocation base for overhead costs is machine hours. The rotary model actually consumed 21,000 machine​ hours, and the fixed wing type consumed 31,000 machine hours. How much overhead is allocated to the fixed wing​ model? A. $210,000 B. $399,000 C. $196,333 D. $ 589,000 (Ch. 19)

D 988,000 / 52000 = 19 19 x 31,000 = 589,000

​(70) Nourishmix, Inc. manufactures food processors. The target sales price is $460 per unit. The company desires a 30​% net profit margin on its products. What is the​ company's target full−product cost per unit using target​ pricing? A. $138 B. $598 C. $782 D. $ 322 (Ch. 19)

D Target full product cost = target sales - (target sales x desired profit %) 460-(460x.3) = 322

(73) Which of the following costs change in total in direct proportion to a change in​ volume? A. mixed costs B. period costs C. fixed costs D. variable costs (Ch. 20)

D Variable Costs

(79) The phone bill for a company consists of both fixed and variable costs. Refer to the​ four-month data below and apply the​ high-low method to answer the question. Minutes Total Bill January 480 $4,000 February 200 ​$2,700 March 170 $2,640 April 320 ​$2,855 What is the fixed portion of the total​ cost? (Round any intermediate calculations to the nearest​ cent, and your final answer to the nearest​ dollar.) A. ​$2,640 B. ​$1,360 C. ​$2,107 D. ​$1,893 (Ch. 20)

D Variable cost per unit = change in cost / change in unit ($4,000-$2,640) / (480-170) = $4.39 per minute Total fixed cost= total mixed costs - total variable cost $4,000-(480x4.39) = $1892.8 =$1,893 fixed cost portion

(86) Contribution margin ratio is equal to​ ________. A. fixed costs divided by contribution margin per unit B. net sales revenue per unit minus variable costs per unit C. net sales revenue minus variable costs D. contribution margin divided by net sales revenue (Ch. 20)

D contribution margin divided by net sales revenue

(64) The costs most easily traced to each product manufactured are A. direct materials and indirect materials B. indirect materials and indirect labor C. direct labor and manufacturing overhead D. direct materials and direct labor (Ch. 19)

D direct materials and direct labor

(72) Under the just−in−time management​ system, ________. A. the risk of the inventory becoming obsolete increases B. a​ company's storage costs increase C. a​ company's inventory insurance costs increase D. the floor space available for production increases (Ch. 19)

D the floor space available for production increases

(1)Managerial accounting information for a company is primarily used by​ ________. A. its customers to understand the pricing of the product B. its investors to make their investment decisions C. its creditors to understand the credibility of the business D. its employees to​ plan, direct and control operations (Ch. 16)

D its employees to​ plan, direct and control operations

(58) During​ September, the Filtering Department of​ Tithonia, Inc. had a beginning Work−in−Process Inventory of 700 units with costs of $130,000. During the​ month, it started and completed 600 units. It had 220 units in the ending Work−in−Process Inventory. What is the number of equivalent units of production for transferred in units in the Filtering Department in September under the first−​in, first−out ​(FIFO) method? A. 480 units B. 1,520 units C. 700 units D. 820 units (Ch. 18)

D 820 units 600 units started and completed + 220 units ending work in progress = 820

(9)Advertising Costs $19,600 Sales Salary 13,200 Sales Revenue 610,000 ​President's Salary 400,000 Office Rent 65,500 Manufacturing Equipment Depreciation 1,000 Indirect Materials Used 4,000 Indirect Labor 12,000 Factory Repair and Maintenance 980 Direct Materials Used 24,000 Direct Labor 28,000 Delivery Vehicle Depreciation 1,600 Administrative Salaries 27,000 How much were​ Myer's product​ costs? A. $ 736,900 B. $ 427,000 C. $ 629,600 D. $ 69,980 (Ch. 16)

D. $ 69,980 Manufacturing Equipment Depreciation 1,000 Indirect Materials Used 4,000 Indirect Labor 12,000 Factory Repair and Maintenance 980 Direct Materials Used 24,000 Direct Labor 28,000 == 69,980

(6) Rios Corporation reports costs for the year as​ follows: Direct Materials Used $315,000 Wages to Line Workers 235,000 Office Rent 32,000 Indirect Materials Used 655,000 How much is the total product costs for the​ year? A. $1,237,000 B. $550,000 C. $655,000 D. $1,205,000 (Ch. 16)

D. $1,205,000 Direct Materials + 315,000 Direct Labor + 235,000 Indirect Materials 655,000 = 1,205,000

(41) Jabari​ Manufacturing, a widgets manufacturing​ company, divides its production operations into three processes—Department ​1, Department​ 2, and Department 3. The company uses a process costing system. Jabari incurred the following costs during the year to produce 4,400 ​units: Department 1 $17,500 Department 2 7,000 Department 3 6,000 If Jabari could sell only 3,300 units during the​ year, what will be the cost per unit of widget​ produced? (Round your answer to the nearest​ cent.) A. $5.57 B. $9.24 C. $3.98 D. $6.93 (Ch. 18)

D. $6.93 $17,500 + $7,000 + $6,000 = $30,500 Total costs $30,500 / 4,400 units produced = $6.93 per unit

(28) The journal entry to record $1,500 of direct labor and $350 of indirect labor incurred will include​ debit(s) to the​ ________. A. Finished Goods Inventory account for $1,850 B. Work−in−Process Inventory account for $1,500 and Finished Goods Inventory account for $350 C. Manufacturing Overhead account for $1,850 D. Work−in−Process Inventory account for $1,500 and Manufacturing Overhead account for $350 (Ch. 17)

D. Work−in−Process Inventory account for $1,500 and Manufacturing Overhead account for $350

(44) In a process costing​ system, production costs are​ ________. A. directly shown on the income statement B. not reported in​ Work-in-Process Inventory or Finished Goods Inventory C. adjusted and allocated by jobs D. accumulated by process (Ch. 18)

D. accumulated by process

(11) Which of the following represents the combined sum of direct labor costs and manufacturing overhead​ costs? A. prime costs B. fixed costs C. period costs D. conversion costs (Ch. 16)

D. conversion costs

(35) On June​ 30, Coral, Inc. finished Job 750 with total job costs of $4,000​, and transferred the costs to Finished Goods Inventory. On July​ 6, Coral sold goods to a customer for $5,200 cash. Which of the following is the correct journal entry to record the cost of goods​ sold? Assume the perpetual inventory system is used. A. debit Work−in−Process Inventory $4,000 and credit Cost of Goods Sold $4,000 B. debit Finished Goods Inventory $4,000 and credit Cost of Goods Sold $4,000 C. debit Cost of Goods Sold $4,000 and credit Work−in−Process Inventory $4,000 D. debit Cost of Goods Sold $4,000 and credit Finished Goods Inventory $4,000 (Ch. 17)

D. debit Cost of Goods Sold $4,000 and credit Finished Goods Inventory $4,000

(55) Black Hills Manufacturing has two processing​ departments, Department I and Department II. During the​ year, direct materials worth $31,000 purchased on account were assigned to Department I. At the end of the​ year, when the production cost report for Department I was​ prepared, Black Hills assigned $50,000 to the units transferred from Department I to Department II. The journal entry to record the transfer of units to Department II will​ ________. A. debit Work−in−Process Inventory—Department II for $31,000 and credit Work−in−Process Inventory—Department I for $31,000 B. debit Work−in−Process Inventory—Department I for $50,000 and credit Work−in−Process Inventory —Department II for $50,000 C. debit Work−in−Process Inventory—Department I for $31,000 and credit Work−in−Process Inventory—Department II for $31,000 D. debit Work−in−Process Inventory—Department II for $50,000 and credit Work−in−Process Inventory—Department I for $50,000 (Ch. 18)

D. debit Work−in−Process Inventory—Department II for $50,000 and credit Work−in−Process Inventory—Department I for $50,000

(34) Altima, Inc. finished Job A40 on the last working day of the year. It utilized $400 of direct materials and $2,400 of direct labor. Altima uses a predetermined overhead allocation rate based on direct labor​ costs, which has been fixed at​ 40%. The entry to record the completion of the job should involve a​ ________. A. debit to Work−in−Process Inventory $3,760 and a credit to Finished Goods Inventory $3,760 B. debit to Cost of Goods Sold $3,760 and a credit to Finished Goods Inventory $3,760 C. debit to Finished Goods Inventory $3,760 and a credit to Materials Inventory $3,760 D. debit to Finished Goods Inventory $3,760 and a credit to Work−in−Process Inventory $ 3,760 (Ch. 17)

D. debit to Finished Goods Inventory $3,760 and a credit to Work−in−Process Inventory $ 3,760 $400 DM $2,400 DL $960 MOH (.4 x $2,400) = $3,760

(46) The Refining Department of​ SweetBeet, Inc. had​ 79,000 tons of sugar to account for in July. Of the​ 79,000 tons,​ 49,000 tons were completed and transferred to the Boiling​ Department, and the remaining​ 30,000 tons were​ 50% complete. The materials required for production are added at the beginning of the process. Conversion costs are added evenly throughout the refining process. The​ weighted-average method is used. Calculate the total equivalent units of production for direct materials. A. ​49,000 units B. ​15,000 units C. ​64,000 units D. ​79,000 units (Ch. 18)

D. ​79,000 units 79,000 units because the direct materials are added once at the beginning of the process

(37) Lakeside, Inc. estimated manufacturing overhead costs for the year at $375,000​, based on 180,000 estimated direct labor hours. Actual direct labor hours for the year totaled 190,000. The manufacturing overhead account contains debit entries totaling $391,000. The Manufacturing Overhead for the year was​ ________. (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.) A. $4,200 underallocated B. $35,737 overallocated C. $35,737 underallocated D. $4,200 overallocated (Ch. 17)

D. ?? $4,200 overallocated $375,000 / 180,000 = 2.08 Predetermined OH 2.08 x 190,000 actual hours = 395,200 $395,200 - $391,000 = $4,200

(83) Steadigen Company sells two generators—Model A and Model B—for $456 per unit and $418 per​ unit, respectively. The variable cost of Model A is $410 per unit and of Model B is $314 per unit. If Steadigen​ Company's sales incentives reward sales of the goods with the highest contribution margin per​ unit, the sales force will be motivated to push sales of Model A more aggressively than Model B. True False (Ch. 20)

False CM per unit = Net sales revenue - Variable cost Model A CM = $456 - $410 = $46 Model B CM = $418 - $314 = $104 False because Model A CM is > Model B CM

(94) Artisan Works is owned and operated by a craftsman who makes replicas of historic firearms for​ museums, sportsmen, and collectors. The data are as​ follows: Sales price per unit $800 Variable cost per unit $470 Fixed costs per month $10,890 If Artisan expects to sell 60 units per​ month, what is his margin of safety expressed in units per​ month? A. 60 units B. 27 units C. 25 units D. 93 units (Ch. 20)

MoS in units = Expected Sales - Breakeven sales CM per unit = Sales per unit - variable cost per unit $800 - $470 = $330 breakeven in units = (Fixed + target goal) / CM per unit (10,890 + 0) / ($330) = 33 units to breakeven = 60 units - 33 units = 27 units margin of safety