Exam 1 MC

Swan Textiles Inc. produces and sells a decorative pillow for $98.00 per unit. In the first month of operation, 2,300 units were produced and 1,800 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: Variable manufacturing costs$23.00 per unit Variable marketing costs$6.00 per unit Fixed manufacturing costs$15 per unit Administrative expenses, all fixed$21.00 per unit Ending inventories: Direct materials-0- WIP-0- Finished goods = 500 units What is the contribution margin using variable costing? $123,500 $124,200 $135,000 $165,600

124,200 98 - (23+6) = $69/ unit sold CM $69 * 1,800 units = $124,200

Pederson Company reported the following: Manufacturing costs $187,000 Units manufactured 17,000 Units sold 8,500units sold for $20 per unit Beginning inventory 3,400units What is the manufacturing cost for the ending finished goods inventory? $37,400 $93,500 $130,900 $238,000

130,900 manuf costs $187,000 / 17,000 units manufactured = $11 per unit 17000-8500+3400 = 11,900 units 11,900 * $11 = 130,900

Puritan Apparels is a clothing retailer. Unit costs associated with one of its products, Product AHF 130, are as follows: Direct materials $110 Direct manufacturing labor 90 Variable manufacturing overhead 45 Fixed manufacturing overhead 33 Sales commissions (2% of sales) 10 Administrative salaries 28 Total $316 What are the direct variable manufacturing costs per unit associated with Product AHF 130? $200 $245 $255 $288

245

M & G TV and Appliance Store is a small company that has hired you to perform some management advisory services. The following information pertains to 2017 operations. Sales (1,500 televisions)$1,500,000 Cost of goods sold 555,000 Store manager's salary per year 120,000 Operating costs per year 210,000 Advertising and promotion per year 18,000 Commissions (2.8% of sales)42,000 What were total fixed costs for 2017? $348,000 $597,000 $945,000 $330,000

348000 salary 120,000 + op costs 210,000 + advertising 18,000

Fast Track Auto produces and sells an auto part for $85 per unit. In 2017, 110,000 parts were produced and 90,000 units were sold. Other information for the year includes: Direct materials$23 per unit Direct manufacturing labor$6 per unit Variable manufacturing costs$1 per unit Sales commissions$6 per part Fixed manufacturing costs$790,000 per year Administrative expenses, all fixed$310,000 per year What is the inventoriable cost per unit using absorption costing? $36.00 $40.00 $37.18 $30.00

37.18 absorption absorbs all variable and fixed manufacturing costs: $790,000 fixed/110,000 units = $7.18 /unit 7.18 + 23 + 6 + 1

If the total cost function is y = 6,500 + 9X, calculate the variable cost for 4,400 units. $6,500 $58,500 $39,600 $46,100

39,600

Managers use management accounting information to ________. A)help external users such as investors, banks, regulators, and suppliers B)communicate a firm's financial position to investors, banks, regulators, and other outside parties C)communicate, develop, and implement strategies D)ensure that financial statements are consistent with the SEC rules

C

Strategy specifies ________. A)the demand created for products and services B)incremental changes for improved performance C)how an organization matches its own capabilities with the opportunities in the marketplace D)standard procedures to ensure quality products

C

Which of the following is NOT true about the cause-and-effect criterion when estimating a cost function? a. Managers must be careful not to equate high correlation between two variables to mean that either variable causes the other b. Knowledge of operations can help managers discover cause-and-effect relationships c. Correlation of variables proves cause-and-effect d. Contractual arrangements may show a direct cause and effect between two variables

C

The balance sheet of a manufacturing-sector companies would report ________. a. direct materials inventory, work-in-process inventory, and finished goods inventory accounts b. only finished goods inventory c. only merchandise inventory d. direct materials inventory and finished goods inventory accounts only

a

The conference method estimates cost functions ________. a. based on analysis and opinions gathered from various departments b. by mathematically analyzing the relationship between inputs and outputs in physical terms c. using quantitative methods that can be very time consuming and costly d. using time-and-motion studies

a

Which of the following best describes how fixed cost are treated in a variable cost method? a. They are excluded from inventory cost and are treated as period costs b. They are part of the product cost c. They are classified as nonmanufacturing costs d. They are allocated to the product cost using a denominator-level capacity choice

a

Which of the following costs is inventoried when using absorption costing? a. variable manufacturing costs b. fixed administrative costs c. fixed selling costs d. variable selling costs

a

________ is the level of capacity based on producing at full efficiency all the time. a. Theoretical capacity b. Demand capacity c. Practical capacity d. Normal capacity

a

A manufacturing plant produces two product lines: golf equipment and soccer equipment. An example of indirect cost for the soccer equipment line is the ________. a. material used to make the soccer balls b. property taxes paid on the land and building (plant) c. labor to shape the leather used to make the soccer ball d. material used to manufacture the soccer studs

b

To discourage producing for inventory, management can ________. a. evaluate performance over a quarterly period rather than a single year b. develop budgeting and planning activities that reduce management's freedom to inappropriately build inventory through increased production c. discourage using nonfinancial measures such as units in ending inventory compared to units in sales as nonfinancial measures may not be congruent with management performance goals d. implement absorption costing across all departments

b

Variable costs ________. a. include most personnel costs and depreciation on machinery b. increase in total when the actual level of activity increases c. are never considered a part of prime cost d. are always indirect costs

b

Which of the following is true of indirect costs? a. Indirect costs are always considered sunk costs. b. Indirect costs cannot be traced to a particular cost object in an economically feasible way. c. Indirect costs always vary in direct proportion to the level of production. d. All indirect costs are included in cost of goods sold.

b

Which of the following is true of line management? a.It only includes the top level management. b.It is directly responsible for achieving the goals of the organization. c.It is responsible of management accounting functions. d.It provides advice, support, and assistance to staff management.

b

Which of the following is true of absorption costing? a. It enables a manager to increase margins and operating income by producing more beginning inventory. b. It enables a manager to increase margins and operating income by producing more and building ending inventory. c. It enables a manager to decrease margins and operating income by producing more beginning inventory. d. It enables a manager to decrease margins and operating income by producing more and building ending inventory.

b.

Throughput contribution equals ________. a. revenues minus manufacturing overhead b. revenues minus all direct labor costs c. revenues minus all direct material cost of goods sold d. variable costs minus fixed costs

c

Which of the following is a manufacturing overhead cost? a. cost of materials that can be traced to individual products in an economically feasible manner b. the use of direct materials in the making of a finished good c. overtime premiums paid to plant workers d. labor cost of plant workers that can be traced accurately and easily to a particular product

c

Which of the following is a period cost? a. the cost of materials used to make a product when those materials are an insignificant part of the finished product b. the cost of direct labor c. costs incurred to provide customer service such as the operation of a 800 phone line to trouble shoot product problems and to answer questions about product warranties d. the amount of depreciation expense recognized because of the use of plant assets such as building and equipment

c

Which of the following statements is true of contribution-margin format of the income statement? a. It distinguishes manufacturing costs from nonmanufacturing costs. b. It is used for absorption costing. c. It distinguishes between variable and fixed costs in its format. d. It calculates gross margin.

c

A cost driver should be measurable and have an economically plausible relationship with the dependent variable which means: a. that the cost driver can be identified in an economically feasible way b. that the relationship must be based on a physical relationship c. that the relationship is based on correlation d. that the relationship is based on a cause -and-effect criterion and makes economic sense to management

d

The gross-margin format is used for ________. a. mixed costing income statement b. variable costing income statement c. standard costing income statement d. absorption costing income statement

d

Which of the following is a guideline used by management accountants to assist in strategic and operational decision making? a.employing a six sigma approach b.employing a regression approach c.employing a supply chain approach d.employing a cost-benefit approach

d

Work-in-process inventory would normally include ________. a. goods fully completed but not yet sold b. direct materials in stock and awaiting use in the manufacturing process c. goods returned after being sold to be re-worked on further improvements and quality d. goods partially worked on but not yet fully completed

d

Management accountants serve as key business partners in the planning process because they understand the key ________ factors that create ________. financial ... value. success ... value success ..... income accounting .... profits

financial ...value

When 25,000 units are produced, fixed costs are $21.00 per unit. Therefore, when 20,000 units are produced, fixed costs will ________. total $420,000 remain at $21.00 per unit decrease to $16.80 per unit increase to $26.25 per unit

increase to $26.25 per unit $21*25,000 = $525,000 $525,000/20,000 units