ACC 201 Exam 1

Which of the following costs do NOT change in total despite changes in volume within the relevant range?

fixed costs

Which of the following will appear as a line item in the traditional format of an income statement?

gross profit

An Enterprise Resource Planning system (ERP) ________.

integrates all worldwide functions, departments, and data of a company into a single system

When the sales price per unit decreases, the breakeven point ________.

increases

Which of the following is one of the key standards of ethical practice published by the Institute of Management

confidentiality

Awanita Enterprises sells computer flash drives for $3.16 per unit. Unit variable cost is $0.06. The breakevenpoint in units is 3600, and expected sales in units are 4300. What is the margin of safety in dollars?

2212

Sales Revenue: $26,000 Beginning Finished Goods Inventory: 8000 Ending Finished Goods Inventory: 13,500 Cost of Goods Manufactured: 15,600 Compute the cost of goods available for sale.

23,600

Rios Corporations reports for the year are as follows: DM used: 780,000 wages to line workers: 245,000 office rent: 33,000 indirect materials used: 800,000 How much is the total product costs for the year?

1,825,000

Asher Company sells two productsX and Y. Product X is sold for $30 per unit and has a variable cost per unitof $15. Product Y is sold for $30 per unit and has a variable cost of $10 per unit. Total fixed costs for thecompany are $20,000. Asher Company typically sells three units of Product X for every unit of Product Y. Whatis the breakeven point in total units? (Round any intermediate calculations to two decimal places, and youranswer to the nearest unit.)

1231

Martin was a professional classical guitar player until a motorcycle accident left him disabled. After longmonths of therapy, he hired an experienced luthier and started a small shop to make and sell Spanish guitars.The guitars sell for $900, and the fixed monthly operating costs are as follows: Rent and utilities: $800 Wages and benefits to luthier: 2000 Other expenses: 474 Martin's accountant told him about contribution margin ratios, and Martin understood clearly that for every dollar ofsales, $0.65 went to cover his fixed costs, and anything above that point was profit. Martin wishes to earn $4000 of operating profit each month. Calculate the number of guitars Martin will need tosell to achieve the target profit. (Round your answer up to the nearest whole guitar.)

13

Belstone, Inc. is a merchandiser of stone ornaments. It sold 15,000 units during the year. The company has provided the following information: Sales Revenue: $525,000 Purchases (excluding Freight In): 347,000 Selling and Administrative Expenses: 36,500 Freight In: 15,500 Beginning Merchandise Inventory: 42,000 Ending Merchandise Inventory: 55,500 How much is the gross profit for the year?

176,000

Service Revenue: $60,000 Operating Expenses: 21,000 Net Income: 39,000 Number of Services Provided for the Year: 10,500 How much was the unit cost per service? (Round your answer to the nearest cent.)

2

An increase in contribution margin per unit can be created by a(n) ________ in sales price per unit and a(n)________ in variable costs per unit.

increases, decreases

Castillo Corporation, a manufacturer, reports costs for the year as follows: Direct materials used: 735,000 Wages to line workers: 510,000 office rent: 26,000 indirect materials used: 700,000 How much is the total period costs for Castillo?

26,000

Harmony Company sells hand-knit scarves. Each scarf sells for $40. The company pays $60 to rent vendingspace for one day. The variable costs are $15 per scarf. How many scarves should the company sell each day inorder to break even? (Round your answer up to the nearest whole scarf.)

3

McLeod, Inc. incurred fixed costs of $300,000. Total costs, both fixed and variable, are $500,000 when 59,000units are produced. It sold 35,000 units during the year. Calculate the variable cost per unit. (Round your answer to the nearest cent.)

3.39

Beginning Balance-Work-in-Process Inventory: $24,000 Ending Balance-Work-in-Process Inventory: 58,000 Beginning Balance-Direct Materials Inventory: 85,000 Ending Balance-Direct Materials Inventory: 61,000 Purchases-Direct Materials: 359,000 Direct Labor: 470,000 Indirect Labor: 21,000 Depreciation on Factory Plant and Equipment: 24,000 Plant Utilities and Insurance: 268,000 What was the amount of the manufacturing overhead costs?

313,000

Minutes Total Bill January: 480 $4500 February: 240 $2690 March; 160 $2630 April: 300 $2845 If the company uses 360 minutes in May, how much will the total bill be? (Round any intermediate calculationsto the nearest cent and your final answer to the nearest dollar.)

37,999

Sunshine Blender Company sold 3000 units in October at a sales price of $45 per unit. The variable cost is $25per unit. Calculate the total contribution margin.

60,000

Direct labor cost: $132,000 Direct materials cost: 84,000 Equipment depreciation(straight-line): 24,000 Factory insurance: 10,000 Factory manager's salary: 10,200 Janitor's salary: 4000 Packaging costs: 18,600 Property taxes: 16,000 From the above information, calculate Tentacle's total fixed costs.

64,200

Factory Utilities: $1000 Indirect Materials Used: 34,000 Direct Materials Used: 292,000 Property Taxes on Factory Building: 5900 Sales Commissions: 85,000 Indirect Labor Incurred: 22,000 Direct Labor Incurred: 150,000 Depreciation on Factory Equipment: 6800 What is the total manufacturing overhead?

69,700

Sales price per unit: $6.50 Variable cost per unit: $2.00 Fixed costs per month: $1500 Calculate the contribution margin ratio. (Round your answer to two decimal places.)

69.23%

Which of the following is a period cost?

Administrative cost

Goods that are produced by a manufacturing company and are ready to sell are recorded in the _______ account.

finished goods inventory

Which of the following statements is true of absorption and variable costing methods?

Both costing methods consider selling and administrative costs to be period costs.

Which of the following will be included in manufacturing overhead costs?

indirect labor and indirect materials used

Which of the following statements is true of absorption costing?

It considers fixed manufacturing overhead cost as product costs.

Which of the following statements is true of variable costing?

It considers fixed selling and administrative costs as period costs.

Which of the following correctly describes Just-In-Time Management?

It is a cost management approach that focuses on maintaining large finished goods inventory levels.

Which of the following statements is true of financial accounting?

It provides information to investors needed for their investment decisions.

Total fixed costs$840,000Sale price per unit80Variable cost per unit30If the company spends an additional $35,000 on advertising, sales volume would increase by 2500 units. Before thechange, the company's sales level exceeds the breakeven point. What effect will this decision have on theoperating income of Titanic?

Operating income will increase by $90,000

In absorption costing which costs are product and which are period?

Product: direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead Period: variable selling and administrative costs, fixed selling and administrative costs

Which of the following statements is true if the variable cost per unit increases while the sales price per unit andtotal fixed costs remain constant?

The breakeven point increases.

The entire sequence of activities that add value to a company's products and services is called ________.

The value chain

Which of the following statements is true of the behavior of total variable costs, within the relevant range?

They will decrease as productions decrease

Which of the following statements is true of the behavior of total fixed costs, within the relevant range?

They will remain the same as production level changes

________ is a philosophy of continuous improvement of products and processes.

Total Quality Managemetn

Goods that have been started in the manufacturing process but are not yet complete are included in the

Work-in-Progress Inventory account

What is Total Quality Management (TQM)?

a philosophy of supplying customers with superior products and services

Which of the following represents the combined sum of direct labor costs and manufacturing overhead costs?

conversion costs

Which of the following is an example of a period cost for a manufacturing company?

advertising expense

Cost volume profit analysis is NOT useful in ________.

calculating operating expenses

You did not understand what the term accrual meant and failed to accrue the interest due at the end of the year on the company's bonds. Which of the IMA standards appears to have been violated?

competence

When the sales price per unit decreases, the contribution margin per unit ________.

decreases

Which of the following is a prime cost and a conversion cost?

direct labor

The degree of operating leverage can be measured by ________.

dividing the contribution margin by operating income

Connie is analyzing the financial statements of MegaMart and Bullseye Company. She wants to invest in one of the companies and is trying to decide which company has the better past performance. Connie is examining

financial accounting information

Miguel, a manager for Sierra Company, is inspecting the reports provided by his company's accounting department. He wants to decide how to schedule his department's employees in production next week. Miguel is examining

managerial accounting information

Contribution margin ratio is the ratio of contribution margin to ________.

net sales revenue

Which of the following is a period cost for a manufacturing company?

office rent

Which of the following appears as a line item in a contribution margin income statement?

operating income

Variable costs per unit, within the relevant range, will

remain the same as production levels change

The income statement of a service company will most likely include ________.

salaries expense

Which of the following would be considered a product cost for a manufacturing company?

salary of the production manager

Operating leverage predicts the effects that fixed costs have on operating income when ________.

sales volume changes

The high-low method is used to

separate mixed costs into their variable and fixed components

Which of the following describes the cost of goods manufactured?

the cost of those goods that were completed during the period

Which of the following is a focus of managerial accounting?

to provide information to business managers to assist them in controlling their businesses

Unit product cost calculations using absorption costing do NOT include ________.

variable selling and administrative costs

Which of the following is an example of direct labor cost in a factory?

wages of assembly line personnel

Which of the following is a product cost for a manufacturing company?

wages paid to factory janitor