Accounting 2 Final (Chapter 21-22 Quiz Questions)

Strait Co. manufactures office furniture. During the most productive month of the year, 3,000 desks were manufactured at a total cost of $59,000. In the month of lowest production, the company made 1,125 desks at a cost of $38,000. Using the high-low method of cost estimation, total fixed costs are

$25,400

Periodic comparisons between planned objectives and actual performance are reported in

budget performance reports

Incurring actual indirect factory wages in excess of budgeted amounts for actual production results in a

controllable variance

At the end of the fiscal year, variances from standard costs are usually transferred to the

cost of goods sold account

If variable costs per unit decreased because of a decrease in utility rates, the break-even point would

decrease

The total manufacturing cost variance consists of

direct materials cost variance, direct labor cost variance, and factory overhead cost variance

Assuming that the standard fixed overhead rate is based on full capacity, the cost of available but unused productive capacity is indicated by the

fixed factory overhead volume variance

If variable costs per unit increased because of an increase in hourly wage rates, the break-even point would

increase

The difference between the current sales revenue and the sales at the break-even point is called the

margin of safety

Understanding how costs behave is useful to management for all the following reasons except

predicting customer demand

The standards for direct materials are made up of which of the following components?

price standard and quantity standard

If the actual quantity of direct materials used in producing a commodity differs from the standard quantity, the variance is a

quantity variance

The principle of exceptions allows managers to focus on correcting variances between

standard costs and actual costs

A favorable cost variance occurs when

standard costs are more than actual costs

As production increases, variable costs per unit

stay the same

If the actual direct labor hours spent producing a commodity differ from the standard hours, the variance is a

time variance

In a cost-volume-profit chart, the

total cost line begins at the total fixed cost value on the vertical axis

The unfavorable volume variance may be due to all of the following factors except

unexpected increases in the cost of utilities

Costs that vary in total in direct proportion to changes in an activity level are called

variable costs

In cost-volume-profit analysis, all costs are classified into which of the following two categories?

variable costs and fixed costs

If at the end of the fiscal year, the variances from standard are significant, the variances should be transferred to the

work in process, cost of goods sold, and finished goods accounts

With the aid of spreadsheets, managers can vary assumptions regarding selling prices, costs, and volume and can immediately see the effects of each change on the break-even point and profit. This is called

"what if" or sensitivity analysis

If fixed costs are $750,000 and variable costs are 60% of sales, what is the break-even point in sales dollars?

$1,875,000

If fixed costs are $850,000 and variable costs are 60% of sales, what is the break-even point in sales dollars?

$2,125,000

Connor Company's fixed costs are $400,000, the unit selling price is $25, and the unit variable costs are $15. What is the break-even point in sales units if the variable costs are increased by $2?

50,000 units

Assume that Corn Co. sold 8,000 units of Product A and 2,000 units of Product B during the past year. The unit contribution margins for Products A and B are $30 and $60, respectively. Corn has fixed costs of $378,000. The break-even point in sales units is

10,500 units

Piper Technology's fixed costs are $1,500,000, the unit selling price is $250, and the unit variable costs are $130. What is the amount of sales in units (rounded to a whole number) required to realize a target profit of $200,000?

14,167 units

If fixed costs are $277,000, the unit selling price is $35, and the unit variable costs are $19, what is the break-even point in sales units if fixed costs are reduced by $35,300?

15,106 units

If fixed costs are $296,000, the unit selling price is $70, and the unit variable costs are $52, what are the old and new break-even points in sales units (rounded to a whole number) if the unit selling price increases by $4?

16,444 units and 13,455 units, respectively

Bryce Co. sales are $914,000, variable costs are $498,130, and income from operations is $196,000. What is the contribution margin ratio?

45.5%

Cost-volume-profit analysis cannot be used if which of the following occurs?

Costs cannot be properly classified into fixed and variable costs.

Which of the following statements regarding fixed and variable costs is true?

Fixed costs are constant in total, and variable costs are constant per unit

When a business sells more than one product at varying selling prices, the business's break-even point can be determined as long as the number of products does not exceed

There is no limit

Which of the following is not a reason standard costs are separated into two components?

Variances bring attention to discrepancies in the budget and require managers to revise budgets closer to actual results.