Accounting

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Beemer's sales are $400,000, variable costs are 75% of sales, and operating income is $50,000. The operating leverage is

2.0

Given the following cost data, what type of cost is shown? ​ Cost Per unit:$6000, $3000. $2000. $1500 Num ofUnits: 1. 2. 3. 4.

Fixed Cost

Which of the graphs in Figure 21-1 illustrates the behavior of a total variable cost?

L /

A cost that has characteristics of both a variable cost and a fixed cost is called a

Mixed Costs

Which of the following budgets is not directly associated with the production budget?

capital expenditures budget

What ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?

contribution margin ratio

The benefits of comparing actual performance of the operations against planned goals include all of the following except

determining how managers are performing against prior years' actual operating results

The total manufacturing cost variance consists of

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

Miller and Sons' static budget for 10,000 units of production includes $50,000 for direct materials, $44,000 for direct labor, variable utilities of $5,000, and supervisor salaries of $24,000. A flexible budget for 12,000 units of production would show

direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $24,000

Standard costs are used in companies for a variety of reasons. Which of the following is not one of the benefits of using standard costs?

used to indicate where changes in technology and machinery need to be made

Given the following cost data, what type of cost is shown? ​ Cost Per unit:$20, $40. $60. $80 Num ofUnits: 1. 2. 3. 4.

variable cost

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

Jase Manufacturing Co.'s static budget for 10,000 units of production includes $40,000 for direct labor and $4,000 for variable electric power. Total fixed costs are $24,000. At 12,000 units of production, a flexible budget would show

variable costs of $52,800 and $24,000 of fixed costs

Which of the following describes the behavior of a variable cost per unit?

remains constant with changes in the activity level

Chelsa Manufacturing Co.'s static budget for 5,000 units of production includes $40,000 for direct labor and $5,000 for variable electric power. Total fixed costs are $23,000. At 8,000 units of production, a flexible budget would show

variable costs of $72,000 and $23,000 of fixed costs

Myers Corporation has the following data related to direct materials costs for November: actual costs for 5,000 pounds of material at $4.50 and standard costs for 4,800 pounds of material at $5.10 per pound. ​ What is the direct materials quantity variance?

$1,020 unfavorable

The following data relate to direct labor costs for August: Actual costs: 5,500 hours at $24.00 per hour Standard costs: 5,000 hours at $23.70 per hour

$1,650 unfavorable

The following data relate to direct labor costs for the current period: Standard costs 7,500 hours at $11.70Actual costs 6,000 hours at $12.00

$17,550 favorable

A firm operated at 90% of capacity for the past year, during which fixed costs were $420,000, variable costs were 40% of sales, and sales were $1,000,000. Operating profit was

$180,000

Spice Inc.'s unit selling price is $60, unit variable costs are $35, fixed costs are $125,000, and current sales are 10,000 units. How much will operating income change if sales increase by 8,000 units?

$200,000 increase

For March, sales revenue is $1,000,000, sales commissions are 5% of sales, the sales manager's salary is $80,000, advertising expenses are $65,000, shipping expenses total 1% of sales, and miscellaneous selling expenses are $2,100 plus 1% of sales. Total selling expenses for the month of March are

$217,100

For February, sales revenue is $700,000; sales commissions are 5% of sales; the sales manager's salary is $96,000; advertising expenses are $90,000; shipping expenses total 2% of sales; and miscellaneous selling expenses are $2,500 plus 1/2 of 1% of sales. Total selling expenses for the month of February are

$241,000

Myers Corporation has the following data related to direct materials costs for November: actual costs for 5,000 pounds of material, $4.50; and standard costs for 4,800 pounds of material at $5.10 per pound.

$3,000 favorable

Variable costs as a percentage of sales for Lemon Inc. are 80%, current sales are $600,000, and fixed costs are $130,000. How much will operating income change if sales increase by $40,000?

$8,000 increase

Motorcycle Manufacturers, Inc. projected sales of 78,000 machines for the year. The estimated January 1 inventory is 6,500 units, and the desired December 31 inventory is 6,000 units. What is the budgeted production (in units) for the year?

77,500

If fixed costs are $1,200,000, the unit selling price is $240, and the unit variable costs are $110, what is the amount of sales required to realize an operating income of $200,000?

9,231 units

Standards that represent levels of operation that can be attained with reasonable effort are called

normal standards

Standard costs are divided into which of the following components?

price standard and quantity standard

If the price paid per unit differs from the standard price per unit for direct materials, the variance is a

price variance

Favorable volume variances may be harmful when

production in excess of normal capacity cannot be sold

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

quantity variance

If the wage rate paid per hour differs from the standard wage rate per hour for direct labor, the variance is a

rate variance

The first budget customarily prepared as part of an entity's master budget is the

sales budget

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

The total manufacturing cost variance is

the difference between actual costs and standard costs for units produced

The controllable variance measures

the efficiency of using variable overhead resources

Contribution margin is

the excess of sales revenue over variable cost

The contribution margin ratio is

the same as the profit-volume ratio

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

time variance

Rocky Company reports the following data: ​ Sales$800,000Variable costs 300,000Fixed costs 120,000 ​

1.3

Principal components of a master budget include

all of these

A formal written statement of management's plans for the future, expressed in financial terms, is a

budget

Jaxson Corporation has the following data related to direct labor costs for September: actual costs are 10,200 hours at $15.75 per hour and standard costs are 10,800 hours at $15.50 per hour.

$9,300 favorable

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 units is

10,500 units

If budgeted beginning inventory is $8,000, budgeted ending inventory is $9,400, and budgeted cost of goods sold is $10,260, budgeted production should be

11,660

Harley Company has sales of $500,000, variable costs are 75% of sales, and operating income is $40,000. What is Harley's operating leverage?

3.1

If sales are $425,000, variable costs are 62% of sales, and operating income is $50,000, what is the contribution margin ratio?

38%

If sales are $820,000, variable costs are 55% of sales, and operating income is $260,000, what is the contribution margin ratio?

45%

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

45.5%

Zeke Company sells 25,000 units at $21 per unit. Variable costs are $10 per unit, and fixed costs are $75,000. The contribution margin ratio and the unit contribution margin are

52% and $11 per unit

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

Costs cannot be properly classified into fixed and variable costs.

The standard price and quantity of direct materials are separated because

direct materials prices are controlled by the purchasing department and quantity used is controlled by the production department

The budget process involves doing all of the following except

dismissing all managers who fail to achieve operational goals specified in the budget

A disadvantage of static budgets is that they

do not show possible changes in underlying activity levels

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

A series of budgets for varying rates of activity is termed a(n)

flexible budget

Which of the following budgets allows for adjustments in activity levels?

flexible budget

When management seeks to achieve personal departmental objectives that may work to the detriment of the entire company, the manager is experiencing

goal conflict

The budgeting process does not involve which of the following activities?

increase in sales by increasing marketing efforts

Which of the following is not an example of a cost that varies in total as the number of units produced changes?

insurance premiums on factory building

The primary difference between a static budget and a flexible budget is that a static budget

is a plan for a single level of production, whereas a flexible budget can be converted to any level of production

Variances from standard costs are reported to

management


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