Accounting
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