Accounting FINAL

To obtain the dollar sales volume necessary to attain a given target profit, which of the following formulas should be used? Multiple Choice (Fixed expenses + Target net profit)/Total contribution margin (Fixed expenses + Target net profit)/Contribution margin ratio Fixed expenses/Contribution margin per unit Target net profit/Contribution margin ratio

(Fixed expenses + Target net profit)/Contribution margin ratio Correct

Mossfeet Shoe Corporation is a single product firm. The company is predicting that a price increase next year will not cause unit sales to decrease. What effect would this price increase have on the following items for next year? CM Ratio Break-even A) Increase Decrease B) Decrease Decrease C) Increase No effect D) Decrease No effect

A

Which of the following will usually be found on an income statement prepared using absorption costing? Contribution Margin Gross Margin A) Yes Yes B) Yes No C) No Yes D) No No Multiple Choice Choice A Choice B Choice C Choice D

C

In the Schedule of Cost of Goods Manufactured and Cost of Goods Sold, the cost of goods manufactured is computed according to which of the following equations? Multiple Choice Cost of goods manufactured = Total manufacturing costs + Ending work in process inventory - Beginning work in process inventory Cost of goods manufactured = Total manufacturing costs + Beginning work in process inventory - Ending work in process inventory Cost of goods manufactured = Total manufacturing costs + Beginning finished goods inventory - Ending finished goods inventory Cost of goods manufactured = Total manufacturing costs + Ending finished goods inventory - Beginning finished goods inventory

Cost of goods manufactured = Total manufacturing costs + Beginning work in process inventory - Ending work in process inventory

Product costs that have become expenses can be found in: Multiple Choice period costs. selling expenses. cost of goods sold. administrative expenses.

Cost of goods sold

In its first year of operations, Bronfren Corporation produced 800,000 sets and sold 780,000 sets of artificial tan lines. What would have happened to net operating income in this first year under the following costing methods if Bronfren had produced 20,000 fewer sets? (Assume that Bronfren has both variable and fixed production costs.) Variable costing Absorption costing A) No effect Increase B) Decrease Increase C) Decrease Decrease D) No effect Decrease Multiple Choice Choice A Choice B Choice C Choice D

D

Which of the following costs at a manufacturing company would be treated as a product cost under variable costing? Multiple Choice direct material cost property taxes on the factory building sales manager's salary sales commissions

Direct Material cost

In a job-order costing system, indirect labor cost is usually recorded as a debit to: Multiple Choice Manufacturing Overhead. Finished Goods. Work in Process. Cost of Goods Sold.

MOH

Which of the following is the correct formula to compute the predetermined overhead rate? Multiple Choice Predetermined overhead rate = Estimated total units in the allocation base ÷ Estimated total manufacturing overhead costs Predetermined overhead rate = Estimated total manufacturing overhead costs ÷ Estimated total units in the allocation base Predetermined overhead rate = Actual total manufacturing overhead costs ÷ Estimated total units in the allocation base Predetermined overhead rate = Estimated total manufacturing overhead costs ÷ Actual total units in the allocation base.

Predetermined overhead rate = Estimated total manufacturing overhead costs ÷ Estimated total units in the allocation base

Property taxes on a company's factory building would be classified as a(n): Multiple Choice product cost. opportunity cost. period cost. variable cost.

Product cost

Contribution margin is: Multiple Choice Sales less cost of goods sold. Sales less variable production, variable selling, and variable administrative expenses. Sales less variable production expense. Sales less all variable and fixed expenses.

Sales less variable production, variable selling, and variable administrative expenses.

The general model for calculating a quantity variance is: Garrison 16e Rechecks 2017-08-17 Multiple Choice Actual quantity of inputs used × (Actual price − Standard price). Standard price × (Actual quantity of inputs used − Standard quantity allowed for output). (Actual quantity of inputs used × Actual price) − (Standard quantity allowed for output × Standard price). Actual price × (Actual quantity of inputs used − Standard quantity allowed for output).

Standard price × (Actual quantity of inputs used − Standard quantity allowed for output).

Which of the following is true of a company that uses absorption costing? Multiple Choice Net operating income fluctuates directly with changes in sales volume. Fixed production and fixed selling costs are considered to be product costs. Unit product costs can change as a result of changes in the number of units manufactured. Variable selling expenses are included in product costs.

Unit product costs can change as a result of changes in the number of units manufactured

When the level of activity decreases within the relevant range, the fixed cost per unit will: Multiple Choice decrease. increase. remain the same. The effect cannot be predicted.

increase

Which of the following would not affect the break-even point? Multiple Choice number of units sold variable expense per unit total fixed expense selling price per unit

number of units sold

An unfavorable materials quantity variance indicates that: Multiple Choice actual usage of material exceeds the standard material allowed for output. standard material allowed for output exceeds the actual usage of material. actual material price exceeds standard price. standard material price exceeds actual price.

standard material price exceeds actual price.

A cost incurred in the past that is not relevant to any current decision is classified as a(n): Multiple Choice period cost. opportunity cost. sunk cost. differential cost.

sunk cost

If manufacturing overhead is underapplied, then: Multiple Choice actual manufacturing overhead cost is less than estimated manufacturing overhead cost. the amount of manufacturing overhead cost applied to Work in Process is less than the actual manufacturing overhead cost incurred. the predetermined overhead rate is too high. the Manufacturing Overhead account will have a credit balance at the end of the year.

the amount of manufacturing overhead cost applied to Work in Process is less than the actual manufacturing overhead cost incurred.

Hayworth Corporation has just segmented last year's income statement into its ten product lines. The chief executive officer (CEO) is curious as to what effect dropping one of the product lines at the beginning of last year would have had on overall company profit. What is the best number for the CEO to look at to determine the effect of this elimination on the net operating income of the company as a whole? Multiple Choice the product line's sales dollars the product line's contribution margin the product line's segment margin the product line's segment margin minus an allocated portion of common fixed expenses

the product line's segment margin

Which of the following is correct? The break-even point occurs on the CVP graph where: Multiple Choice A. total profit equals total expenses. B. total profit equals total fixed expenses. C. total contribution margin equals total fixed expenses. D. total variable expenses equal total contribution margin.

total contribution margin equals total fixed expenses.

Net operating income computed under variable costing would exceed net operating income computed using absorption costing if: Multiple Choice units sold exceed units produced. units sold are less than units produced. units sold equal units produced. the average fixed cost per unit is zero.

units sold exceed units produced

A cost that would be included in product costs under both absorption costing and variable costing is: Multiple Choice supervisory salaries. factory rent. variable manufacturing costs. variable selling expenses.

variable manufacturing costs.

Within the relevant range, variable costs can be expected to: Multiple Choice vary in total in direct proportion to changes in the activity level. remain constant in total as the activity level changes. increase on a per unit basis as the activity level increases. increase on a per unit basis as the activity level decreases.

vary in total in direct proportion to changes in the activity level.