Chapter 20 & 21 Multiple Choice

Which of the following is NOT a primary assumption in a cost-volume-profit analysis? Total sales and total costs can be represented by straight lines. Within the relevant range of operating activity, the efficiency of operations does not change. Costs can be divided into fixed and variable components. There is a change in the inventory quantities during the period.

There is a change in the inventory quantities during the period.

Costs that have characteristics of both a variable cost and a fixed cost are classified as ________. variable costs fixed costs mixed costs None of these choices are correct.

mixed costs

Contribution margin equals sales minus fixed costs. sales minus mixed costs. sales minus variable costs. None of these choices are correct.

sales minus variable costs.

The __________ is the relative distribution of sales among the products sold by a company. sales mix mixed cost product mix None of these choices are correct.

sales mix

The unit selling price of the overall enterprise product equals the average selling price of the products. price of the highest-selling product in the mix. sum of the unit selling prices of each product multiplied by its sales mix percentage. price of the product with the lowest selling price.

sum of the unit selling prices of each product multiplied by its sales mix percentage.

Compute the yield as a percentage rounded to two digits after the decimal, assuming 110 pounds of tea entered the Packaging Department and 103 pounds of tea were packaged. 1.07% 93.64% 6.36% 95.67%

93.64%

Process and job order cost systems are similar in that each system records and summarizes product costs. classifies product costs as direct materials, direct labor, and factory overhead. allocates factory overhead costs to products. All of these choices are correct.

All of these choices are correct.

If a company decides to increase the selling price of its product, what is its effect on break-even point? Decrease Increase No-effect None of these choices are correct.

Decrease

The journal entry to record the transfer from work in process to finished goods would include a debit to Work in Process. Finished Goods. Cost of Goods Sold. None of these choices are correct.

Finished Goods.

Which of the following formulas is used to calculate break-even units? Fixed Costs ÷ Unit Contribution Margin Variable Costs ÷ Contribution Margin Percent Variable Costs ÷ Unit Contribution Margin Fixed Costs ÷ Contribution Margin Percent

Fixed Costs ÷ Unit Contribution Margin

What effect does the increase in fixed costs have on the break-even units? Decrease Increase No-effect None of these choices are correct.

Increase

All of the following are ways cost-volume-profit analysis may be used except analyzing the effects of changes in costs on profits. analyzing the effects of changes in volume on profits. setting selling prices. None of these choices are correct.

None of these choices are correct.

Which of the following most likely uses a process cost system? Purse manufacturer Oil refinery Automobile manufacturer Guitar manufacturer

Oil refinery

What do electric companies, such as Duke Energy Corporation, use to match power supply to demand? Energy generator Electrical pyramid Megawatt hours Power stack

Power stack

Which type of chart plots only a profit line rather than sales and cost lines? Cost-volume-profit chart Profit-volume chart Profit-cost chart Cost-volume chart

Profit-volume chart

When can process costing be used in service businesses? When the inventory is similar. When the power stack is also used. Where the nature of the service is uniform across all units. At the accountant's discretions.

Where the nature of the service is uniform across all units.

The cost per megawatt hour is determined by using process costing by accumulating the conversion costs. dividing the costs by megawatt hours. adding the cost of inventory. dividing the top part of the power stack into the lowest part.

accumulating the conversion costs.

The last step in preparing a cost of production report is to _____. compute equivalent units of production determine the units to be assigned costs determine the cost per equivalent unit allocate costs to units transferred out and partially completed units

allocate costs to units transferred out and partially completed units

Under the __________ method, all production costs (materials and conversion costs) are combined together for determining equivalent units and cost per equivalent unit. FIFO LIFO average cost job order cost

average cost

A company's operating leverage is computed as contribution margin divided by income from operations. profit margin divided by net income. revenue divided by expenses. None of these choices are correct.

contribution margin divided by income from operations.

The journal entry to recognize depreciation on machinery would include a debit to Factory Overhead. debit to Accumulated Depreciation. credit to Factory Overhead. None of these choices are correct.

debit to Factory Overhead.

The first step in preparing a cost of production report is to _____. compute equivalent units of production determine the units to be assigned costs determine the cost per equivalent unit allocate costs to units transferred out and partially completed units

determine the units to be assigned costs

Costs that do not change with the change in the level of production for some time is classified as ________. variable costs fixed costs mixed costs None of these choices are correct.

fixed costs

The difference between contribution margin and income from operations is net income. variable costs. fixed costs. None of these choices are correct.

fixed costs.

Under variable costing, the cost of goods manufactured consists of all except direct materials. direct labor. variable factory overhead. fixed factory overhead.

fixed factory overhead

The cost per equivalent unit is determined by dividing the __________ by the __________. total production costs; total equivalent units of production total equivalent units of production; total production costs goods available for sale in dollars; goods available for sale in units None of these choices are correct

total production costs; total equivalent units of production

The quantity of the material output divided by the quantity of the material input gives you the _____. yield direct materials cost per equivalent unit average cost per unit None of these choices are correct.

yield