Midterm 1

two companies are expected to have annual sales of 1 million decks of playing cards next year. Estimates for next year are: Company 1: Selling price per deck- $3 Cost of paper per deck- $.62 Printing ink per deck- $.13 Labor per deck- $.75 Variable overhead per deck- $.30 Fixed costs- $960,000 Company 2: Selling price per deck- $3 Cost of paper per deck- $.65 Printing ink per deck- $.15 Labor per deck- $1.25 Variable overhead per deck- $.35 Fixed costs- $252,000 Given this data, what are the breakeven point in units for company 1; breakeven point in units for company 2; volume units at which profits of company 1 and company 2 are equal a. $800,000; $420,000; $1,180,000 b. $800,000; $420,000; $1,000,000 c. $533,334; $105,000; $1,180,000 d. $533,334; $105,000; $1,000,000

a. $800,000; $420,000; $1,180,000

Supplies are a: a. Manufacturing cost, Prime cost b. Conversion cost, Manufacturing cost c. Manufacturing cost d. Conversion cost, Manufacturing cost, Prime cost

b. Conversion cost, Manufacturing cost

when deciding to accept a one time special order from a wholesaler, management should: a. not consider the special order's impact on future prices of their product b. determine whether excess capacity is available c. consider the sunk costs and opportunity costs d. verify past design costs for the product

b. determine whether excess capacity is available

the breakeven point revenues is calculated by dividing: a. contribution margin percentage by fixed costs b. fixed costs by contribution margin percentage c. total revenues by fixed costs d. fixed costs by total revenues

b. fixed costs by contribution margin percentage

the breakeven points in units increases when unit costs: a. decrease and sales price remains unchanged b. increase and sales price remains unchanged c. increase and sales price increases d. remain unchanged and sales price increases

b. increase and sales price remains unchanged

according to the Statement of Management Accounting Number 1C Revised, IMA Statement of Ethical Professional Practice, a member has a responsibility to recognize professional limitations. Under which standard of ethical conduct would this responsibility be included? a. Credibility b. Integrity c. Competence d. Confidentiality

c. Competence

which of the following actions should a management accountant take first in confronting a potential ethical conflict concerning your direct supervisor? a. clarify relevant ethical issues by initiating a confidential discussion with the IMA Ethics Counselor b. consult the attorney as to legal obligations and rights concerning the ethical conflict c. follow the organization's procedures concerning resolution of such a conflict d. inform the Board of Directors of the existence of a potential conflict

c. follow the organization's procedures concerning resolution of such a conflict

Managerial accounting differs from financial accounting in that financial accounting is: a. more oriented toward the future b. heavily involved with decision analysis and implementation of decisions c. primarily concerned with external financial reporting d. related to non-quantitative information

c. primarily concerned with external financial reporting

Which of the following statements are FALSE? a. period costs are never included as part of inventory b. all manufacturing costs are inventoriable costs c. a costing system traces direct costs and allocates indirect costs to product d. conversion costs include all direct manufacturing costs

d. conversion costs include all direct manufacturing costs

Richardson Motors uses ten units of part number T305 each month in production of large diesel engines. The cost to manufacture one unit of T305 is: Direct Materials- $2,000 Materials Handling (20% of direct materials costs)- $400 Direct Labor- $16,000 Manufacturing Overhead (150% of direct labor)- $24,000 Total Manufacturing Cost- $42,400 Materials handling, which is not included in manufacturing overhead, represents direct variable costs of the receiving department that are applied to direct materials and purchased components on the basis of their cost. Richardson's annual manufacturing overhead budget is one-third variable and two-thirds fixed. Simpson Castings, one of Richardson's reliable vendors, has offered to supply T305 at unit price $30,000. If Richardson Motors purchases the 10 T305 units from Simpsons Castings, Richardson is able to rent all idle capacity for $50,000 per month. Should Richardson decide to purchase parts from Simpson, the monthly cost for T305 would be a: a. decrease of $64,000 b. increase of $96,000 c. decrease of $34,000 d. increase of $46,000

d. increase of $46,000

McMurphy corporation produces a part that is used in the manufacture of one of its products. the costs associated with the production of 12,000 units of this part are: Direct materials- $86,000 Direct labor- $126,000 Variable factory overhead- $58,000 Fixed factory overhead- $138,000 Total costs= $408,000 Of the fixed factory overhead costs, $55,000 is avoidable. Conners company has offered to sell $12,000 units of the same part to McMurphy corporation for $41 per unit. Assuming there is no other use for the facilities, McMurphy should: a. buy the part, as this would save $16 per unit b. make the part, as this would save $16 per unit c. but the part, as this would save $192,000 d. make the part, as this would save $14 per unit

d. make the part, as this would save $14 per unit

which of following statements is FALSE: a. manufacturing sector firms normally hold three types of inventory: direct materials inventory, work in process inventory, and finished goods inventory b. work in process inventory are goods partially worked on but not yet completed c. service sector companies provide services and intangible products to their customers d. merchandising companies hold two types of inventory: merchandise inventory and direct materials

d. merchandising companies hold two types of inventory: merchandise inventory and direct materials

which of the following is an assumption of cvp analysis? a. when graphed, total costs curve upward b. the unit-selling price is variable as it is subject to demand and supply c. total costs can be divided into inventoriable and period costs with respect to the level of output d. total costs can be divided into a fixed component and a component that is variable with respect to the level of output

d. total costs can be divided into a fixed component and a component that is variable with respect to the level of output

Given the following information: Finished goods inventory, December 31- $10 Work in process, December 31- $5 Raw materials, December 31- $15 Purchases of raw materials- $13 Indirect labor costs- $5 Factory depreciation- $3 Selling expense- $8 Direct manufacturing labor-$12 Other factory costs- $7 Finished goods inventory, January 1- $20 Work in process, January 1- $10 Raw materials, January 1- $14 The cost of goods manufactured is: a. $34 b. $39 c. $47 d. $42 e. $44

e. $44