Washington Company provided the following information regarding its only product--ice skates. $\begin{array}{lr} \text { Direct materials used } & \$ 200,000 \\ \text { Direct labor } & 80,000 \\ \text { Fixed overhead } & 100,000 \\ \text { Fixed selling and administrative costs } & 300,000 \\ \text { Variable overhead } & 20,000 \\ \text { Variable selling and administrative } & 60,000 \\ \text { Selling unit price } & 100 \\ & \\ \text { Units produced and sold } & 10,000 \end{array}$ The difference in manufacturing cost per unit between the absorption approach and contribution approach is _____.

A) $10 higher if absorption cost is used B) $10 higher if contribution cost is used C) $40 higher if absorption is used D) $40 higher if contribution is used A) $10 higher if absorption cost is used B) $10 higher if contribution cost is used C) $40 higher if absorption is used D) $40 higher if contribution is used

Oregon Company provided the following information regarding its only product--ice skates. \[\begin{array} { l r } \text { Direct materials used } & \$ 500,000 \\ \text { Direct labor } & 180,000 \\ \text { Fixed overhead } & 100,000 \\ \text { Fixed selling and administrative costs } & 150,000 \\ \text { Variable overhead } & 120,000 \\ \text { Variable selling and administrative } & 60,000 \\ \text { Selling unit price } & 75 \\\\ \text { Units produced and sold } & 10,000 \end{array}\] _____ is the total manufacturing cost if the contribution approach is used.

A) $680,000 B) $800,000 C) $300,000 D) $620,000 A) $680,000 B) $800,000 C) $300,000 D) $620,000

McEnroe Industries budgeted the following costs for the production of its only product, tennis balls, for the next fiscal year: \[\begin{array} { l r } \text { Materials } & \$ 35,000 \\ \text { Labor } & 25,000 \\ \text { Overhead: } & \\ \text { Variable } & 30,000 \\ \text { Fixed } & 15,000 \\ \text { Selling and administrative: } & \\ \text { Variable } & 7,500 \\ \text { Fixed } & \underline { 12,500 } \\ \text { Total costs } & \$ 125,000 \end{array}\] McEnroe Industries has a target profit of $60,000.The average target markup for setting prices as a percentage of prime costs would be _____.

A) 38% B) 61% C) 208% D) 63% A) 38% B) 61% C) 208% D) 63%

Ohio Company provided the following information regarding its only product--ice skates. $\begin{array}{lr} \text { Direct materials used } & \$ 300,000 \\ \text { Direct labor } & 80,000 \\ \text { Fixed overhead } & 100,000 \\ \text { Fixed selling and administrative costs } & 170,000 \\ \text { Variable overhead } & 20,000 \\ \text { Variable selling and administrative } & 90,000 \\ \text { Selling unit price } & 99 \\\\ \text { Units produced and sold } & 12,000 \end{array}$ _____ is the total manufacturing cost if the absorption approach is used.

A) $280,000 B) $300,000 C) $360,000 D) $500,000 A) $280,000 B) $300,000 C) $360,000 D) $500,000

Dakota Corporation has been producing and selling 42,000 hats a year.The Dakota Corporation has the capacity to produce 52,000 hats with its present facilities.The following information is also available: $\begin{array}{lr} \text { Selling price per unit } & \$ 30 \\ \text { Variable costs per unit: } \\ \text { Manufacturing } & 13 \\ \text { Selling and Administrative } & 7 \\ \text { Fixed costs in total: } \\ \text { Manufacturing } & \$ 128,000 \\ \text { Selling and Administrative }& 56,000\\ \end{array}$ If a special order is accepted for 10,000 hats at a price of $25 per unit, net income would _____.

A) increase by $90,000 B) increase by $250,000 C) increase by $120,000 D) decrease by $24,000 A) increase by $90,000 B) increase by $250,000 C) increase by $120,000 D) decrease by $24,000