Question 1

Absorption costing is to gross margin as variable costing is to:

Accepted Answer

A) gross profit 
B) territory margin 
C) net income 
D) contribution margin 
A) gross profit 
B) territory margin 
C) net income 
D) contribution margin

Question 2

Which of the following product life cycle stages has revenues for the entire industry decreasing?

Accepted Answer

A) Introduction 
B) Growth 
C) Maturity 
D) Decline 
A) Introduction 
B) Growth 
C) Maturity 
D) Decline

Question 3

The following information pertains to Guillotine Corporation: $$\begin{array} { l r } 
\text { Beginning inventory } & 1,000 \text { units } \
\text { Ending inventory } & 6,000 \text { units } \
\text { Direct labor per unit } & \$ 40 \
\text { Direct materials per unit } & 20 \
\text { Variable overhead per unit } & 10 \
\text { Fixed overhead per unit } & 30 \
\text { Variable selling and admin. costs per unit } & 6 \
\text { Fixed selling and admin. costs per unit } & 14
\end{array}$$ What is the value of the ending inventory using the absorption costing method?

Accepted Answer

A) $240,000 
B) $360,000 
C) $420,000 
D) $600,000 
A) $240,000 
B) $360,000 
C) $420,000 
D) $600,000

Question 4

Taylor Company's budgeted sales were 10,000 units at $200 per unit. Actual sales were 9,200 units at $210 per unit.
Taylor's sales price variance is

Accepted Answer

A) $92,000 (F). 
B) $100,000 (U). 
C) $8,000 (U). 
D) $68,000 (U). 
A) $92,000 (F). 
B) $100,000 (U). 
C) $8,000 (U). 
D) $68,000 (U).

Question 5

The pricing of a new product at a low initial price to build market share quickly is called __________.

Accepted Answer

The answer of The pricing of a new product at...

Question 6

The perfectly competitive market has many buyers and sellers, none of which are large enough to influence the market.

Accepted Answer

A) True 
 B)False

Question 7

Lorillard Corporation has the following information for April, May, and June 2018: $\begin{array} { l r r r } & \text { April } & \text { May } & \text { June } \ \text { Units produced } & 12,500 & 12,500 & 12,500 \ \text { Units sold } & 8,750 & 10,625 & 13,125 \end{array}$
Production costs per unit (based on 12,500 units) are as follows:
$\begin{array}{lr}
\text { Direct materials } & 15 \
\text { Direct labor } & 10 \
\text { Variable factory overhead } & 7.50 \
\text { Fixed factory overhead } & 5 \
\text { Variable selling and admin. expenses } & 12.50 \
\text { Fixed selling and admin. expenses } & 5
\end{array}$ There were no beginning inventories for April 2018, and all units were sold for $50. Costs are stable over the three months.
What is the May ending inventory cost for Lorillard Corporation using the variable costing method?

Accepted Answer

A) $182,812.50 
B) $187,500 
C) $312,500 
D) $162,500 
A) $182,812.50 
B) $187,500 
C) $312,500 
D) $162,500

Question 8

What are the ways employee behavior changes in relation to a profit emphasis?

Accepted Answer

A) desire to avoid losses may result in short-run decisions 
B) unethical behavior may take place if rewards or bonuses are based on profits 
C) ignoring the less measurable outcomes that may benefit the company 
D) all of the above are potential changes 
A) desire to avoid losses may result in short-run decisions 
B) unethical behavior may take place if rewards or bonuses are based on profits 
C) ignoring the less measurable outcomes that may benefit the company 
D) all of the above are potential changes

Question 9

The following information pertains to Guillotine Corporation: $$\begin{array} { l r } 
\text { Beginning inventory } & 1,000 \text { units } \
\text { Ending inventory } & 6,000 \text { units } \
\text { Direct labor per unit } & \$ 40 \
\text { Direct materials per unit } & 20 \
\text { Variable overhead per unit } & 10 \
\text { Fixed overhead per unit } & 30 \
\text { Variable selling and admin. costs per unit } & 6 \
\text { Fixed selling and admin. costs per unit } & 14
\end{array}$$ How much greater or less than variable costing net income is the absorption costing net income?

Accepted Answer

A) $150,000 less than 
B) $150,000 greater than 
C) $240,000 less than 
D) $240,000 greater than 
A) $150,000 less than 
B) $150,000 greater than 
C) $240,000 less than 
D) $240,000 greater than

Question 10

The market size variance is favorable when the budgeted industry sales in units is:

Accepted Answer

A) more than the actual units sold 
B) less than the actual units sold 
C) more than the actual market share percentage 
D) less than the budgeted market share percentage 
A) more than the actual units sold 
B) less than the actual units sold 
C) more than the actual market share percentage 
D) less than the budgeted market share percentage

Question 11

Scottish Company manufactures a variety of toys and games. John Chisholm, president, is disappointed in the sales of a new board game. The game sold only 10,000 units in 2018 when 30,000 were projected. Sales for 2019 look no better. At $100 per game, it is not a hot seller. Direct costs of the board game are $56 variable cost and $100,000 fixed. John is considering several options. Option One: Cut the price to $70 and perhaps sell 15,000 units. Option Two: Cut the price to $60, reduce material costs by $10, and cut advertising by $60,000. Anticipated volume for this option is 10,000 units. Option Three: Cut the price to $80 and include a $10 mail-in rebate offer. It is anticipated that 15,000 units could be sold and only 30 percent of the rebate coupons would be redeemed.
What is the profit (loss) from Option Two?

Accepted Answer

A) ($100,000) 
B) $600,000 
C) $100,000 
D) $40,000 
A) ($100,000) 
B) $600,000 
C) $100,000 
D) $40,000

Question 12

The markup is pure profit, it does not include all costs not included in the base cost.

Accepted Answer

A) True 
 B)False

Question 13

Scottish Company manufactures a variety of toys and games. John Chisholm, president, is disappointed in the sales of a new board game. The game sold only 10,000 units in 2018 when 30,000 were projected. Sales for 2019 look no better. At $100 per game, it is not a hot seller. Direct costs of the board game are $56 variable cost and $100,000 fixed. John is considering several options. Option One: Cut the price to $70 and perhaps sell 15,000 units. Option Two: Cut the price to $60, reduce material costs by $10, and cut advertising by $60,000. Anticipated volume for this option is 10,000 units. Option Three: Cut the price to $80 and include a $10 mail-in rebate offer. It is anticipated that 15,000 units could be sold and only 30 percent of the rebate coupons would be redeemed.
What is the profit (loss) from Option One?

Accepted Answer

A) $1,050,000 
B) $110,000 
C) $950,000 
D) $210,000 
A) $1,050,000 
B) $110,000 
C) $950,000 
D) $210,000

Question 14

Market structure affects price as well as the costs necessary to support that price.

Accepted Answer

A) True 
 B)False

Question 15

The sales volume variance is the difference between actual and expected volume sold multiplied by the expected price.

Accepted Answer

A) True 
 B)False

Question 16

The sales volume variance communicates the impact the difference between actual and expected units sold has on revenues.

Accepted Answer

A) True 
 B)False

Question 17

Bernardo Company reported the following units of production and sales for August and September 2018: $\begin{array}{lrr}&\text { Units }\
\hline  \text { Month }& \text { Produced } & \text { Sold } \
\text { August } 2018 & 100,000 & 90,000 \
\text { September } 2018 & 100,000 & 105,000
\end{array}$
Net income under absorption costing for August was $40,000; net income under variable costing for September was $50,000. Fixed manufacturing costs were $600,000 for each month.
How much was net income for August using variable costing?

Accepted Answer

A) $40,000 
B) $20,000 
C) $(20,000) 
D) $(40,000) 
A) $40,000 
B) $20,000 
C) $(20,000) 
D) $(40,000)

Question 18

The Furthur Phish Company has recorded the following data for three of their products: $$\begin{array} { l c c c c } 
\text { Product } & \text { Old Price } & \text { New Price } & \text { Old Quantity } & \text {New Quantity } \
\mathrm { X } & \$ 14.75 & \$ 14.25 & 2,000 & 2,200 \
\mathrm { Y } & 19.25 & 18.50 & 3,000 & 3,300 \
\mathrm { Z } & 24.50 & 27.50 & 4,000 & 3,600
\end{array}$$ 
Required: 
a.Determine the price elasticity of demand for each of the products.
b.Which products have an elastic demand? Inelastic demand?

Accepted Answer

The answer of The Furthur Phish Company has recorded the...

Question 19

Barium Corp. provides the following information for the month of March of the current year: Revenues
$$\begin{array} { l r } 
\text { Revenues } & \$ 200,000 \
\text { Cost of Goods Sold } & 80 \% \
\text { Selling and administrative expenses } & \$ 11,000
\end{array}$$
Compute the markup on cost of goods sold (COGS).

Accepted Answer

A) 50% 
B) 67% 
C) 25% 
D) 33% 
A) 50% 
B) 67% 
C) 25% 
D) 33%

Question 20

The contribution margin volume variance is the difference between the actual and budgeted quantities sold multiplied by the:

Accepted Answer

A) budgeted sales price 
B) actual contribution margin variance 
C) budgeted contribution margin variance 
D) budgeted average unit contribution margin 
A) budgeted sales price 
B) actual contribution margin variance 
C) budgeted contribution margin variance 
D) budgeted average unit contribution margin

Absorption costing is to gross margin as variable costing is to:

Which of the following product life cycle stages has revenues for the entire industry decreasing?

Taylor Company's budgeted sales were 10,000 units at $200 per unit. Actual sales were 9,200 units at $210 per unit. Taylor's sales price variance is

The pricing of a new product at a low initial price to build market share quickly is called __________.

The perfectly competitive market has many buyers and sellers, none of which are large enough to influence the market.

What are the ways employee behavior changes in relation to a profit emphasis?

The market size variance is favorable when the budgeted industry sales in units is:

The markup is pure profit, it does not include all costs not included in the base cost.

Market structure affects price as well as the costs necessary to support that price.

The sales volume variance is the difference between actual and expected volume sold multiplied by the expected price.

The sales volume variance communicates the impact the difference between actual and expected units sold has on revenues.

Barium Corp. provides the following information for the month of March of the current year: Revenues Revenues \ 200,000 Cost of Goods Sold 80\% Selling and administrative expenses \ 11,000 Compute the markup on cost of goods sold (COGS).

The contribution margin volume variance is the difference between the actual and budgeted quantities sold multiplied by the:

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters

Exam 18: Pricing and Profitability Analysis

Absorption costing is to gross margin as variable costing is to:

Which of the following product life cycle stages has revenues for the entire industry decreasing?

Taylor Company's budgeted sales were 10,000 units at $200 per unit. Actual sales were 9,200 units at $210 per unit. Taylor's sales price variance is

The pricing of a new product at a low initial price to build market share quickly is called __________.

The perfectly competitive market has many buyers and sellers, none of which are large enough to influence the market.

What are the ways employee behavior changes in relation to a profit emphasis?

The market size variance is favorable when the budgeted industry sales in units is:

The markup is pure profit, it does not include all costs not included in the base cost.

Market structure affects price as well as the costs necessary to support that price.

The sales volume variance is the difference between actual and expected volume sold multiplied by the expected price.

The sales volume variance communicates the impact the difference between actual and expected units sold has on revenues.

Barium Corp. provides the following information for the month of March of the current year: Revenues Revenues \ 200,000 Cost of Goods Sold 80\% Selling and administrative expenses \ 11,000 Compute the markup on cost of goods sold (COGS).

The contribution margin volume variance is the difference between the actual and budgeted quantities sold multiplied by the:

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters