Question 1

Which of the following costing methods charges all the manufacturing costs to the products?

Accepted Answer

A)  variable costing 
B)  direct costing 
C)  absorption costing 
D)  contribution costing 
A)  variable costing 
B)  direct costing 
C)  absorption costing 
D)  contribution costing

Question 2

Watson,Inc.has collected the following data for the current year: $$\begin{array} { | l | r | } 
\hline \text { Beginning Finished Goods Inventory } & 70 \text { units } \
\hline \text { Units produced } & 510 \text { units } \
\hline \text { Units sold } & 580 \text { units } \
\hline \text { Sales price } & \$ 160 \text { per unit } \
\hline \text { Direct materials } & \$ 31 \text { per unit } \
\hline \text { Direct labor } & \$ 16 \text { per unit } \
\hline \text { Variable manufacturing overhead } & \$ 12 \text { per unit } \
\hline \text { Fixed manufacturing overhead } & \$ 16,600 \text { per year } \
\hline \text { Variable selling and administrative costs } & \$ 5 \text { per unit } \
\hline \text { Fixed selling and administrative costs } & \$ 12,500 \text { per year } \
\hline
\end{array}$$ The beginning Finished Goods Inventory costs were $3,800 under absorption costing and $2,500 under variable costing.
What is the operating income using absorption costing? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

Accepted Answer

A)  $42,310 
B)  $26,910 
C)  $39,410 
D)  $3,800 
A)  $42,310 
B)  $26,910 
C)  $39,410 
D)  $3,800

Question 3

Contribution margin ratio is equal to ________.

Accepted Answer

A)  fixed costs divided by contribution margin per unit 
B)  net sales revenue per unit minus variable costs per unit 
C)  net sales revenue minus variable costs 
D)  contribution margin divided by net sales revenue 
A)  fixed costs divided by contribution margin per unit 
B)  net sales revenue per unit minus variable costs per unit 
C)  net sales revenue minus variable costs 
D)  contribution margin divided by net sales revenue

Question 4

Higher fixed costs decrease the total contribution margin required to break even.

Accepted Answer

A) True 
 B)False

Question 5

Fontana Pizza Company sells pizzas in two different sizes-medium and large.The two products sell in equal numbers.The contribution margin of a medium pizza is $14 and the contribution margin of a large pizza is $18.The weighted average contribution margin is $16.

Accepted Answer

A) True 
 B)False

Question 6

Groovelex,Inc.has collected the following data for the current year: $$\begin{array} { | l | r | } 
\hline \text { Beginning Finished Goods Inventory } & 70 \text { units } \
\hline \text { Units produced } & 560 \text { units } \
\hline \text { Units sold } & 630 \text { units } \
\hline \text { Sales price } & \$ 180 \text { per unit } \
\hline \text { Direct materials } & \$ 23 \text { per unit } \
\hline \text { Direct labor } & \$ 13 \text { per unit } \
\hline \text { Variable manufacturing overhead } & \$ 16 \text { per unit } \
\hline \text { Fixed manufacturing overhead } & \$ 11,600 \text { per unit } \
\hline \text { Variable selling and administrative costs } & \$ 4 \text { per unit } \
\hline \text { Fixed selling and administrative costs } & \$ 12,000 \text { per unit } \
\hline
\end{array}$$ What is the unit product cost using absorption costing? (Round your answer to the nearest cent.)

Accepted Answer

A)  $98.14 
B)  $52.00 
C)  $72.71 
D)  $49.71 
A)  $98.14 
B)  $52.00 
C)  $72.71 
D)  $49.71

Question 7

Identify the breakeven point in the graph given below.

Accepted Answer

A)  O 
B)  E 
C)  D 
D)  B 
A)  O 
B)  E 
C)  D 
D)  B

Question 8

Kelley Business Machines provided the following manufacturing costs for the month of March. $$\begin{array} { | l | r | } 
\hline \text { Direct labor cost } & \$ 140,000 \
\hline \text { Direct materials cost } & 85,000 \
\hline \text { Equipment depreciation (straight-line) } & 25,000 \
\hline \text { Factory insurance } & 20,000 \
\hline \text { Factory manager's salary } & 13,300 \
\hline \text { Janitor's salary } & 5,500 \
\hline \text { Packaging costs } & 18,800 \
\hline \text { Property taxes } & 16,100 \
\hline
\end{array}$$ From the above information,calculate Kelley's total variable costs.Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.

Accepted Answer

A)  $323,700 
B)  $225,000 
C)  $243,800 
D)  $230,500 
A)  $323,700 
B)  $225,000 
C)  $243,800 
D)  $230,500

Question 9

Lambert Company sells two products-X and Y.Lambert predicts that it will sell 2,500 units of X and 2,000 units of Y during the next period.The unit contribution margins are $4.00 and $5.10,respectively.What is the weighted-average unit contribution margin?

Accepted Answer

A)  $4.49 per product 
B)  $4.55 per product 
C)  $5.10 per product 
D)  $4.00 per product 
A)  $4.49 per product 
B)  $4.55 per product 
C)  $5.10 per product 
D)  $4.00 per product

Question 10

Variable costing prepares the income statement using the traditional format.

Accepted Answer

A) True 
 B)False

Question 11

Zot-Ice Corp.has provided the following data for the current year.
 $$\begin{array} { | l | r |r| } 
\hline \text { Units produced } & 2,500& \text { units } \
\hline \text { Sales price } & \$ 200 &\text { per unit } \
\hline \text { Direct materials } & \$ 75 &\text { per unit } \
\hline \text { Direct labor } & \$ 65& \text { per unit } \
\hline \text { Variable manufacturing overhead } & \$ 25& \text { per unit } \
\hline \text { Fixed manufacturing overhead } & \$ 225,000& \text { per year } \
\hline \text { Variable selling and administrative costs } & \$ 30 &\text { per unit } \
\hline \text { Fixed selling and administrative costs } & \$ 150,000& \text { per year } \
\hline
\end{array}$$ Calculate the unit product cost using absorption costing and variable costing.

Accepted Answer

\[\begin{array} { l l l } 
& \text { Var

Question 12

An increase in selling price per unit increases the number of units required to break even.

Accepted Answer

A) True 
 B)False

Question 13

The breakeven point is the point where the sales revenues are equal to the fixed costs.

Accepted Answer

A) True 
 B)False

Question 14

The ________ method allows managers to increase operating income through production by producing more products than needed.

Accepted Answer

A)  absorption costing 
B)  variable costing 
C)  direct costing 
D)  marginal costing 
A)  absorption costing 
B)  variable costing 
C)  direct costing 
D)  marginal costing

Question 15

Fasetech,Inc.has collected the following data.(There are no beginning inventories.) $$\begin{array} { | l | r | } 
\hline \text { Units produced } & \text { 540 units } \
\hline \text { Sales price } & \$ 140 \text { per unit } \
\hline \text { Direct materials } & \$ 18 \text { per unit } \
\hline \text { Direct labor } & \$ 15 \text { per unit } \
\hline \text { Variable manufacturing overhead } & \$ 9 \text { per unit } \
\hline \text { Fixed manufacturing overhead } & \$ 16,600 \text { per year } \
\hline \text { Variable selling and administrative costs } & \$ 9 \text { per unit } \
\hline \text { Fixed selling and administrative costs } & \$ 10,900 \text { per year } \
\hline
\end{array}$$ What is the operating income using absorption costing if 500 units are sold? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

Accepted Answer

A)  $22,600 
B)  $18,230 
C)  $25,420 
D)  $34,730 
A)  $22,600 
B)  $18,230 
C)  $25,420 
D)  $34,730

Question 16

Operating leverage predicts the effects fixed costs have on changes in operating income when ________.

Accepted Answer

A)  production is discontinued 
B)  there are no sales returns 
C)  variable costs change 
D)  sales volume changes 
A)  production is discontinued 
B)  there are no sales returns 
C)  variable costs change 
D)  sales volume changes

Question 17

When the selling price per unit decreases,the contribution margin per unit ________.

Accepted Answer

A)  increases proportionately 
B)  increases 
C)  remains the same 
D)  decreases 
A)  increases proportionately 
B)  increases 
C)  remains the same 
D)  decreases

Question 18

The relevant range of Zhang Company is between 110,000 units and 190,000 units per month.If the company produces beyond 190,000 units per month ________.

Accepted Answer

A)  the fixed costs will remain the same, but the variable cost per unit may change 
B)  the fixed costs may change, but the variable cost per unit will remain the same 
C)  the fixed costs and the variable cost per unit will not change 
D)  both the fixed costs and the variable cost per unit may change 
A)  the fixed costs will remain the same, but the variable cost per unit may change 
B)  the fixed costs may change, but the variable cost per unit will remain the same 
C)  the fixed costs and the variable cost per unit will not change 
D)  both the fixed costs and the variable cost per unit may change

Question 19

Unit product cost calculations using absorption costing do not include ________.

Accepted Answer

A)  fixed manufacturing overhead 
B)  variable manufacturing overhead 
C)  variable selling and administrative costs 
D)  direct materials 
A)  fixed manufacturing overhead 
B)  variable manufacturing overhead 
C)  variable selling and administrative costs 
D)  direct materials

Question 20

When there are no beginning or ending balances in Finished Goods Inventory,variable and absorption costing will result in ________.

Accepted Answer

A)  different amounts for ending Finished Goods Inventory 
B)  the same operating income 
C)  different sales revenue 
D)  different amounts for cost of goods sold 
A)  different amounts for ending Finished Goods Inventory 
B)  the same operating income 
C)  different sales revenue 
D)  different amounts for cost of goods sold

Which of the following costing methods charges all the manufacturing costs to the products?

Contribution margin ratio is equal to ________.

Higher fixed costs decrease the total contribution margin required to break even.

Fontana Pizza Company sells pizzas in two different sizes-medium and large.The two products sell in equal numbers.The contribution margin of a medium pizza is $14 and the contribution margin of a large pizza is $18.The weighted average contribution margin is $16.

Identify the breakeven point in the graph given below.

Lambert Company sells two products-X and Y.Lambert predicts that it will sell 2,500 units of X and 2,000 units of Y during the next period.The unit contribution margins are $4.00 and $5.10,respectively.What is the weighted-average unit contribution margin?

Variable costing prepares the income statement using the traditional format.

An increase in selling price per unit increases the number of units required to break even.

The breakeven point is the point where the sales revenues are equal to the fixed costs.

The ________ method allows managers to increase operating income through production by producing more products than needed.

Operating leverage predicts the effects fixed costs have on changes in operating income when ________.

When the selling price per unit decreases,the contribution margin per unit ________.

The relevant range of Zhang Company is between 110,000 units and 190,000 units per month.If the company produces beyond 190,000 units per month ________.

Unit product cost calculations using absorption costing do not include ________.

When there are no beginning or ending balances in Finished Goods Inventory,variable and absorption costing will result in ________.

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters

Exam 21: Cost-Volume-Profit Analysis

Which of the following costing methods charges all the manufacturing costs to the products?

Contribution margin ratio is equal to ________.

Higher fixed costs decrease the total contribution margin required to break even.

Fontana Pizza Company sells pizzas in two different sizes-medium and large.The two products sell in equal numbers.The contribution margin of a medium pizza is $14 and the contribution margin of a large pizza is $18.The weighted average contribution margin is $16.

Identify the breakeven point in the graph given below.

Lambert Company sells two products-X and Y.Lambert predicts that it will sell 2,500 units of X and 2,000 units of Y during the next period.The unit contribution margins are $4.00 and $5.10,respectively.What is the weighted-average unit contribution margin?

Variable costing prepares the income statement using the traditional format.

An increase in selling price per unit increases the number of units required to break even.

The breakeven point is the point where the sales revenues are equal to the fixed costs.

The ________ method allows managers to increase operating income through production by producing more products than needed.

Operating leverage predicts the effects fixed costs have on changes in operating income when ________.

When the selling price per unit decreases,the contribution margin per unit ________.

The relevant range of Zhang Company is between 110,000 units and 190,000 units per month.If the company produces beyond 190,000 units per month ________.

Unit product cost calculations using absorption costing do not include ________.

When there are no beginning or ending balances in Finished Goods Inventory,variable and absorption costing will result in ________.

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters