Question 1

Opportunity costs are earnings or potential benefits foregone because a certain course of action is taken.

Accepted Answer

A) True 
 B)False

Question 2

The direct costing procedure is sometimes referred to as variable costing.

Accepted Answer

A) True 
 B)False

Question 3

Under ____________________ costing procedures, fixed manufacturing costs are included in the cost of goods manufactured.

Accepted Answer

The answer of Under ____________________ costing procedures, fixed manufacturing costs...

Question 4

Assume that the Venus Company, which now sells its product for $75 per unit, has an opportunity to sell 3,000 units in a foreign country for $54 a unit. The order will not affect its current domestic sales. Shipping costs of $9 a unit would be incurred on the order. Current variable manufacturing costs are $31 per unit manufactured. Variable selling and administrative costs are $14 per unit sold. Included in variable selling expenses is a sales commission of $1 per unit, which would not apply to the special order. Fixed manufacturing costs are $75,000 per year and fixed selling and administrative expenses are $45,000 per year. The company is now manufacturing and selling 5,000 units per year.
1. Should the Venus Company take the order?
2. What impact would the special order have on profits?

Accepted Answer

1. Yes; 
2. The orde

Question 5

Under absorption costing, a portion of the fixed manufacturing overhead is deferred to future periods as part of the inventory value.

Accepted Answer

A) True 
 B)False

Question 6

The excess of net sales over the cost of goods sold, based on variable costs only, is referred to as the __________________.

Accepted Answer

manufactur

Question 7

Which of the following is not true of the direct costing procedure?

Accepted Answer

A)  Variable and fixed costs are considered as part of the cost of goods manufactured. 
B)  The cost of goods sold, based solely on variable costs, is subtracted from net sales to arrive at the manufacturing margin. 
C)  Variable selling expenses are deducted from the manufacturing margin. 
D)  Variable administrative expenses are deducted from the manufacturing margin. 
A)  Variable and fixed costs are considered as part of the cost of goods manufactured. 
B)  The cost of goods sold, based solely on variable costs, is subtracted from net sales to arrive at the manufacturing margin. 
C)  Variable selling expenses are deducted from the manufacturing margin. 
D)  Variable administrative expenses are deducted from the manufacturing margin.

Question 8

McAdd Industries is considering whether to continue making part MPG 411 or buying the part from a supplier. The supplier can sell the needed number of parts (47,000 projected) to McAdd for an amount that is above the company's current cost to manufacture it. If McAdd decides to purchase the parts from its supplier, it will be able to reconfigure the manufacturing floor in order to allow increased production of 50 of its product for an increased contribution margin of $17,000 for the year. The old machine has a book value of $39,000, and can be sold for $4,000. Discuss this situation. What are the considerations?

Accepted Answer

The student should mention the

Question 9

A segment of a business probably should be discontinued if

Accepted Answer

A)  its common costs exceed its contribution margin. 
B)  its contribution margin exceeds its controllable fixed costs and its common costs. 
C)  it cannot produce a contribution margin. 
D)  it has a net loss. 
A)  its common costs exceed its contribution margin. 
B)  its contribution margin exceeds its controllable fixed costs and its common costs. 
C)  it cannot produce a contribution margin. 
D)  it has a net loss.

Question 10

The data given below pertains to the operations of the Newton Products Corporation for the year ended December 31, 2013 $\begin{array} { l r } 
\text { Sales: } & 3,400 \text { units at } \$ 55 \text { a unit } \
\text { Variable manufacturing costs: } & 3,200 \text { units at } \$ 25 \text { a unit } \
\text { Variable selling and admin. expenses: } & \$ 5 \text { a unit } \
\text { Fixed manufacturing costs: } & \$ 24,000 \
\text { Fixed selling and admin. expenses: } & \$ 16,000 \
\text { Finished goods inventory, Jan. 1, 2013: } & 500 \text { units } \
\text { Finished goods inventory, December 31, } & 600 \text { units }
\end{array}$
-Based on the information given prepare an income statement for the year using the direct costing approach. Assume that the beginning finished goods inventory had a cost of $25 per unit.

Accepted Answer

The answer of The data given below pertains to the...

Question 11

The increase in a cost from one alternative to another is called a(n) ____________________ cost.

Accepted Answer

The answer of The increase in a cost from one...

Question 12

Common costs are allocated to each segment of a business to determine the segment's contribution margin.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not relevant in decision making?

Accepted Answer

A)  opportunity costs 
B)  differential costs 
C)  sunk costs 
D)  variable costs 
A)  opportunity costs 
B)  differential costs 
C)  sunk costs 
D)  variable costs

Question 14

If a decision must be made to replace a machine, the book value of the existing machine is a sunk cost.

Accepted Answer

A) True 
 B)False

Question 15

In making a decision to replace a machine, which of the following is not relevant?

Accepted Answer

A)  the training that workers will need in order to use the new machine 
B)  the variable costs of operating the new machine 
C)  the variable costs of operating the old machine 
D)  the book value of the old machine 
A)  the training that workers will need in order to use the new machine 
B)  the variable costs of operating the new machine 
C)  the variable costs of operating the old machine 
D)  the book value of the old machine

Question 16

Match the following descriptions with the appropriate term.

Accepted Answer

The answer of Match the following descriptions with the appropriate...

Question 17

Which of the following is NOT a consideration regarding the purchase of new equipment when looking at the net income under each alternative?

Accepted Answer

A)  depreciation expense per year on the new equipment 
B)  annual sales 
C)  differential labor costs 
D)  additional fixed costs under an alternative 
A)  depreciation expense per year on the new equipment 
B)  annual sales 
C)  differential labor costs 
D)  additional fixed costs under an alternative

Question 18

Using the given information, determine the income under both the absorption and the direct (variable) costing methods for the company for the year. Explain the difference, if any. $\begin{array}{llcc}
  \text { Beginning Inventory } & -0-  \text { units} \
 \text { Units produced } &15,000\
 \text { Ending Inventory } &2,000\
 \text {Sales price per unit  } &\$44.00\
 \text { Variable manufacturing costs per unit } &19.00\
 \text {  Variable selling $ \& $ administrative costs per unit} &4.00\
 \text { Fixed manufacturing costs } &\$75000\
 \text { Fixed selling and administrative costs } &\$79,950\
\end{array}$

Accepted Answer

The company's income under absorption co

Question 19

The first step in the decision-making process is to determine relevant cost and revenue data.

Accepted Answer

A) True 
 B)False

Question 20

A segment of a business shows a contribution margin of $30,000 but incurs controllable fixed costs of $26,000. Eliminating that segment will result in an increase in company-wide net income.

Accepted Answer

A) True 
 B)False

Opportunity costs are earnings or potential benefits foregone because a certain course of action is taken.

The direct costing procedure is sometimes referred to as variable costing.

Under ____________________ costing procedures, fixed manufacturing costs are included in the cost of goods manufactured.

Under absorption costing, a portion of the fixed manufacturing overhead is deferred to future periods as part of the inventory value.

The excess of net sales over the cost of goods sold, based on variable costs only, is referred to as the __________________.

Which of the following is not true of the direct costing procedure?

A segment of a business probably should be discontinued if

The increase in a cost from one alternative to another is called a(n) ____________________ cost.

Common costs are allocated to each segment of a business to determine the segment's contribution margin.

Which of the following is not relevant in decision making?

If a decision must be made to replace a machine, the book value of the existing machine is a sunk cost.

In making a decision to replace a machine, which of the following is not relevant?

Match the following descriptions with the appropriate term.

Which of the following is NOT a consideration regarding the purchase of new equipment when looking at the net income under each alternative?

The first step in the decision-making process is to determine relevant cost and revenue data.

A segment of a business shows a contribution margin of $30,000 but incurs controllable fixed costs of $26,000. Eliminating that segment will result in an increase in company-wide net income.

Notes Payable and Notes Receivable

Merchandise Inventory

Property, Plant, and Equipment

Accounting for Partnerships

Corporations: Formation and Capital Stock Transactions

Corporate Earnings and Capital Transactions

Long-Term Bonds

Financial Statement Analysis

The Statement of Cash Flows

Departmentalized Profit and Cost Centers

Accounting for Manufacturing Activities

Job Order Cost Accounting

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

Filters

Exam 30: Cost-Revenue Analysis for Decision Making

Opportunity costs are earnings or potential benefits foregone because a certain course of action is taken.

The direct costing procedure is sometimes referred to as variable costing.

Under ____________________ costing procedures, fixed manufacturing costs are included in the cost of goods manufactured.

Under absorption costing, a portion of the fixed manufacturing overhead is deferred to future periods as part of the inventory value.

The excess of net sales over the cost of goods sold, based on variable costs only, is referred to as the __________________.

Which of the following is not true of the direct costing procedure?

A segment of a business probably should be discontinued if

The increase in a cost from one alternative to another is called a(n) ____________________ cost.

Common costs are allocated to each segment of a business to determine the segment's contribution margin.

Which of the following is not relevant in decision making?

If a decision must be made to replace a machine, the book value of the existing machine is a sunk cost.

In making a decision to replace a machine, which of the following is not relevant?

Match the following descriptions with the appropriate term.

Which of the following is NOT a consideration regarding the purchase of new equipment when looking at the net income under each alternative?

The first step in the decision-making process is to determine relevant cost and revenue data.

A segment of a business shows a contribution margin of $30,000 but incurs controllable fixed costs of $26,000. Eliminating that segment will result in an increase in company-wide net income.

Notes Payable and Notes Receivable

Merchandise Inventory

Property, Plant, and Equipment

Accounting for Partnerships

Corporations: Formation and Capital Stock Transactions

Corporate Earnings and Capital Transactions

Long-Term Bonds

Financial Statement Analysis

The Statement of Cash Flows

Departmentalized Profit and Cost Centers

Accounting for Manufacturing Activities

Job Order Cost Accounting

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

Filters