accounting mcqs 510150
1)Under a relevant range of production, when total quantities sold increase, total fixed costs
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a. |
increase |
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b. |
decrease |
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c. |
remain equal |
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d. |
there is no relationship |
2)Conversion costs are
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a. |
only direct material |
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b. |
only direct labor |
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c. |
only overhead |
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d. |
overhead and direct labor |
3)XY Company sells its unique product at $30.00. Variable costs per unit are $20.00. Total fixed sales salaries per month $40,000.00. Other fixed costs per month $60,000.00. Assume that the company wants to change the sales salaries as follows: Total fixed sales salaries per month 25,000. Sales commission of 10% of sales.?Find at what sale-level is the company indifferent between the two alternatives
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a. |
$5,000 |
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b. |
5,000 units |
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c. |
10,000 |
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d. |
7,500 units |
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4) AJ Company makes three products. |
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Current selling price per unit, variable cost per unit, and machine hours required are as follows: |
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Products |
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X |
Y |
Z |
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Current selling price per unit |
$20 |
$30 |
$20 |
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Variable cost per unit |
10 |
18 |
12 |
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Machine hours required for each unit |
2 |
3 |
4 |
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The company has a maximum of 1000 machine hours available per month. |
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Assume the company produces all products; find the total contribution margin per hour.
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a. |
$13.50 |
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b. |
$12 |
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c. |
$9 |
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d. |
$4 |
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5) TC Company makes several printing works using two machines (X and Y). |
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Data on the two machines for June 2010 are as follows: |
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X |
Y |
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Direct material |
10 |
15 |
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Time required for each unit (TR) |
2 |
3 |
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Expected volume during the month (EV) |
2,000 |
500 |
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Expected labor cost per hour |
50 |
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Budgeted overhead costs |
660,000 |
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Determine |
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The overhead rate per labor hour |
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1. |
FOAR = $120.00 per hour worked |
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2. |
FOAR = 120.00 per dollar |
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3. |
FOAR = $60.00 per hour worked |
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4. |
FOAR = $120.00 per overhead costs |
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6) Assume the cost structure is as follows: TC = 25,000 + 5q, where TC = total costs, q = quantities sold. Under relevant range of sales, selling price per unit is $8.00. Total fixed costs are
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$100,000 |
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$50,000 |
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$25,000 |
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More information is needed |
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7) The income statements of Tahany Company for June and July 2005 are as follows: |
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June |
July |
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Sales |
610 |
650 |
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Cost of goods sold |
420 |
460 |
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Gross margin |
190 |
190 |
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Selling and administrative expenses |
185 |
195 |
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Income before tax |
5 |
-5 |
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Using High Low Method, the variable component of cost of goods sold is
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a. |
1.00 |
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b. |
.25 |
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c. |
1.25 |
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d. |
0 |
8) Non value added activities are
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a. |
Direct material (only) |
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b. |
Direct labor (only) |
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c. |
Overhead (only) |
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d. |
Not essential costs to make/manufacture a product |
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9) Tany Corporation is a small table manufacturing company operating in the north of Puerto Rico. |
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Managers estimate the following costs per unit (one table) |
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Direct material (DM) |
$6.00 |
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Direct labor (DL) |
$4.00 |
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Variable manufacturing overhead (VMO) |
$3.00 |
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Variable administrative expenses (VAE) |
$1.00 |
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The estimated contribution margin is |
30% |
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Monthly fixed costs are |
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Manufacturing |
$10,000.00 |
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Administrative |
$5,000.00 |
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a. |
2,000 |
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b. |
2,200 |
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c. |
2,500 |
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d. |
2,750 |
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10) Tany Corporation is a small table manufacturing company operating in the north of Puerto Rico. |
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Managers estimate the following costs per unit (one table) |
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Direct material (DM) |
$6.00 |
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Direct labor (DL) |
$4.00 |
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Variable manufacturing overhead (VMO) |
$3.00 |
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Variable administrative expenses (VAE) |
$1.00 |
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The estimated contribution margin is |
30% |
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Monthly fixed costs are |
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Manufacturing |
$10,000.00 |
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Administrative |
$5,000.00 |
Total unit sold during last month is 2525, what is the total operating income.
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a. |
between $100 and $120 |
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b. |
between $120 and $140 |
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c. |
between $140 and $160 |
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d. |
between $160 and $180 |
11) BC Company estimates the following data for the coming month: total variable costs $60,000.00, income tax rate 30%, contribution margin percentage 60%. Find the estimated total sales for the coming month.
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a. |
$100,000 |
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b. |
$60,000 / 40% |
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c. |
$60,000 / 60% |
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d. |
$60,000 X 60% |
12) If a company raises its required net income
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a. |
the tax rate will decrease |
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b. |
break even point is negative |
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c. |
required contribution margin increases |
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d. |
required contribution margin decreases |
13)If a company raises its required operating profit
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a. |
break even point is negative |
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b. |
break even point is zero |
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c. |
required contribution margin increases |
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d. |
required contribution margin decreases |
14) Copy of
XYZ has three products X, Y and Z. The following information pertains to these products X, Y, and Z. Contribution margin percentages are 40%, 50%, and 40% respectively. Sales mix percentages are 20%, 30%, and 50% respectively. Monthly fixed costs are estimated to be $100.00. The weighted average contribution margin percentage is
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a. |
43% |
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b. |
40% |
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c. |
30% |
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d. |
0 |
15) Which of the following examples is a short term decision?
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a. |
Make or buy decision |
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b. |
Purchase of land |
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c. |
Issuing bonds |
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d. |
Joint venture |
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e. |
Purchase of building |
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16) Sales (in units) |
60,000 |
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Selling price per unit |
25 |
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Manufacturing costs per unit: |
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Materials |
5 |
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Direct labor |
4 |
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Overhead |
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Variable |
4 |
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Fixed |
6 |
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Total |
19 |
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Gross margin |
6 |
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Selling and admin. Expenses per unit |
2 |
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Operating income |
4 |
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A company in a foreign market offer to buy and the offer specifies the following data |
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units to be sold |
10000 |
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price per unit |
20 |
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If the Company accepts the special offer, the incremental profit would be |
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a. |
$70,000.00 |
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b. |
($70,000.00) |
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c. |
$10,000.00 |
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d. |
($10,000.00) |
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17) Total Costs |
Unit Cost |
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Direct materials |
20,000 |
2.00 |
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Direct labor |
25,000 |
2.50 |
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Variable overhead |
15,000 |
1.50 |
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Fixed overhead (non-avoidable) |
24000 |
2.40 |
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Fixed overhead (avoidable) |
26,000 |
2.60 |
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Purchase cost |
85,999 |
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Should the company produce the product internally?
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a. |
Yes |
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b. |
No |
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c. |
Indifferent to to make or to buy |
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d. |
Yes if the market price per unit covers the fixed cost per unit. |
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18) Sales (in units) |
60,000 |
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Selling price per unit |
25 |
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Manufacturing costs per unit: |
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Materials |
5 |
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Direct labor |
4 |
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Overhead |
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Variable |
4 |
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Fixed |
6 |
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Total |
19 |
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Gross margin |
6 |
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Selling and admin. Expenses per unit (fixed) |
2 |
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Operating income |
4 |
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A company in a foreign market offer to buy and the offer specifies the following data |
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units to be sold |
10,000 |
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price per unit |
13.1 |
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Should the company sell this special order? |
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a. |
Yes, accept |
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b. |
No, reject |
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c. |
Indifferent to reject or not |
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d. |
Always reject |
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Which of the following costs should be considered in short term decisions? |
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