test sample 3,4,10

Sample Test Questions: This is a random sample of possible test questions. Some of these questions may or may not appear on your test. I have worked each of these questions and would consider using them on a test. You should work these problems as a way to assess your skills but not as your only means to studying for the test.

2) G ross margin is: 2) _______

A) s ales revenue less variable costs B) s ales revenue less cost of goods sold

C) c ontribution margin less variable costs D) c ontribution margin less fixed costs

3) I n a company with low operating leverage: 3) _______

A) t here is a higher possibility of net loss than a higher-leveraged firm

B) l ess risk is assumed than in a highly leveraged firm

C) f ixed costs are high and variable costs are low

D) l arge changes in sales volume result in small changes in net income

5) _______

5) A t the breakeven point of 200 units, variable costs total $400 and fixed costs total $600. The 201st

unit sold will contribute ________ to profits.

A) $1 B) $2 C) $3 D) $5

6) _______

6) S chuppener Company sells its only product for $18 per unit, variable production costs are $6 per

unit, and selling and administrative costs are $3 per unit. Fixed costs for 10,000 units are $10,000.

The contribution margin is:

A) $11 per unit B) $9 per unit C) $12 per unit D) $8 per unit

8) _______

8) A ssume there is a reduction in the selling price and all other CVP parameters remain constant.

This change will:

A) r educe operating income B) i ncrease variable costs

C) r educe fixed costs D) i ncrease contribution margin

Answer the following questions using the information below:

Cheaney Manufacturing produces a single product that sells for $200. Variable costs per unit equal $50. The company expects total fixed costs to be $120,000 for the next month at the projected sales level of 2,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately.

9) W hat is the current breakeven point in terms of number of units? 9) _______

A) 2,400 units B) 800 units

C) 900 units D) N one of these answers are correct.

10) A ssume only the specified parameters change in a CVP analysis. The contribution margin

10) ______

percentage increases when:

A) t otal fixed costs decrease B) t otal fixed costs increase

C) v ariable costs per unit increase D) v ariable costs per unit decrease11) T he Manufacturing Overhead Control account is the record of: 11) ______

A) a llocated overhead when using normal costing

B) a ctual direct material and direct manufacturing labor costs

C) a ctual overhead costs

D) B oth A and B are correct answers when using normal costing.

12) A ll of the following increase (are debited to) the Work-in-Process Control account EXCEPT: 12) ______

A) d irect manufacturing labor B) d irect materials

C) a llocated manufacturing overhead costs D) a ctual plant insurance costs

Answer the following questions using the information below:

Wayland Manufacturing uses a normal cost system and had the following data available for 20X5:

Direct materials purchased on account $ 74,000

Direct materials requisitioned 41,000

Direct labor cost incurred 65,000

Factory overhead incurred 73,000

Cost of goods completed 146,000

Cost of goods sold 128,000

Beginning direct materials inventory 13,000

Beginning WIP inventory 32,000

Beginning finished goods inventory 29,000

Overhead application rate, as a percent of direct-labor costs 125 percent

13) T he journal entry to record the materials placed into production would include a: 13) ______

A) d ebit to Direct Materials Inventory for $74,000

B) c redit to WIP Inventory for $41,000

C) c redit to Direct Materials Inventory for $41,000

D) d ebit to WIP Inventory for $74,000

14) J ob costing: 14) ______

A) a llocates an equal amount of cost to each unit made during a time period

B) c an only be used in manufacturing

C) i s commonly used when each unit of output is identical

D) r ecords the flow of costs for each customer

Answer the following questions using the information below:

Wayland Manufacturing uses a normal cost system and had the following data available for 20X5:

Direct materials purchased on account $ 74,000

Direct materials requisitioned 41,000

Direct labor cost incurred 65,000Factory overhead incurred 73,000

Cost of goods completed 146,000

Cost of goods sold 128,000

Beginning direct materials inventory 13,000

Beginning WIP inventory 32,000

Beginning finished goods inventory 29,000

Overhead application rate, as a percent of direct-labor costs 125 percent

16) T he ending balance of finished goods inventory is: 16) ______

A) $18,000 B) $47,000 C) $29,000 D) $146,000

17) F or January, the cost components of a picture frame include $0.35 for the glass, $.65 for the

17) ______

wooden frame, and $0.80 for assembly. The assembly desk and tools cost $400. 1,000 frames are

expected to be produced in the coming year. What cost function best represents these costs?

A) y= 1.00 + 400X B) y= 1.80 + 400X

C) y= 400 +1.80X D) y= 2.20 + 1,000X

Answer the following questions using the information below:

The Gangwere Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Gangwere Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation.

Month Cost Hours

January $40,000 3,500

February 24,400 2,000

March 31,280 2,450

April 36,400 3,000

May 44,160 3,900

June 42,400 3,740

19) W hat is the estimated total cost at an operating level of 2,850 hours? 19) ______

A) $34,736 B) $33,240 C) $32,016 D) $25,692

21) ______

21) W hat is the breakeven point in units, assuming a product's selling price is $100, fixed costs are

$8,000, unit variable costs are $20, and operating income is $32,000?

A) 100 units B) 300 units C) 400 units D) 500 units

Answer the following questions using the information below:

The following information is for Barnett Corporation:

Product X: Revenue $10.00

Variable Cost $2.50Product Y: Revenue $15.00

Variable Cost $5.00

Total fixed costs $50,000

22) ______

22) W hat is the breakeven point assuming the sales mix consists of two units of Product X and one

unit of Product Y?

A) 2,000 units of Y and 4,000 units of X B) 1012.5 units of Y and 2,025 units of X

C) 1,000 units of Y and 2,000 units of X D) 2012.5 units of Y and 4,025 units of X

Answer the following questions using the information below:

Ruben intends to sell his customers a special round-trip airline ticket package. He is able to purchase the package from the airline carrier for $150 each. The round-trip tickets will be sold for $200 each and the airline intends to reimburse Ruben for any unsold ticket packages. Fixed costs include $5,000 in advertising costs.

23) H ow many ticket packages will Ruben need to sell to break even? 23) ______

A) 34 packages B) 50 packages C) 100 packages D) 150 packages

Answer the following questions using the information below:

For 20X5, Marcotte's Animal Supply Manufacturing uses machine-hours as the only overhead cost-allocation base. The accounting records contain the following information:

Estimated Actual

Manufacturing overhead costs $100,000 $120,000

Machine-hours 20,000 25,000

25) U sing job costing, the 20X5 actual indirect-cost rate is: 25) ______

A) $4.80 per machine-hour B) $4.00 per machine-hour

C) $5.00 per machine-hour D) $6.00 per machine-hour

Answer the following questions using the information below:

Nancy's Niche sells a single product. 8,000 units were sold resulting in $80,000 of sales revenue, $20,000 of variable costs, and $10,000 of fixed costs.

27) T o achieve $100,000 in operating income, sales must total: 27) ______

A) $160,000 B) $130,000

C) $440,000 D) N one of these answers are correct.

Answer the following questions using the information below:

Apple Valley Corporation uses a job cost system and has two production departments, A and B. Budgeted manufacturing costs for the year are:Department A Department B

Direct materials $700,000 $100,000

Direct manufacturing labor $200,000 $800,000

Manufacturing overhead $600,000 $400,000

The actual material and labor costs charged to Job #432 were as follows:

Total

Direct materials: $25,000

Direct labor:

Department A $ 8,000

Department B $12,000

$20,000

Apple Valley applies manufacturing overhead costs to jobs on the basis of direct manufacturing labor cost using departmental rates determined at the beginning of the year.

28) F or Department A, the manufacturing overhead allocation rate is: 28) ______

A) 300% B) 100% C) 66% D) 33%

29) A step variable-cost function: 29) ______

A) i s fixed over the long run but not over the short run

B) e xample includes adding additional warehouse space

C) i s often approximated with a continuous variable-cost function

D) r emains the same over a wide range of activity

Answer the following questions using the information below:

Cheaney Manufacturing produces a single product that sells for $200. Variable costs per unit equal $50. The company expects total fixed costs to be $120,000 for the next month at the projected sales level of 2,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately.

30) ______

30) S uppose that management believes that a 20% reduction in the selling price will result in a 20%

increase in sales. If this proposed reduction in selling price is implemented:

A) o perating income will increase by $36,000

B) o perating income will decrease by $36,000

C) o perating income will increase by $44,000

D) o perating income will decrease by $80,0002) B

3) B

5) C

6) B

8) A

9) B

10) D

11) C

12) D

13) C

14) D

16) B

17) C 19) B

21) A

22) A

23) C 25) A

27) D

28) A

29) C

30) B