1.

Standish company is using Activity-base costing. They have determined that they want to allocate overhead costs based on customer orders and number of shipments. They have determined the following information:

Factory Overhead: $500,000

Customer orders: 1,000

Number of shipments: 5,000

Standish has determined that customer orders make up 25% of factory overhead and shipments make up 75% of factory overhead.

How much of factory overhead will be allocated to each customer order?

Group of answer choices

$75

$125

$500

$100

How much of factory overhead will be allocated to each shipment?

Group of answer choices

$125

$500

$100

$75

2.

Basket Co produced and sold 5,000 units in the month. Below is their financial information:

Selling Price: $10 per unit

Direct Manufacturing Costs: $5 per unit

Fixed Manufacturing Overhead: $30,000

Variable Selling expenses: $3 per unit

Fixed Selling expenses: $10,000

Basket Co is trying to determine whether to use a Contribution Margin income statement or an Absorption Costing income statement.

What would be the difference between their Contribution Margin and their Gross Profit?

Group of answer choices

a. Gross Profit would be $10,000 higher than Contribution Margin

b. Both Gross Profit and Contribution Margin would be the same

c. Gross Profit would be $20,000 higher than Contribution Margin

d. Gross Profit would be $10,000 lower than Contribution Margin

3.

Champion Medals wants to achieve an Operating Income of $150,000 in the month.

Based on the information below, how many items would they need to sell?

Selling price: $20 per unit

Direct labor: $5 per unit

Direct materials $3 per unit

Fixed Manufacturing Costs: $40,000

Group of answer choices

12,500 Units

15,834 Units

7,500 Units

3,334 Units

4.

When a company has reached the breakeven point, their operating profit ___________.

Group of answer choices

a. stays the same with any additional units

b. decreases for each additional unit

c. increases faster for each additional unit

d. increases slower for each additional unit

5.

What is the best treatment of a common fixed cost that is not traceable to a specific business segment if it will continue as a cost even if segments are divested?

Group of answer choices

a. Allocate the costs between the segments based on volume.

b. Record costs as part of the total company, but not a particular segment.

c. Arbitrarily divide the costs among the segments.

d. Trace the costs directly to their segment to have complete segment income statements.

6.

This costing method categorizes costs as either product or period costs in order to determine cost of goods sold.

Group of answer choices

a. Marginal Costing

b. Contribution Costing

c. Absorption Costing

d. Variable Costing