1. A company produces 500 units of a product, and each unit sells for $6. Variable cost per unit is $2.50. Fixed Cost per unit is $3.00. Production is expected to decrease to 400 units. If that happens which of the following is false?

1. Contribution Margin will remain at 3.5/unit
2. Fixed cost per unit will increase to 3.75/unit
3. Total Cost per unit will be more than selling price
4. Total cost per unit will remain less than the selling price

2. If youre expressing cost on a graph, Total fixed cost is on the Y intercept.

1. True
2. False

3. When making a decision to allocate constrained resources among multiple product lines, prioritize production based on:

1. The product with the highest contribution margin per unit
2. The product that has the highest customer demand
3. The product with the highest contribution margin per unit of the constrained resource
4. The product with the lowest fixed cost

4. If fixed Costs are $28,000, Net Operating Income is $12,000, and Contribution Margin Ratio 40%, how much is sales revenue?

1. $30,000
2. $60,000
3. $66,667
4. $70,000
5. $100,000

5. Rent expense on a manufacturing facility is $15,000 per month. Under ABC, this would be classified as a what level of activity?

1. Facility
2. Product
3. Batch
4. Unit

6. Direct Materials + Direct Labor + Manufacturing Overhead Applied equals:

1. Prime Costs
2. Period costs
3. Conversion costs
4. Cost of goods manufactured
5. Cost of goods sold
6. Current manufacturing costs

7. Rent expense on a manufacturing facility is $15,000 per month. Its a good example of which type of cost?

1. fixed
2. Varibale
3. Mixed
4. None of these

8. When calculating Variable Overhead Variances, Standard Hours, and Actual hours are the same as used for Direct Labor Variances.

1. true
2. false

9. A cost is relevant if it occurs in the future and there is a difference between cost alternatives.

1. true
2. false

10. Which of the following accounts would most likely be credited when Applying manufacturing overhead.

1. salaries and wages payable
2. manufacturing overhead
3. prepaid rent
4. accumulated depreciation
5. work in process inventory

11. When an industrial manufacturer records depreciation on office equipment used in the corporate office, they debit _____ and credit _____.

1. Depreciation expense, manufacturing overhead
2. Depreciation expense, accumulated depreciation
3. Manufacturing overhead, accumulated depreciation
4. Manufacturing overhead, work in process inventory

12. The relevant range is the range over which a company expects its assumptions regarding cost to hold true.

1. true
2. false

13. Emilys Lighting makes special lighting fixtures designed for use in Zoom meetings that sell for $70 each. They usually make 40,000 units per year. They are thinking of outsourcing, and a supplier abroad in the Kingdom of spade will make them for $21 each. Currently their per unit cost are $10 for direct materials, $6 for direct labor, $4 for Variable overhead, and $3 for fixed overhead. They have no plans for what to do with the space if they stop making the product. If they decide to stop making the product and start buying the product:

1. Profit will decrease by $80,000
2. Profit will increase by $40,000
3. Profit will increase by $80,000
4. Profit will decrease by $40,000

14. A company has two product lines, each with different selling prices, demand, and costs. The required rate of return (or hurdle rate) will likely be the same for each product line.

1. True
2. False

15. Which of the following budgets must be prepared first?

1. Sales budget
2. Production budget
3. Cost of goods sold budget
4. Direct labor budget

16. A company produces 500 units of a product, and each unit sells for $6. Variable cost per unit is $2.50. Fixed cost per unit is $3 at this production level. What is their degree of operating leverage?

1. 0.58
2. 12.5
3. 8.75
4. 7

17. A companys production records show the following information: January - Produced 13,000 units at a cost of $44,000, February - Produced 15,000 units at a cost of $45,000, March - Produced 10,000 units at a cost of $36,000, April - Produced 12,000 units at a cost of $48,000. Using the High-Low method, how much variable cost per unit?

1. $1.60/unit
2. $1.80/unit
3. $3.00/unit
4. $3.38/unit
5. $3.50/unit
6. $3.60/unit
7. $4.00/unit

18. When using the high-low method, you select the periods with the highest and lowest total cost.

1. True
2. False

19. Esthers end tables makes, not surprisingly, end tables. The tables currently sell for $100 each, and they are running at their full capacity of 10,000 tables per year. A company wants to specially order 50 tables for their new corporate offices, and they will pay $85 for each. Esthers per unit costs are $15 for direct materials, $20 for direct labor, $18 for variable overhead, and $2 for fixed overhead at 10,000 units per year. Should they accept the special order?

1. yes
2. no

20. Prime costs are $90,000 and conversion costs are $240,000. Manufacturing overhead is applied at a rate of 500% of direct labor costs. Actual manufacturing overhead is $202,000. Direct materials cost is:

1. $38,000
2. $40,000
3. $40,400
4. $42,000
5. $50,000
6. $200,000