Madrid Corporation is using a manufacturing overhead application rate of 110% of direct labor dollars. If direct labor was 10 hours at $15 per hour, how much overhead should be applied to the job? a) $135 b) $165 b 8135 e jobabo c) $160 d) $150 e) None of the above A company has fixed costs of $175,000 and a 25% contribution margin ratio. What dollar sales are necessary to achieve a pre-tax net income of $200,000 if the tax rate is 20%? a) $1,000,000 b) $1,180,000 c) $1,500,000 d) $1,700,000 e) $1,900,000 24 25. Which of the following statements is true regarding fixed and variable costs? a) Fixed costs stay the same and variable costs increase in total as activity volume increases b) Fixed costs increase and variable costs decrease in total as activity volume decreases c) Both fixed and variable costs increase as activity volume increases d) Both fixed and variable costs stay the same in total as activity volume increases e) None of the above 26 An accounting system that provides information that management can use to evaluate the performance of a department's manager is called a a) Cost accounting system Managerial accounting system. Responsibility accounting system b) c) d) Financial accounting system. e) Activity-based accounting system. 27. A company bought a machine that has an expected life of six years and no salvage value. Management estimates that this machine will generate annual after-tax net income of $70o. If the accounting rate of return is 10%, what was the purchase price of the machine? a) $7,000 b) $700 c) $28,000 d) e) $14,000 $3,500 28. Assume the following: Beginning Inventory Goods started and completed Ending goods in process 25% complete Units of Product 2,000 15,000 5,000 35% complete Assuming FIFO, what are the equivalent units for beginning and ending inventory? a) Beginning 2,000 and Ending 5,000 b) Beginning 1,300 and Ending 5,000 c) Beginning 1,300 and Ending 3,750 d) Beginning 1,300 and Ending 1,250 e) Beginning 700 and Ending 1,.250 e) Direct Labor