multiple choice

1)Under a relevant range of production, when total quantities sold increase, total fixed costs a. increase b decrease . c. remain equal d there is no relationship . 2)Conversion costs are a. only direct material b only direct labor . c. only d . overhead 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 a. $5,000 b 5,000 units . c. 10,000 d 7,500 units . 4) AJ Company makes three products. ? ? ? Current selling price per unit, variable cost per unit, and machine hours required are as follows: ? ? Products ? ? X Y Z Current selling price per unit $20 $30 $20 Variable cost per unit 10 18 12 Machine hours required for each unit 2 3 4 The company has a maximum of 1000 machine hours available per month. Assume the company produces all products; find the total contribution margin per hour. a. $13.50 b $12 . c. $9 d . $4 5) TC Company makes several printing works using two machines (X and Y). Data on the two machines for June 2010 are as follows: X Y Direct material 10 15 Time required for each unit (TR) 23 Expected volume during the month (EV) 2,000 500 Expected labor cost per hour Budgeted overhead costs 50 660,000 Determine The overhead rate per labor hour 1. FOAR = $120.00 per hour worked 2. FOAR = 120.00 per dollar 3. FOAR = $60.00 per hour worked 4. FOAR = $120.00 per overhead costs 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 $100,000 $50,00 0 $25,00 0 More informa tion is needed 7) The income statements of Tahany Company for June and July 2005 are as follows: June July Sales 610 650 Cost of goods sold 420 460 Gross margin 190 190 Selling and administrative expenses 185 195 Income before tax 5 -5 Using High Low Method, the variable component of cost of goods sold is a. 1.00 b .25 . c. 1.25 d . 0 8) Non value added activities are a. Direct material (only) b Direct labor (only) . c. Overhead d . (only) Not essential costs to make/manufacture a product 9) Tany Corporation is a small table manufacturing company operating in the north of Puerto Rico. Managers estimate the following costs per unit (one table) Direct material (DM) $6.00 Direct labor (DL) $4.00 Variable manufacturing overhead (VMO) $3.00 Variable administrative expenses (VAE) $1.00 The estimated contribution margin is Monthly fixed costs are Manufacturing Administrative 30% $10,000.00 $5,000.00 a. 2,000 b 2,200 . c. 2,500 d . 2,750 10) Tany Corporation is a small table manufacturing company operating in the north of Puerto Rico. Managers estimate the following costs per unit (one table) Direct material (DM) $6.00 Direct labor (DL) $4.00 Variable manufacturing overhead (VMO) $3.00 Variable administrative expenses (VAE) $1.00 The estimated contribution margin is 30% Monthly fixed costs are Manufacturing $10,000.00 Administrative $5,000.00 Total unit sold during last month is 2525, what is the total operating income. a. between $100 and $120 b between $120 and $140 . c. between d . $140 and $160 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. a. $100,000 b $60,000 / 40% . c. $60,000 d . / 60% $60,000 X 60% 12) If a company raises its required net income a. the tax rate will decrease b break even point is negative . c. required d . contribution margin increases required contribution margin decreases 13)If a company raises its required operating profit a. break even point is negative b break even point is zero . c. required d . contribution margin increases 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 a. 43% b 40% . c. 30% d . 0 15) Which of the following examples is a short term decision? a. Make or buy decision b Purchase of land . c. Issuing bonds d Joint venture . e. Purchase of building 16) Sales (in units) Selling price per unit 60,000 25 Manufacturing costs per unit: Materials Direct labor 5 4 Overhead Variable Fixed Total Gross margin Selling and admin. Expenses per unit Operating income 4 6 19 6 2 4 A company in a foreign market offer to buy and the offer specifies the following data units to be sold 10000 price per unit 20 If the Company accepts the special offer, the incremental profit would be a. b. c. d. Unit Cost $70,000.00 ($70,000.00) $10,000.00 ($10,000.00) 17) Total Costs Direct materials 20,000 2.00 Direct labor 25,000 2.50 Variable overhead 15,000 1.50 Fixed overhead (non-avoidable) 24000 2.40 Fixed overhead (avoidable) 26,000 2.60 Purchase cost 85,999 Should the company produce the product internally? a. b. c. d. Yes No Indifferent to to make or to buy Yes if the market price per unit covers the fixed cost per unit. 18) Sales (in units) Selling price per unit Manufacturing costs per unit: Materials Direct labor Overhead Variable Fixed Total Gross margin Selling and admin. Expenses per unit (fixed) Operating income 60,000 25 5 4 4 6 19 6 2 4 A company in a foreign market offer to buy and the offer specifies the following data units to be sold price per unit Should the company sell this special order? a. b. c. d. Yes, accept No, reject Indifferent to reject or not Always reject 10,000 13.1 Which of the following costs should be considered in short term decisions