MULTIPLE CHOICE. Choose the one alternative that best completes question. 1) When determining the cost of a manufactured product, a salesperson's salary would be classified A) a direct cost. C) a period cost. B) an indirect cost. D) a conversion cost. 2) When determining the cost of a manufactured product, the cost of lighting the factory would be classified as A) a direct cost. C) a period cost. B) an indirect cost. D) a conversion cost. 3) Where would period costs be found on the financial statements? A) As operating expenses on the income statement for a previous period. B) Under current liabilities on the balance sheet C) As operating expenses on the income statement in the period incurred D) Under current assets on the balance sheet 4) Which of the following statements is correct concerning product costs? A) Product costs are expensed in the period incurred. B) Product costs are shown with operating expenses on the income statement. C) Product costs are shown with current liabilities on the balance sheet. D) Product costs are expensed in the period the related product is sold. information is that which differs between alternatives and can affect the future. C) Predictable B) Historical A) Relevant D) Irrelevant 6) A cost whose total amount changes in direct proportion to a change in volume is a(n). cost. A) mixed B) irrelevant C) variable D) fixed Answer the following question(s) using the information below. Toby's Farm Store buys portable generators for $500 and sells them for $800. He pays a sales commission of 5% of sales revent sales staff. Toby pays $2,000 a month rent for his store, and also pays $1,800 a month to his staff in addition to the commission: sold 200 generators in June. 7) If Toby prepares a contribution margin income statement for the month of June, what would be his contribution margin? A) $160,000 B) $268,000 C) $52,000 D) $108,000 profin? 8) 1 Toby prepares a traditional income statement for the month of June, what would be his gro A) $100,000 B) $160,000 C) $60,000 D) $260,000 9) If Toby prepares a traditional income statement for the month of June, what would be his operating income? A) $48,200 B) $60,000 10) The unit contribution margin is computed by C) $160,000 A) dividing the variable cost per unit by the sales revenue. B) subtracting the variable cost per unit from the sales price per unit. C) subtracting the sales price per unit from the variable cost per unit. D) dividing the sales revenue by variable cost per unit. 8) 17) On a C A D) $72,000 10) 11) The contribution margin ratio explains the percentage of each sales dollar that contributes towards A) variable costs. C) fixed costs and generating a profit. Use the information below to answer the following question(s). B) period expenses. D) sales revenue. 11) Akron Laser Wash sells deluxe car washes for $15 per customer. Variable costs are $9 per wash, Fixed costs are $40,000 per me 12) What is Akron Laser Wash's contribution margin ratio? A) 6% B) 40% C) 60% 13) What is Akron Laser Wash's contribution margin per car wash? A) $9.00 B) $2.50 C) $6.00 12) D) 250% 13) D) $0.40 14) On a CVP graph, the total cost line intersects the total revenue line at which of the following 14) points? A) The break-even point B) The level of the fixed costs C) The level of the variable costs D) None of the above: 15) Sales below the break-even point indicate a , whereas sales above the break-even point 15) indicate a A) profit; loss B) loss; profit C) profit; profit D) loss; loss 16) On a CVP graph, the horizontal line intersecting the vertical y-axis represents A) total costs. C) total fixed costs B) total variable costs. D) break-even point. 2 16) 161