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Note that a question and its answers may be split across a page break, so be sure that you have seen the entire question and all the answers before choosing an answer. euestions I to 20: Select the best answer to each question. 1. Last year, Gftrnsky Corporation's variable costing net operating income was $52,100, and its ending inventory increased iry aOb units. Fixed manufacturing overhead cost was $7 per unit. What was the absorption costing net operating income last year? A. $54,900 B. $2,800 c. $52,100 D. $49,300 2. Use the following information to answer this question. Harris Company produces a single product. Last year, Halris manufactured 17,000 units and sold 13,000 units. Production costs for the year were as follows: Production Cort Data $153,000 $110,500 Direct labor Variable overhead Fixed manufactudng overhead Sales were $780,000 for the year, variable selling and administative expenses were $88,400, and fixed selling and administative expenses were $170,000. There was no beginning inventory. Assume that direct labor is a variable cost. Under absorption costing, the carrying value on the balance sheet of the ending inventory for the year would be A. $190,800. B. $230,800. c. $170,000. D. $0. 3. Indiana Corporation produces a single product that it sells for $9 per unit. During the first year of operations, 100,000 units were produced,-and 90,000 units were sold. Manufacturing costs and selling and adminisffative expenses for the year were as follows: $0.50 per unit produced What was Indiana Corporation's net operating income for the year using variable costing? A. $371,000 B. S281,000 c. $271,000 D. $181,000 4. Rank the following methods of assigning overhead costs from least assxate to most accurate. A. Plantwide rate, activity-based costing, deparhnental rates B. DeparUnental rates, plantwide rate, activity-based costing C. Activity-based costing, departuental rates, plantwide rate D. Planfiride rate, deparffnental rates, activity-based costing 5. A cost driver is A. a fixed cost that can't be avoided. B. the largest single category of cost in a company. C. a factor that causes variations in a cost. D. an indirect cost thafs essential to the business. 6. At a break-even point of 400 units sold, variable expenses were $4,000, and fxed expenses were $2,000. What will the 401st unit sold contribute to profit? A. $15 B. $10 c. $s D. $0 7. Use the following information to answer this question. Callaham Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $115.80 per unit. $ales .v,olume, (unit$) 4,000 5,0tDO Cost of sales Stllt@ fssrr-oL The best estimate of the total variable cost per unit is A. S84.50. B. $100.90. c. s10s.70. D. $106.90. 8. A disadvantage of the high-low method of cost analysis is that A. it uses two exteme data points, which may not be representative of norrnal conditions. B. ifs too time-consuming to apply. C. it can't be used when there ile a very large number of observations. D. it relies totally on the judgment of the person perforrring the cost analysis. 9. Use the following information to answer this question. Lifsey Wedding Fantasy Company makes very elaborate wedding cakes to order. The owner of the company has provided the following data concerning the activity rates in its activity-based costing system: Lctivity RSte Acfivity Cost Pools 150.94 per guest :,.4 Complexity-related - $31.62 per tier . The measrue of activity for the size-related activity cost pool is the number of planned guests at the wedding reception. The greater the number of guests, the larger the cake. . The measure of complexity is the number of tiers in the cake. . The activrty measure for the order-related cost pool is the number of orders. (Each wedding involves . one order.) The activrty rates include the costs of raw ingredients, such as flour, sugar, eggs, and shortening. The activity rates don't include the costs of purchased decorations, such as miniature statues and wedding bells, which are accounted for separately. Data concerning two recent orders are listed here: Number of tiers on the cake Suppose the company decides that the present activity-based costing system is too complex and that all costs (except for the costs of purchased decorations) should be allocated on the basis of the nurnber of guests. In that event, what would you expect to happen to the costs of cakes? A. The cost of cakes for receptions with fewer than the average number of guests would go down. B. The cost of cakes for receptions with more than the average number of guests would go down. C. The costs of all cakes would go down. D. The costs of all cakes would go up. 10. Use the following information to answer this question. Callaham Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $115.80 per unit. Snles volumc (untts) 5,000 $422,500 Selling and adminisffative costs $106p00 The best estimate of the total monthly fixed cost is A. $24,000. B. $427,600. c. $528,500. D. $478,050. 11. Use the following information to answer this question. Lifsey Wedding Fantasy Company makes very elaborate wedding cakes to order. The owner of the company has provided the following data concerning the activity rates in its activity-based costing system: AcfiYity Cost Pools Acttvity Rate $0.94 per guest $31.62 per tier . The measure of activity for the size-related activity cost pool is the number of planned guests at the wedding reception. The greater the nurnber of guests, the larger the cake. . The measure of complexity is the number of tiers in the cake. . The activity measure for the order-related cost pool is the number of orders. @ach wedding involves one order.) . The activity rates include the costs of raw ingredients, such as flour, sugar, eggs, and shortening. The activrty rates don't include the costs of purchased decorations, such as miniafure statues and wedding bells, which are accounted for separately. Data concenring two recent orders are listed here: ,j,,ry-.;'l :;TY,ffig' l Number of reception guests Number of tiers on the cake Cost ofpurchased decorations for cake Assuming that all of the costs listed above are avoidable costs in the event that an order is turned down, which amount would the company have to charge for the Pyburn wedding cake to just break even? A.s29.92 B. $338.64 c. $s5.79 D. $279.87 12. Use the following information to answer this question. Gargymal Company would like to estimate the variable and fixed components of its electrical costs and has compiled the following data for the past five months of operations. illrchine Hours lA-ugust I Electrical Cost 1,000 $1,620 $1J10 : $1,870 sr,*, Using the high-low method of analysis, the estimated fixed cost per month for electricity is closest to which of the following? A. $870.00 B. $1,290.00 c. $1,306.50 D. $1,150.00 13. Green Company's variable experures are75o/o of sales. At a sales level of $400,000, the company's degree of operating leverage is 8. At this sales level, fixed expenses are A. $100,000. B. $50,000. c. $87,500. D. 575,000. 14. Use the following information to answer this question. Lifsey Wedding Fantasy Company makes very elaborate wedding cakes to order. The owner of the company has provided the following data concerning the activity rates in its activity-based costing system: : Complexity-related $31.62 per tier . The measure of activity for the size-related activity cost pool is the number of planned guests at the wedding reception. The greater the number of guests, the larger the cake. . The measure of complexity is the number of tiers in the cake. . The activity measure for the order-related cost pool is the number of orders. (Each wedding involves one order.) . The activity rates include the costs of raw ingredients, such as flour, sugar, eggs, and shortening. The activity rates don't include the costs of purchased decorations, such as miniature statues and wedding bells, which are accounted for separately. Data conceming two recent orders are listed here: Number of reception guests lNumber of tiers on the ll cake lCost of ourchased decorations for 14 cake lSZg.gZ Assuming that the company charges $556.96 for the Smith wedding cake, what would be the overall margin on the order? A. $1s2.45 B. $460.30 c. $165.41 r). $96.66 15. Mardist Corporation has sales of S100,000, variable expenses of $75,000, fixed exponses of $30,000, and a net loss of $5,000. How much would Mardist have to sell to achieve a profit of 10% of sales? A. $187,500 B. $180,000 c. $225,500 D. $200,000 16. Use the following information to answer this question. Callatram Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $115.80 per unit. Salcs I Cost of sales I voluw (unite) 4,000, srs.ooo 51000 'l s+zz.soo : Selling and adminishative costs The best estimate of the total conffibution margn when 4,300 units are sold is A. $43,430. B. $64,070. c. $38,270. D. $134,590. 17. Purchase-order processing is an example of alan activity. A. unit-level B. batch-level C. product-level D. organization- sustaining Acdvity eo$Pool Processing orders The company makes 240 units of product T91H ayea\\ requiring a tota-lof 550 machine hours, 90 orders, and 40 io*p"ltioo hours per year. The product's direct materials cost is $16.98 per unit, anl its direct labor cost is StZ.Og per gnit. e6oiaing to the activity-based costing system, the average cost of product T9lH is per unit. closest to A. $79.66 B. $90.81 c.$29.07 - D. $75.70 19. Use the following information to answer this questionHarris Company produces a single product. Last year, Harris manufactured 17,000 units and sold 13,000 units. Production costs for the year were as follows: Produefion Co*tllatr $204,000 Fixed manufacturing overhead Sales were $780,000 for the year, variable selling and adminisEative expenses were $88,400, and fixed "se[ing and administative expenses were $170,@0. There was no beginning inventory. Assume that direct labor is a variable cost. The connibution margin per unit was A. $17.50. B. $27.30. c. $32.s0. D. $25.70. 20. Which of the following is tnre regarding the contribution margin ratio of a single-product company? A. The con&ibution margin ratio increases as the number of rmits sold increases. B. The contibution margin ratio multipliedby the variable expense perunit equals the confribution margin psr unit. C. As fixed expenses decrease, the contibution margin ratio increases. D. If sales increase, the dollar increase in net operating income can be computed by multiplying the contibution margin ratio by the dollar increase in sales. End ofexam