Please answer the following questions. On the attached document.

NAME: ACT 5004 WEB - Cost Accounting Summer Term 2016 Assignment Three 100 Points Put your name at the top of the page where indicated. Select the best answer for the following 10 multiple-choice questions. Each question is worth 10 points. MUST submit the answer sheet and show work. Good luck! 1. A 2. 3. 4. 5. 6. 7. 8. 9. 10. 1 1. Which of the following is an assumption of CVP analysis? A. Total costs can be divided into a fixed component and a component that is variable with respect to the level of output. B. When graphed, total costs curve upward. C. The unit-selling price is variable as it is subject to demand and supply. D. Total costs can be divided into inventoriable and period costs with respect to the level of output. Use the following information for Questions 2 and 3 Southern Cross sells several products. Information of average revenue and costs is as follows: Selling price per unit $20.00 Variable costs per unit: Direct material $4.00 Direct manufacturing labor $1.60 Manufacturing overhead $0.40 Selling costs $2.00 Annual fixed costs $96,000 The company sells 12,000 units at the end of the year. 2. The contribution margin per unit is A. $11.00 B. $12.00 C. $4.00 D. $14.00 3. If direct labor and direct material costs increase by $1 each, total contribution margin A. increases by $20,000 B. increases by $14,000 C. decreases by $24,000 D. decreases by $14,000 4. Up High sells helicopters. During the current year, 100 helicopters were sold resulting in $820,000 of sales revenue, $250,000 of variable costs, and $342,000 of fixed costs. The number of helicopters that must be sold to achieve $300,000 of operating income (ignore taxes) is A. 113 units B. 102 units C. 96 units D. 100 units 2 5. Cousin Corp. sells several products. Information of average revenue and costs is as follows: Selling price per unit $28.50 Variable costs per unit: Direct material $5.50 Direct manufacturing labor $1.15 Manufacturing overhead $0.85 Selling costs $2.50 Annual fixed costs $125,000 Cousin currently produces and sells 15,000 units. If Cousin decides to lower its selling price by 12.25%, the operating income is reduced by A. $29,500 B. $55,500 C. $50,500 D. $52,500 6. Nova Southeastern University is planning to hold a fund raising banquet at one of the local country clubs. It has two options for the banquet: OPTION one: Crestview Country Club a. Fixed rental cost of $1,000 b. $12 per person for food OPTION two: Tallgrass Country Club a. Fixed rental cost of $3,000 b. A caterer who charges $8.00 per person for food Nova has budgeted $1,800 for administrative and marketing expenses. It plans to hire a band which will cost another $800. Tickets are expected to be $30 per person. Local business supporters will donate any other items required for the event. Which option provides the greatest degree of operating leverage if 600 people attend? A. Option one B. Option two C. Both options provide equal degrees of operating leverage. D. Operating leverage is indeterminable. 7. Budgets are primarily used to A. increase the book value of its assets B. communicate with external stakeholders C. calculate the income tax liability D. formulate company strategies 3 8. YOLO Industries manufactures and sells two models of watches, Plus Time (Plus) and Minus Time (Minus). It expects to sell 3,000 units of Plus and 1,000 units of Minus in 2016.The following estimates are given for 2016: Selling price Direct materials Direct labor Manufacturing overhead Plus $200 20 40 40 Minus $500 50 150 100 YOLO had an inventory of 200 units of Plus and 75 units of Minus at the end of 2015. It has decided that as a measure to counter stock outages it will maintain ending inventory of 350 units of Plus and 200 units of Minus. Each Minus watch requires one unit of Quartz and has to be imported at a cost of $10 per unit. There were 100 units of Quartz in stock at the end of 2015.The management does not want to have any stock of Quartz at the end of 2016. What is the total budgeted cost of goods manufactured in 2016? A. $600,000 B. $625,500 C. $652,500 D. $667,500 Use the following information to answer Questions 9 and 10 The following information pertains to Prime Products: Month January February March Sales $60,000 $80,000 $100,000 Purchases $32,000 $40,000 $56,000 Cash is collected from customers in the following manner: Month of sale 30% Month following the sale70% 40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month. Labor costs are 20% of sales. Other operating costs are $30,000 per month (including $8,000 of depreciation). Both of these are paid in the month incurred. The cash balance on March 1 is $8,000. A minimum cash balance of $6,000 is required at the end of the month. Money can be borrowed in multiples of $1,000. 9. How much cash will be collected from customers in March? A. $94,000 B. $86,000 C. $100,000 D. $110,000 10. How much cash will be paid to suppliers in March? 4 A. $46,400 B. $56,000 C. $88,000 D. $92,000 5