Please verify the answers I have now and help me with the ones I am missing
Essential Concepts of Accounting Student: Kim L. Holman II ___________________________________________________________________________ 1. Lucy Treasures operates a chain of gift shops. The company pays liability insurance premiums of $2,500 per year for each shop. The managers of each shop are paid a salary of $3,000 per month and all other employees are paid on an hourly basis. Relative to the number of shops, the cost of insurance is which kind of cost? A. Fixed cost B. Variable cost C. Mixed cost D. Semi-variable 2. A cost that contains both fixed and variable elements is referred to as a A. hybrid cost. B. mixed cost. C. half cost. D. semi cost. 3. Select from the following the incorrect statement regarding contribution margin. A. Sales - variable manufacturing costs = contribution margin. B. Net income + total fixed costs = contribution margin. C. At the breakeven point (where the company has neither profit nor loss), total fixed costs = total contribution margin. D. An increase in the amount of variable cost per unit will decrease contribution margin and profit, assuming that nothing else changes. 4. Which of the following costs generally can be traced directly to units of product? A. Indirect materials B. Assembly labor C. Overhead costs D. A and B 5. Andy is trying to decide which one of two job offers he will accept. Several items are presented below: Select the items that are relevant to Andy's decision. A. (1), (2), (3), (4), (5) B. (2), (3), (4) C. (1), (3), (5) D. (2), (4) 6. Brandon Company plans to add a new item to its product line. Two possible products are under consideration. Each unit of Product A costs $12 to produce and sells for $20, while each unit of Product B costs $18 and sells for $28. What is the differential revenue for this decision? A. $2 per unit sold B. $8 per unit sold C. $14 per unit sold D. $18 per unit sold 7. Which of the following is not a possible commonly-used term for costs that can be eliminated by taking a specified course of action? A. avoidable costs B. differential costs C. relevant costs D. sunk costs 8. Select the correct statement regarding relevant costs and revenues. A. To be relevant, a cost or revenue must be future-oriented and must differ between the alternatives. B. Sunk costs are relevant for decision-making purposes. C. Differential revenues are expected future revenues that do not vary between the alternatives under consideration. D. Avoidable costs are also known as sunk costs. 9. Sheffield Company expects to begin operating on July 1, 2012. The company's master budget contained the following operating expense budget: Sales commissions are paid in cash in the month following the month in which the expense is recognized. All other expense items requiring cash payment are paid in the month in which they are recognized. The amount of commissions payable that would appear on the company's September 30, 2012 pro forma balance sheet is A. $15,000 B. $18,000 C. $12,000 D. $16,000 10. Which of the following is not a budgeted financial statement? A. Pro forma cash flow statement B. Pro forma balance sheet C. Purchases budget D. Pro forma income statement 11. A budget prepared at a single volume of activity is referred to as a A. strategic budget. B. static budget. C. standard budget. D. flexible budget 12. Acme Calendar Company manufactures wall and desktop calendars for business use. The company expects production of 10,000 units this year. Various costs and items associated with calendar production are described below: Required: Assume that management is interested in determining the average cost per calendar. For each item in the table, place a check mark or X in every column that applies. When labeling costs as fixed or variable, select your response on the basis of whether the total cost of that item will change when changes occur in volume of calendars produced. 13. Rayburn Company expects factory depreciation to be $80,000 for 2012, and the total number of direct labor hours for the year is expected to be 25,000. If the number of direct labor hours for April is 2,800, how much factory depreciation should be allocated to products made in April? There is no Number 14. 15. Cannon Company produces and sells air compressors for $250. The variable costs per unit are $150 plus a sales commission of 10% of the selling price. Total fixed costs consist of $14,000 in fixed overhead and $16,000 in fixed selling and administrative costs. Required: 1) Compute the contribution margin per unit. Unit selling price = $250 Variable cost per unity = $150 + $250 * 10% = $175 Contribution margin per unit = $250 - $175 = $75 2) Compute the break-even point in units: Total fixed costs = $14,000 + $16,000 = $30,000 Break-even points in units = 30,000 / 75 = 400 unit 3) How many units must be sold to earn a profit of $60,000? Q = Number air compressors sold 250Q = 175Q + 30,000 + 60,000 75Q = 90,000 Q = 90,000 / 75 = 1,200 units 16. Hart Company currently produces a component that it uses in making some of its products. Hart has calculated the following costs for making the part: Hart is considering outsourcing the component. A supplier has offered to sell the component to Hart for $54 each. Hart needs 10,000 units each year. Required: Should Hart outsource the component? Support your answer with appropriate computations. 17. Fair Price, Inc. has two divisions, and their most recent financial statements are shown below: The Tiling Division has incurred losses for the past five years, and management believes that the company will be better off maintaining and growing the Carpeting Division. Required: Should Fair Price, Inc. eliminate the Tiling Division? 18. Matching. Select the term from the list provided that best matches the description provided. 19. Don's Game Store sells computer and other electronic games. The store has budgeted sales for January as indicated in the following table. The company expects an 8 percent increase in sales for the month of February and a 5 percent increase for March. Required: a) Complete the sales budget by filling in the missing amounts. Sales Cash Sales Sales on account Total budgeted sales January February $20,000 40,000 $60,000 March $21,600 43,200 $64,800 $21,000 42,000 $63,000 20. Chance Company estimates sales of 13,000 units for the upcoming period. At this sales volume its budgeted income is as follows: During the period the company actually produced and sold 14,000 units. Required: Prepare a flexible budget based on 14,000 units. 21. For 2012, an investment center of Lawson Company reported operating income of $420,000 on total operating assets of $2,600,000. The company has established a target ROI of 14% for the investment center. Last year, the investment center's ROI was 11.9%. Required: Calculate the 2012 return on investment for the investment center. 22. Mindy Norton Company reported the following information for 2012: Required: Based on this information, calculate the company's residual income for 2012. Investment charge = Average Operating Assets * Desired ROI = $300,000 * 10% Investment charge = $30,000 Residual Income = Net Income - Investment Charge = $45,000 - $30,000 Residual Income = $15,000
