QUESTION 1 Greg, a college student, knows that the opportunity cost of taking a class this summer is $1,200. This means (Make sure that you are following the denition of your textbook for \"opportunity cost\" when you answer this question) that: O a. Instead of taking the class, Greg could earn $1,200 by working instead. 0 '3' Greg will need to pay $1,200 to take the class. 0 c. The difference between what he would earn working less the cost of the class is $1,200. 0 '1 By taking the class, Greg will have the opportunity to earn $1,200 more in a job than he would without taking the class. 0 e. Greg will be able to earn $1,200 if he takes this class. Q U E ST I O N 2 A cost that is proportional to the cost driver that is represented by the volume of the underlying activity is a: a a. Mixed cost. 0 '3' Fixed cost. 0 c. Variable cost. 0 d' Volume cost. 0 9' Break-even cost. Bass Boss Manufacturing Company manufactures two types of bass boats. Bass Boss provides the following data, pertinent to allocating its annual overhead cost of $485,000: Bass Boss Product Boss Hog Boss Bear Units per year 15,000 20,000 Machine hours/unit 3.0 5.0 Materials cost/unit $1,500 $2,000 Labor cost/unit $ 800 $1,000 Determine the overhead allocation rate if the allocation is made based on the cost driver of machine hours. A a. $3 per machine hour A 19' $12.43 per machine hour A 0. $54,375 per machine hour A d' $4.35 per machine hour A 9' $5,000 per machine hour QUESTION 4 Trish's Quilt Connection is an on-line company specializing in high-quality quilt frames and accessories. Trish does not charge customers shipping charges for quilt frame orders. She has provided the following information; Month Quilt Frames Sold Shipping Costs January 1,075 $ 8,800 February 780 $ 8,000 March 1,150 $ 9,000 April 1,280 $10,000 Using the high-low method, estimate Trish's total variable and xed costs are at if she sells 1,280 frames for the month of May: C a. Total variable cost=$5,120; Total Fixed Cost $4,880 Q b-Total variable cost=$320; Total Fixed Cost $9,680 (7 c' Total variable cost=$10,000; Total Fixed Cost $0 (7 d Total variable cost=$2,000; Total Fixed Cost $8,000 0 e. Total variable cost=$7,500; Total Fixed Cost $500 QUESTION 5 The owner of a driving range is trying to determine the value of hiring additional part time help. If she is able to hire someone to work in the shop for 15 hours per week for $10 per hour, she estimates that she can teach approximately 10 additional lessons for which she charges $40 per lesson. The value of hiring a new employee is: 0 a- $400 77 b$250 0 0- $150 0 d$100 C e. None of the above. QUESTION 6 In June, Ace Manufacturing Plant produced 100 units of propane canisters for sale. The total variable costs were $5,000 and the fixed costs for the plant amounted to $3,000. How much is the expected unit variable cost for canisters if Ace Manufacturing produces 120 canisters in July? a. $50.00 O b. $66.67 c. $80.00 O d. $41.67 O e. $30.00 QUESTION 7 Harms Shoe Company applies manufacturing overhead based on the number of units as the cost driver. Information concerning costs for July follows: Direct Labor costs 8 800 hours @ $14 Salary paid to marketing staff 11,000 hours @$15 Manufacturing overhead $$8,000 Corporate headquarters overhead $$10,000 Direct materials $45,000 How much is the unit product cost if 1,000 units are produced? a. $8.00 O b. $64.20 O c. $53.00 O d. $56.20 O e. $89.20QUESTION 8 Bill and Ted recently opened a plumbing business The business currently has $500 monthly depreciation for its two trucks as its only xed costs. During the rst month, the company had 10 service calls each earning $99 revenue per call and variable costs amounting to $20 per call for plumbing supplies and gas How much is Bill and Ted's contribution margin for its rst month? C a- $290 x\QUESTION 10 During May, Mayer Company's total fixed costs were $5,000 and variable costs were $7,000 when 500 units were produced. How much is total cost for June if 600 units are produced? a. $13,400 O b. $12,000 O c. $7,400 O d. $14,400 O e. $7,000 QUESTION 11 The SurferDude Company manufactures long and short surfboards. The company incurred manufacturing overhead costs of $210,000 in March. They have decided to allocate these costs based on units produced. During March, the company used 10,000 direct labor hours for Longboards and 10,000 direct labor hours for Shortboards. In March the company produced 8,000 longboards and 6,000 shortboards. The amount of overhead allocated to each product, respectively, would be: Longboards Shortboards A $120,000 $90,000 B. $90,000 $120,000 C. $105,000 $105,000 D. $ 80,000 $60,000 E. $105,000 $105,000 O a. A Ob. B Occ Od. D Oe EQUESTION 12 Spudz Toys estimated production of 2,000 stuffed dogs each with a selling price of $8.00. If the variable cost per stuffed dog is $2.00 and fixed costs are $5,000, what is estimated profit? O a. $7,000 O b. $16,000 O c. $12,000 O d. $11,000 O e. None of the above QUESTION 13 Which of the following is not a key difference between managerial accounting and financial accounting? The emphasis of financial accounting is information reliability while the emphasis of managerial accounting is information relevance. Financial accounting focuses on past financial data while managerial accounting uses all available data. Financial accounting focuses on external users while managerial accounting focuses on internal users Financial accounting uses financial and non-financial data while managerial accounting only uses non-financial data. Financial accounting reports are released periodically while managerial accounting reports are generated on an as-needed basis. QUESTION 14 Factory rent is an example of: a. Product-level cost. O b. Facility-level cost. c. Unit-level cost. d. Batch-level cost. O e. None of the above.QUESTION 15 The Harvey Company has provided the following information about its only product when they sold 10,000 units (all items are per unit). Revenue $15.00 Direct labor cost 1.50 Direct materials 2.00 Allocated manufacturing overhead 6.00 (1/3 is variable, 2/3 is fixed) Selling and administrative 1.00 (1/2 is variable, 1/2 is fixed) Profit before tax $4.50 For every additional unit sold above 10,000, the company's profit before taxes will increase by: O a. $4.50 per unit O b. $9.00 per unit O c. $7.00 per unit O d. $11.50 per unit O e. None of the above QUESTION 16 Contribution margin denotes: a. The amount that remains after subtracting costs of goods sold from revenue b. The amount that remains after subtracting fixed costs from revenue O C. The amount that remains after subtracting fixed costs from costs of goods sold d. The amount that remains after subtracting variable costs from revenue e. The amount that remains after subtracting variable costs from costs of goods soldQUESTION 17 Managerial accounting is a branch of accounting which: a. Provides financial information to creditors and stockholders b. Summarizes financial information C. Assists in predicting stock prices d. Assists in making business decisions e. Helps managers in training employees QUESTION 18 Cost of goods manufactured by Hobte & Co for July is $419,000. At the end of July, the company had a finished goods inventory of $98,000. Cost of goods sold during June and July are $400,000 and $405,000 respectively. What is the finished goods inventory at the end of June? a. $ 89,000 O b. $ 5,000 c. $ 84,000 O d. $ 112,000 O e. $ 107,000 QUESTION 19 The accounting records of Tacoma Company revealed the following costs: direct materials used, $170,000; direct labor, $350,000; manufacturing overhead, $400,000; and selling and administrative expenses, $220,000. Tacoma's product costs total: a. $520,000 O b. $750,000 O c. $920,000 O d. $1,140,000 e. some other amountQUESTION 20 Montgomery Company has a variable (with respect to sales volume) selling cost. If sales volume increases, how will the total variable cost and the variable cost per unit behave? Total Variable Cost Variable Cost Per Unit A Increase Increase B. Increase Remain constant C. Increase Decrease D. Remain constant Decrease El Decrease Increase CT 3- A 77 b- B C? 0- c Q d- D