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Question 12 Ms. Andrea Chadwick, the company president, has heard that there are multiple break-even points for every product. She does not believe this and has asked you to provide the evidence of such a possibility. Some information about the company for current year is as follows:

Total fixed manufacturing overhead	$180,000
Total other fixed expenses	$200,000
Total variable manufacturing expenses	$120,000
Total other variable expenses	$120,000
Units produced	30,000 units
Budgeted production	30,000 units
Units sold	25,000 units
Selling price	$40

What are break-even sales in units using absorption costing?

Select one:

A. 8,000 units

B. 5,625 units

C. 6,667 units

D. 7,693 units

E. 769 units

Question 13

From the perspective of long-run product costing it is best to use

Select one:

A. practical capacity for pricing decisions.

B. theoretical capacity for performance evaluation.

C. master-budget capacity utilization to highlight unused capacity.

D. normal capacity utilization for benchmarking purposes.

E. supply capacity to satisfy customer demand.

Question 14

Stober Company produces a specialty item. Management has provided the following information:

Actual sales	60,000 units
Budgeted production	50,000 units
Selling price	$40.00 per unit
Direct material costs	$10.00 per unit
Variable manufacturing overhead	$3.00 per unit
Variable administrative costs	$5.00 per unit
Fixed manufacturing overhead	$4.00 per unit

What is the cost per statue if throughput costing is used?

Select one:

A. $13.00

B. $10.00

C. $22.00

D. $19.00

E. $15.00

Question 15

Honda Heaven produces and sells an auto part for $20.00 per unit. Direct materials are $8 per unit, while direct manufacturing labour averages $1.50 per unit. Variable manufacturing overhead is $0.50 per unit and fixed manufacturing overhead is $250,000 per year. Administrative expenses, all fixed, run $90,000 per year, with sales commissions of $2 per part. Production is 100,000 parts per year. And this year, 75,000 boxes were sold. What is Honda Heaven's inventory cost per box using variable costing?

Select one:

A. $10.00

B. $9.50

C. $13.40

D. $12.50

E. $15.40

Question 16

Helton Company has the following information for the current year:

Beginning fixed manufacturing overhead in inventory	$95,000
Fixed manufacturing overhead in production	375,000
Ending fixed manufacturing overhead in inventory	25,000
Beginning variable manufacturing overhead in inventory	$10,000
Variable manufacturing overhead in production	50,000
Ending variable manufacturing overhead in inventory	15,000

What is the difference between operating incomes under absorption costing and variable costing?

Select one:

A. $5,000

B. $65,000

C. $70,000

D. $50,000

E. $40,000

Question 17

A manufacturing firm is able to produce 1,000 pairs of shoes per hour, at maximum efficiency. There are three eight-hour shifts each day. Due to unavoidable operating interruptions, production averages 800 units per hour. In the month of June the plant actually operated only 25 days due to avoidable shut downs. What is the theoretical capacity for the month of April?

Select one:

A. 600,000 units

B. 720,000 units

C. 480,000 units

D. 576,000 units

E. 744,400 units

Question 18

Variable costing regards fixed manufacturing overhead as

Select one:

A. a product cost.

B. a period expense.

C. an unexpired cost.

D. an inventoriable cost.

E. a deferred asset.

Question 19

Peggy's Pillows produces and sells a decorative pillow for $75.00 per unit. In the first month of operation, 2,000 units were produced and 1,750 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes:

Variable manufacturing costs	$20.00 per unit
Variable marketing costs	$3.00 per unit
Fixed manufacturing costs	$7.00 per unit
Administrative expenses, all fixed	$15.00 per unit
Ending inventories:
Direct materials	-0-
WIP	-0-
Finished goods	250 units

What is operating income using variable costing?

Select one:

A. $78,750

B. $52,500

C. $40,000

D. $65,750

E. $47,000

Question 20

Peggy's Pillows produces and sells a decorative pillow for $75.00 per unit. In the first month of operation, 2,000 units were produced and 1,750 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes:

Variable manufacturing costs	$20.00 per unit
Variable marketing costs	$3.00 per unit
Fixed manufacturing costs	$7.00 per unit
Administrative expenses, all fixed	$15.00 per unit
Ending inventories:
Direct materials	-0-
WIP	-0-
Finished goods	250 units

What is cost of goods sold using variable costing?

Select one:

A. $78,750

B. $35,000

C. $40,250

D. $47,250

E. $52,500