The contribution margin at the break-even point:

A) plus total fixed costs equals total revenues.

B) is greater than variable costs.

C) is zero.

D) equals total fixed costs.

XYZ Co. manufactures two models, Standard and Premium. Weekly demand is estimated to be 100 units of the Standard Model and 70 units of the Premium Model. The following per unit data apply:

	Standard	Premium
Contribution margin per unit	$18	$20
Number of machine-hours required	3	4

If there are 496 machine-hours available per week, how many units of each model should XYZ produce to maximize profits?

A) 100 units of Standard and 49 units of Premium

B) 100 units of Standard and 70 units of Premium

C) 85 units of Standard and 60 units of Premium

D) 72 units of Standard and 70 units of Premium

When deciding to lease a new cutting machine or continue using the old machine, the following costs are relevant except the:

A) $10,000 market value/selling price of the old machine

B) $20,000 acquisition cost of the new machine

C) $3,000 annual savings in operating costs if the new machine is purchased

D) $50,000 acquisition cost of the old machine

Inventory balances for the XYZ Enterprises in January 2023 are as follows:

	Jan 1, 2023	Jan 31, 2023
Raw materials	$ 27,000	$21,000
Work in process	48,000	37,200
Finished goods	108,000	90,000

During January, purchases of direct materials were $36,000. Direct labor and factory overhead costs were $60,000 and $84,000, respectively.

What is January's cost of goods manufactured?

A) $186,000

B) $214,800

C) $196,800

D) $194,000

E) $190,800

XYZ Company has a predetermined overhead rate of $6 per direct labor hour. Last year the company incurred $156,600 of actual manufacturing overhead cost and the account was $12,600 underapplied. How many direct labor hours were worked during the year?

A) 24,000 direct labor hours

B) 25,000 direct labor hours

C) 26,000 direct labor hours

D) 28,200 direct labor hours

E) 29,000 direct labor hours

The contribution margin format of the income statement:

A) calculates gross margin

B) is used with absorption costing

C) distinguishes manufacturing costs from nonmanufacturing costs

D) highlights the lump sum of fixed manufacturing costs

XYZ Electronics Corp. produces and sells headphones 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 per unit using variable costing?

A) $45

B) $30

C) $20

D) $23

XYZ Company had the following income statement for the month of July 2023:

Sugar Land Company Income Statement For the Month of July 2023
Sales ($60 10,000)		$600,000
Cost of goods sold:
Direct materials ($12 10,000)	$120,000
Direct labor ($9 10,000)	90,000
Variable factory overhead ($7.50 10,000)	75,000
Fixed factory overhead	120,000	405,000
Gross profit		$195,000
Selling and administrative expenses:
Variable ($1.50 10,000)	$ 15,000
Fixed	90,000	105,000
Operating income		$90,000

What is the sales volume required to earn a profit of $9,000? (Assume no taxes.)

A) 3,300 units

B) 7,300 units

C) 10,000 units

D) 6,450 units

Assume XYZ Manufacturing has a Janitorial Department that supports the Maintenance Department, along with two production departments, Department A and Department B. Janitorial and Maintenance are allocated to other departments on the basis of square footage of space used. The amount of space used by each department is listed below:

Department	Square Footage Used
Janitorial	600
Maintenance	900
Department A	4,500
Department B	9,000

The expected cost for the Janitorial Department is $9,000. Using the step-down method, what is the amount of janitorial costs will be allocated to Maintenance? Assume Janitorial is the support department whose costs are allocated first.

A) $600

B) $562.50

C) $0

D) $540

E) $5,400

XYZ Co. uses machine hours as its overhead cost allocation driver.

Estimated manufacturing overhead	$690,000
Estimated machine hours	46,000
Actual machine hours worked	50,000

Actual manufacturing overhead costs incurred:
Indirect materials	$170,000
Indirect labor	230,000
Utilities	120,000
Insurance	100,000
Rent	80,000

The amount of overapplied or underapplied overhead is:

A) $10,000 underapplied.

B) $40,000 underapplied.

C) $50,000 overapplied.

D) $65,200 underapplied.

E) $60,000 overapplied.

Some information about the XYZ Company for 2023 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
Beginning inventory	0	units
Units produced	30,000	units
Budgeted production	30,000	units
Units sold	25,000	units
Selling price	$40

What are breakeven sales in units?

A) 5,769 units

B) 12,180 units

C) 5,625 units

D) 11,875 units

Information about the XYZ Company's two products includes:

	Product D	Product E
Unit selling price:	$9.00	$9.00
Unit variable costs:
Manufacturing	$5.25	$6.75
Selling	0.75	0.75
Total unit variable costs	$6.00	$7.50

Monthly fixed costs are as follows:

Manufacturing	$ 82,500
Selling and administrative	45,000
Total	$127,500

What is the total monthly sales volume in units required to break even when the sales mix in units is 70 percent Product D and 30 percent Product E?

A) 42,333 units

B) 8,333 units

C) 50,000 units

D) 56,667 units

E) 16,667 units

Under variable costing, if a manager's bonus is tied to operating income, then, all else equal, increasing inventory levels would result in:

A) increasing the manager's bonus

B) being unable to determine the manager's bonus using only the above information

C) not affecting the manager's bonus

D) decreasing the manager's bonus

XYZ Communications Company's contribution margin ratio is 15%. Assume operating leverage is defined as Contribution margin Operating income. If the degree of operating leverage is 12 at the $150,000 sales level, net operating income at the $150,000 sales level must equal:

A) $1,500

B) $1,875

C) $2,160

D) $2,250

E) $2,700

The XYZ Toy Company manufactures its Dream Lites Kids' Pillow. Monthly production costs for 10,000 units are as follows:

Direct materials	$40,000
Direct labor	10,000
Variable overhead costs	30,000
Fixed overhead costs	20,000
Total costs	$100,000

It is estimated that 10% of the fixed overhead costs assigned to the Dream Lites Pillow will no longer be incurred if the company outsources production of the Dream Lites Pillow to an outside supplier. Thresher Toy has the option of purchasing the pillow from the outside supplier at $8.50 per unit.

If XYZ Toy accepts the offer from the outside supplier, the monthly avoidable costs (costs that will no longer be incurred) total:

A) $100,000

B) $98,000

C) $82,000

D) $50,000

XYZ Company sells a soccer ball for $20. In March, it sold 28,000 balls while manufacturing 30,000. There was no beginning inventory on March 1. Production information for March was:

Direct manufacturing labor per unit	15 minutes
Fixed selling and administrative costs	$40,000
Fixed manufacturing overhead	132,000
Direct materials cost per unit	2
Direct manufacturing labor per hour	24
Variable manufacturing overhead per unit	4
Variable selling expenses per unit	2

Operating income under absorption costing will be ___________ operating income under variable costing by $____________ .

A) greater than; $ 11,467

B) greater than; $9,429

C) greater than; $ 12,286

D) greater than; $8,800