2. To find the direct materials spending variance:

1. Add the direct materials rate and efficiency variances
2. Add the direct materials rate and the quantity variances
3. Multiply the standard price per unit by (standard quantity - actual quantity)
4. Multiply the standard hours by (standard rate - actual rate

3. A product sells for $60 per unit and has a contribution margin per unit of $45. When 2,000 units are produced and sold, Net operating income is $5,000. How much are total fixed costs?

1. $6,667
2. $35,000
3. $115,000
4. $30,000
5. $85,000

4. Sales revenue is $40,000, Cost of goods sold is $13,000, and selling general and administrative expenses are $17,000. Variable costs are $8,000, Fixed costs are $22,000, and net operating income is $10,000. Contribution margin is:

1. $20,000
2. $23,000
3. $27,000
4. $30,000
5. $32,000

5. When making a keep or drop decision, if all common fixed costs are unavoidable, then you will drop the product line if segment margin increases.

1. True
2. False

6. Esthers end tables makes end tables. The tables currently sell for $100 each. A company wants to specially order 50 tables for their new corporate offices, and they will pay $85 for each. Esthers per unit costs are $15 for direct materials, $20 for direct labor, $18 for variable overhead, and $2 for fixed overhead at 10,000 units per year. Esther has excess capacity to accept the special order. If they accept the special order, then.

1. Profit will increase by $1500
2. Profit will increase by $1600
3. Profit will increase by $2250
4. Profit will increase by $2350

7. Profit Margin is calculated:

1. Net operating income/sales revenue
2. Sales revenue- variable costs
3. COGS/ average inventory
4. Gross profit/ sales revenue

8. ROI is calculated by:

1. net operating income/ average invested assets
2. net operating income/ sales revenue
3. sales revenue/ average invested assets
4. average invested assets x hurdle rate

9. Which of the following methods of estimating fixed and variable costs will yield the most accurate result?

1. scatter graph
2. High-low method
3. Regression analysis

10. When production increases over the relevant range, what happens to variable cost per unit?

1. Decreases
2. Increases
3. Stays constant

11. When production decreases over the relevant range what happens to fixed cost per unit?

1. decreases
2. increases
3. stays constant

12. A company manufactures candles. Each candle sells for $20, and they plan to sell 10,000 candles. Direct materials are $2/unit, Direct labor is $3/unit, variable overhead is $2.50/unit, and fixed costs total $20,000. To break even, they need to sell ____ units.

1. 1,600
2. 1,905
3. 2,105
4. 2,667

13. A company uses square footage of the building as a cost driver for an activity. The building is 5,000 square feet, 500 square feet is used for product A, the rest is used for product B. The cost allocated to product A under ABC is calculated as (500 sq ft/5,000 sq ft) x total cost. This is an example of the activity rate method.

1. True
2. False

14. Materials handling costs are $12,000, setup costs are $21,000. There were 288 material moves, and 15 setups. Product A required 180 material moves, and Product B used the rest of the material moves. Product A required 9 setups, Product B used the rest of the setups. If they used the activity proportion method, how would the setup costs be allocated to product A?

1. 40% x $12,000
2. 62.5% x $21,000
3. 62.5% x $12,000
4. 60% x $21,000
5. 40% x $21,000
6. 37.5% x $21,000

15. Beginning WIP inventory contained 70,000 units. All direct materials were added at the beginning of the manufacturing process. They completed 130,000 units during the period, and there were 32,000 units in WIP inventory at the end of the period which were 80% complete. How many equivalent units were in ending WIP with respect to conversion cost?

1. 92,000
2. 25,600
3. 155,600
4. 85,600
5. 28,000

16. Managerial accounting looks to the past, while financial accounting looks to the future.

1. true
2. false

36) Which of the following is not true regarding activity-based costing?

a. GAAP allows its use in most circumstances for financial statement reporting.

b. it can be costly to implement

c. It allows the use of multiple cost drivers

d. none of these

37) In late 2019, a company prepares a master budget for 2020. The direct labor budget shows budgeted direct labor hours as 16,000 hours. The manufacturing overhead budget shows total budgeted manufacturing overhead as $240,000. During 2020, actual manufacturing overhead totaled was $258,000, and they applied overhead to jobs based on 15,800 hours. Before closing the manufacturing overhead account to cost of goods

a. Underapplied by $21,000

b. overapplied by $21,000

c. overapplied by $18,000

d underapplied by $18,000

38) When production increases over the relevant range, what happens to total fixed cost?

a. Decrease

b. increase

c. stays constant

39) Beginning WIP inventory contained 70,000 units. All direct materials were added at the beginning of the manufacturing process. They completed 130,000 units during the period, and there were 32,000 units in WIP inventory at the end of the period which were 80% complete. How many units were started during the period?

a. 92,000

b. 25,600

c. 155,600

d. 85,600

e. 28,000

40) Sales revenue is $40,000. Target profit is 20% of sales revenue. Target cost is:

a. $32,000

b. $8,000

c. $34,000

d. $28,000