Accounting MCQs_09 Dec

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Description

1)Under a relevant
range of production, when total quantities sold increase, total fixed costs

a.

increase

b.

decrease

c.

remain equal

d.

there is no
relationship

2)Conversion costs are

a.

only direct material

b.

only direct labor

c.

only overhead

d.

overhead and direct labor

3)XY Company sells
its unique product at $30.00. Variable costs per unit are $20.00. Total fixed
sales salaries per month $40,000.00. Other fixed costs per month $60,000.00.
Assume that the company wants to change the sales salaries as follows: Total
fixed sales salaries per month 25,000. Sales commission of 10% of sales.?Find
at what sale-level is the company indifferent between the two alternatives

a.

$5,000

b.

5,000 units

c.

10,000

d.

7,500 units

4) AJ Company makes three
products.

?

?

?

Current selling price per
unit, variable cost per unit, and machine hours required are as follows:

?

?

Products

?

?

X

Y

Z

Current selling price per
unit

$20

$30

$20

Variable cost per unit

10

18

12

Machine hours required for
each unit

2

3

4

The company has a maximum of
1000 machine hours available per month.

Assume
the company produces all products; find the total contribution margin per hour.

a.

$13.50

b.

$12

c.

$9

d.

$4

5)
TC Company makes several printing works using two machines (X and Y).

Data on the two
machines for June 2010 are as follows:

X

Y

Direct
material

10

15

Time
required for each unit (TR)

2

3

Expected
volume during the month (EV)

2,000

500

Expected
labor cost per hour

50

Budgeted
overhead costs

660,000

Determine

The
overhead rate per labor hour

1.

FOAR = $120.00 per hour worked

2.

FOAR = 120.00 per dollar

3.

FOAR = $60.00 per hour worked

4.

FOAR = $120.00 per overhead costs

6) Assume the cost structure is as follows: TC = 25,000 + 5q,
where TC = total costs, q = quantities sold. Under relevant range of sales,
selling price per unit is $8.00. Total fixed costs are

$100,000

$50,000

$25,000

More
information is needed

7) The income statements
of Tahany Company for June and July 2005 are as follows:

June

July

Sales

610

650

Cost
of goods sold

420

460

Gross
margin

190

190

Selling
and administrative expenses

185

195

Income
before tax

5

-5

Using
High Low Method, the variable component of cost of goods sold is

a.

1.00

b.

.25

c.

1.25

d.

0

8) Non
value added activities are

a.

Direct
material (only)

b.

Direct
labor (only)

c.

Overhead
(only)

d.

Not
essential costs to make/manufacture a product

9) Tany Corporation
is a small table manufacturing company operating in the north of Puerto
Rico.

Managers estimate the following costs per unit (one table)

Direct material (DM)

$6.00

Direct labor (DL)

$4.00

Variable manufacturing overhead (VMO)

$3.00

Variable administrative expenses (VAE)

$1.00

The estimated contribution margin is

30%

Monthly fixed costs are

Manufacturing

$10,000.00

Administrative

$5,000.00

a.

2,000

b.

2,200

c.

2,500

d.

2,750

10) Tany Corporation is a
small table manufacturing company operating in the north of Puerto Rico.

Managers estimate the
following costs per unit (one table)

Direct material (DM)

$6.00

Direct labor (DL)

$4.00

Variable manufacturing
overhead (VMO)

$3.00

Variable administrative
expenses (VAE)

$1.00

The estimated
contribution margin is

30%

Monthly fixed costs are

Manufacturing

$10,000.00

Administrative

$5,000.00

Total
unit sold during last month is 2525, what is the total operating income.

a.

between
$100 and $120

b.

between
$120 and $140

c.

between
$140 and $160

d.

between
$160 and $180

11)
BC Company estimates the following data for the coming month: total variable
costs $60,000.00, income tax rate 30%, contribution margin percentage 60%. Find
the estimated total sales for the coming month.

a.

$100,000

b.

$60,000
/ 40%

c.

$60,000
/ 60%

d.

$60,000
X 60%

12)
If a company raises its required net income

a.

the
tax rate will decrease

b.

break
even point is negative

c.

required
contribution margin increases

d.

required
contribution margin decreases

13)If
a company raises its required operating profit

a.

break even point is negative

b.

break even point is zero

c.

required contribution margin increases

d.

required contribution margin decreases

14) Copy of

XYZ has three products X, Y and Z.
The following information pertains to these products X, Y, and Z. Contribution
margin percentages are 40%, 50%, and 40% respectively. Sales mix percentages
are 20%, 30%, and 50% respectively. Monthly fixed costs are estimated to be
$100.00. The weighted average contribution margin percentage is

a.

43%

b.

40%

c.

30%

d.

0

15) Which of the following examples
is a short term decision?

a.

Make or buy decision

b.

Purchase of land

c.

Issuing bonds

d.

Joint venture

e.

Purchase of building

16)
Sales (in units)

60,000

Selling
price per unit

25

Manufacturing
costs per unit:

Materials

5

Direct
labor

4

Overhead

Variable

4

Fixed

6

Total

19

Gross
margin

6

Selling
and admin. Expenses per unit

2

Operating
income

4

A
company in a foreign market offer to buy and the offer specifies the
following data

units
to be sold

10000

price
per unit

20

If
the Company accepts the special offer, the incremental profit would be

a.

$70,000.00

b.

($70,000.00)

c.

$10,000.00

d.

($10,000.00)

17) Total Costs

Unit Cost

Direct materials

20,000

2.00

Direct labor

25,000

2.50

Variable overhead

15,000

1.50

Fixed overhead
(non-avoidable)

24000

2.40

Fixed overhead (avoidable)

26,000

2.60

Purchase cost

85,999

Should the company produce the
product internally?

a.

Yes

b.

No

c.

Indifferent to to make or to buy

d.

Yes if the market price per unit covers the fixed cost per unit.

18) Sales (in units)

60,000

Selling price per unit

25

Manufacturing costs per unit:

Materials

5

Direct labor

4

Overhead

Variable

4

Fixed

6

Total

19

Gross margin

6

Selling and admin. Expenses
per unit (fixed)

2

Operating income

4

A company in a foreign market
offer to buy and the offer specifies the following data

units to be sold

10,000

price per unit

13.1

Should the company sell this
special order?

a.

Yes, accept

b.

No, reject

c.

Indifferent to reject or not

d.

Always reject

Which
of the following costs should be considered in short term decisions?

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