Saint leo MBA560 quiz 6 (feb 12, 2014)



Select the correct statement regarding fixed costs.
(Points : 2)

Question 2.
Larry’s Lawn Care incurs significant gasoline costs. This
cost would be classified as a variable cost if the total gasoline cost:
(Points : 2)

Question 3.
Tri-State Food Service operates six fast food restaurants in
the New England area. The company pays rent of $10,000 per year for each
shop. The managers of each shop are paid a salary of $3,200 per month
and all other employees are paid on an hourly basis. Relative to the
number of hours worked, total compensation cost for a particular shop is
which kind of cost?
(Points : 2)

Question 4.
Romo Corporation normally produces between 150,000 and
175,000 units each year. Producing more than 175,000 units alters the
company’s cost structure. For example, fixed costs increase because more
space must be rented, and additional supervisors must be hired. The
production range between 150,000 and 175,000 is called the:
(Points : 2)

Question 5.
The magnitude of operating leverage for Perkins Corporation
is 3.4 when sales are $100,000. If sales increase to $110,000, profits
would be expected to increase by what percent?
(Points : 2)

Question 6.
Once sales reach the breakeven point, each additional unit sold will:
(Points : 2)

Question 7.
Ajani Company has variable costs equal to 40% of sales. The
company is considering a proposal that will increase sales by $10,000
and total fixed costs by $6,000. By what amount will net income
(Points : 2)

Question 8.
At its $25 selling price, Paciolli Company has sales of
$10,000, variable manufacturing costs of $4,000, fixed manufacturing
costs of $1,000, variable selling and administrative costs of $2,000 and
fixed selling and administrative costs of $1,000. What is the company’s
contribution margin per unit?
(Points : 2)

Question 9.
The excess of a product’s selling price over its variable costs is referred to as:
(Points : 2)

Question 10.
Wall Company incurred $30,000 of fixed cost and $40,000 of
variable cost when 1,000 units of product were made and sold. If the
company’s volume doubles, the company’s total cost will:
(Points : 2)

Question 11.
Zoro, Inc. produces a product that has a variable cost of
$6.00 per unit. The company’s fixed costs are $30,000. The product sells
for $10.00 a unit and the company desires to earn a $20,000 profit.
What is the volume of sales in units required to achieve the target
(Points : 2)

Question 12.
Cost objects may be:
(Points : 2)

Question 13.
Milton Company has three departments occupying the following amount of floor space:

Department 1 15,000 sq. ft.
Department 2 10,000 sq. ft.
Department 3 25,000 sq. ft.

How much store rent should be allocated to Department 2 if total rent is equal to $100,000?
(Points : 2)

Question 14.
Which of the following statements is true regarding the salary of the manager of a fast food hamburger restaurant?
(Points : 2)

Question 15.
A chair manufacturer makes custom chairs using hand tools,
wood, glue, and varnish. Which of the following statements is true?
(Points : 2)

Question 16.
Which of the following costs is most likely to be directly
traceable to a specific department in a retail clothing store?
(Points : 2)

Question 17.
Which of the following statements is true?
(Points : 2)

Question 18.
Select the true statement from the following.
(Points : 2)

Question 19.
The KnitWitt Corporation manufactures knitted shawls and
scarves. The company expects to incur $1,500,000 in overhead costs
during 2010. The following budget information is for 2010:

Shawls Scarves Total
Number of units expected to be produced 50,000 100,000 150,000
Direct labor hours 250,000 800,000 1,050,000
Machine hours 100,000 80,000 180,000

If the company uses direct labor hours as the cost driver, what will be the allocation rate for 2010?
(Points : 2)

Question 20.
Humboldt Corporation manufactures electronic products, including calculators and printers.

Cost items of the company include:

  1. Labor on assembling a printer
  2. Salary of an employee who supervises calculator manufacturing
  3. Materials used in making a printer
  4. Company president’s salary
  5. Salary of the manager of the Calculator Division
  6. Depreciation on corporate headquarters building
  7. Ink cartridges installed in printer during manufacture
  8. Depreciation on equipment used in making calculators
  9. Supplies used in corporate offices

Which of the costs listed above is a direct cost assuming the cost object is an individual printer?
(Points : 2)


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