accountng quiz 30 mcq

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Description

1. Manufacturing overhead
consists of:

a. all manufacturing costs.

b. indirect materials but not
indirect labor.

c. all manufacturing costs, except
direct materials and direct labor.

d. indirect labor but not indirect
materials.

2.Each of the following would be a period cost except:

a. the salary of the company
president’s secretary.

b. the cost of a general
accounting office.

c. depreciation of a machine used
in manufacturing.

d. sales commissions.

3.In describing the cost formula equation Y = a + bX, which of
the following statements is correct?

a. “X” is the dependent
variable.

b. “a” is the fixed
component.

c. In the high-low method,
“b” equals change in activity divided by change in costs.

d. As “X” increases
“Y” decreases.

4. Which one of the following costs should NOT be considered a
direct cost of serving a particular customer who orders a customized personal
computer by phone directly from the manufacturer?

a. the cost of the hard disk drive
installed in the computer.

b. the cost of shipping the
computer to the customer.

c. the cost of leasing a machine
on a monthly basis that automatically d. tests hard disk drives before they
are installed in computers.

d. the cost of packaging the
computer for shipment.

5. The term differential cost refers to:

a. a difference in cost which
results from selecting one alternative instead of another.

b. the benefit forgone by
selecting one alternative instead of another.

c. a cost which does not involve
any dollar outlay but which is relevant to the decision-making process.

d. a cost which continues to be
incurred even though there is no activity.

6.When a decision is made among a number of alternatives, the
benefit that is lost by choosing one alternative over another is the:

a. realized cost.

b. opportunity cost.

c. conversion cost.

d. accrued cost.

7.In September direct labor was 40% of conversion cost. If the
manufacturing overhead for the month was $66,000 and the direct materials cost
was $20,000, the direct labor cost was:

a. $13,333

b. $44,000

c. $99,000

d. $30,000

8. At a volume of 10,000 units, Company P incurs $30,000 in
factory overhead costs, including $10,000 in fixed costs. Assuming that this
activity is within the relevant range, if volume increases to 12,000 units,
Company P would expect to incur total factory overhead costs of:

a. $36,000

b. $34,000

c. $30,000

d.$32,000

9. Haar Inc. is a merchandising company. Last month the
company’s cost of goods sold was $61,000. The company’s beginning merchandise
inventory was $11,000 and its ending merchandise inventory was $21,000. What
was the total amount of the company’s merchandise purchases for the month?

a. $61,000

b. $51,000

c. $71,000

d. $93,000

10. At a sales volume of 35,000 units, Thoma Corporation’s sales
commissions (a cost that is variable with respect to sales volume) total
$448,000.

To the nearest whole cent, what should be the average sales commission per unit
at a sales volume of 36,800 units? (Assume that this sales volume is within the
relevant range.)

a. $13.49

b. $12.17

c. $12.80

d.$12.49

12. Fiene Sales, Inc., a
merchandising company, reported sales of 2,200 units in June at a selling price
of $600 per unit. Cost of goods sold, which is a variable cost, was $364 per
unit. Variable selling expenses were $23 per unit and variable administrative
expenses were $33 per unit. The total fixed selling expenses were $30,500 and
the total administrative expenses were $55,300.

The contribution margin for June was:

$1,111,000

$396,000

$310,200

$519,200

13. Getchman Marketing, Inc., a merchandising company, reported
sales of $592,500 and cost of goods sold of $305,000 for April. The company’s
total variable selling expense was $37,500; its total fixed selling expense was
$16,000; its total variable administrative expense was $35,000; and its total
fixed administrative expense was $38,900. The cost of goods sold in this
company is a variable cost.

The gross margin for April is:

$287,500

$215,000

$537,600

$160,100

14. The following cost data pertain to the operations of Mancia
Department Stores, Inc., for the month of February.

Corporate legal office salaries – $62,000

Shoe dept. cost of salaries (Brentwood Store) – $80,000

Corporate HQ building lease- $79,000

Store Manager Salary (Brentwood Store)- $14,000

Shoe Department Sales Commissions (Brentwood Store) – $8,000

Store utilities (Brentwood Store) – $13,000

Shoe Department Managers Salary (Brentwood Store) – $4,000

Central Warehouse lease cost – $11,000

Janitorial Cost (Brentwood Store) – $11,000

The Brentwood Store is just one of many stores owned and
operated by the company. The Shoe Department is one of many departments at the
Brentwood Store. The central warehouse serves all of the company’s stores.

What is the total amount of the costs listed above that are direct costs of the
Shoe Department?

$80,000

$88,000

$130,000

$92,000

15. Temblador Corporation purchased a machine 7 years ago for
$319,000 when it launched product E26T. Unfortunately, this machine has broken
down and cannot be repaired. The machine could be replaced by a new model 330
machine costing $323,000 or by a new model 230 machine costing $285,000.
Management has decided to buy the model 230 machine. It has less capacity than
the model 330 machine, but its capacity is sufficient to continue making
product E26T. Management also considered, but rejected, the alternative of
dropping product E26T and not replacing the old machine. If that were done, the
$285,000 invested in the new machine could instead have been invested in a
project that would have returned a total of $386,000.

In making the decision to buy the model 230 machine rather than the model 330
machine, the differential cost was:

$34,000

$38,000

$4,000

$67,000

17. If Q equals the level
of output, P is the selling price per unit, V is the variable expense per unit,
and F is the fixed expense, then the break-even point in units is:

Q ÷ (P-V).

F ÷ (P-V).

V ÷ (P-V).

F ÷
[Q(P-V)].

18. James Company has a margin of safety percentage of 20% based
on its actual sales. The break-even point is $200,000 and the variable expenses
are 45% of sales. Given this information, the actual profit is:

$27,500

$18,000

$22,500

$22,000

19.Montgomery Corporation produces and sells a single product.
Data concerning that product appear below:

Selling price – $240 per unit – 100% of sales

Variable Expenses – $144 per unit – 60% of sales

Contribution Margin – $96 per unit – 40% of sales

Fixed expenses are $239,000 per month. The company is currently
selling 3,000 units per month. The marketing manager would like to cut the
selling price by $12 and increase the advertising budget by $12,000 per month.
The marketing manager predicts that these two changes would increase monthly
sales by 500 units. What should be the overall effect on the company’s monthly
net operating income of this change?

increase of $102,000

decrease of $30,000

decrease of $6,000

increase of $30,000

20. Hassick Corporation produces and sells a single product
whose contribution margin ratio is 63%. The company’s monthly fixed expense is
$460,530 and the company’s monthly target profit is $19,000. The dollar sales
to attain that target profit is closest to:

$290,134

$302,104

$761,159

$731,000

21. Shiraki Corporation
produces and sells a single product. Data concerning that product appear below:

Selling price per unit –
$200

Variable expenses per
unit – $78

Fixed expenses per month
– $396,500

The break-even in monthly
dollar sales is closest to:

$650,000

$687,722

$396,500

$1,016,667

22. Data concerning Carlo Corporation’s single product appear
below:

Selling price per unit – $230

Variable expenses per unit – $69

Fixed expenses per month – $466,900

The break-even in monthly dollar sales is closest to:

$896,744

$466,900

$1,556,333

$667,000

23. A cement manufacturer has supplied the following data:

Tons of cement produced and sold – 260,000

Sales Revenue- $1,118,000

Variable Manufacturing Expense – $429,000

Fixed manufacturing expense – $288,000

Variable selling and administrative expense – $228,000

Net Operating Income – $82,000

What is the company’s unit contribution margin?

$2.00

$0.32

$4.30

$2.30

24. A company that makes organic fertilizer has supplied the
following data:

Bags produced and sold – 680,000

Sales Revenue- $4,352,000

Variable Manufacturing Expense – $1,972,000

Fixed manufacturing expense – $730,000

Variable selling and administrative expense – $412,000

Net Operating Income – $456,000

The company’s unit contribution margin is closest to:

$5.25

$4.05

$3.50

$2.35

25. The following is Allison Corporation’s contribution format
income statement for last month:

Sales – $800,000

Variable Expense – $300,000

Contribution Margin – 500,000

Fixed expenses- 400,000

Net Operating Income – 100,000

The company has no beginning or ending inventories. The company
produced and sold 10,000 units last month.

What is the company’s degree of operating leverage?

0.2

8.0

1.7

5.0

25. Paxton Corp has
provided the following data concerning its operations last month:

Sales- 400,000

Variable expenses-
250,000

Fixed Expenses- 100,000

Paxton Corp is a
retailing organization.

The contribution margin ratio is:

12.5%

33.0%

25.0%

37.5%

27. Robledo Corporation produces and sells a single product.
Data concerning that product appear below:

Selling Price- $100 per unit – 100% of sales

Variable Expenses- 20 per unit – 20% of sales

Contribution Margin- $80 per unit – 80% of sales

Fixed expenses are $625,000 per month. The company is currently selling 9,000
units per month. Consider each of the following questions independently.

This question is to be considered independently of all other questions relating
to Robledo Corporation. Refer to the original data when answering this
question.
Management is considering using a new component that would increase the unit
variable cost by $3. Since the new component would increase the features of the
company’s product, the marketing manager predicts that monthly sales would
increase by 400 units. What should be the overall effect on the company’s
monthly net operating income of this change?

decrease of $30,800

decrease of $3,800

increase of $30,800

increase of $3,800

28. Data concerning Homme Corporation’s single product appear
below:

Selling Price- $190 per unit – 100% of sales

Variable Expenses- 114 per unit – 60% of sales

Contribution Margin- $76 per unit – 40% of sales

The company is currently selling 2,000 units per month. Fixed
expenses are $130,000 per month. Consider each of the following questions
independently.

This question is to be considered independently of all other questions relating
to Homme Corporation. Refer to the original data when answering this question.
The marketing manager believes that a $12,000 increase in the monthly
advertising budget would result in a 190 unit increase in monthly sales. What
should be the overall effect on the company’s monthly net operating income of
this change?

increase of $2,440

decrease of $12,000

increase of $14,440

decrease of $2,440

29. Data concerning Celenza Corporation’s single product appear
below:

Selling Price- $230 per unit

Variable expenses per unit- $59.80

Fixed expenses per month – $697,820

Assume the company’s monthly target profit is $25,000. The unit
sales to attain that target profit are closest to:

6,492 units

4,247 units

12,087 units

3,143 units

30. Kuhner Corporation produces and sells two products. Data
concerning those products for the most recent month appear below:

Sales- $10,000 (Product B64P) – $46,000 (Product I00E)

Variable Exp.- $2,500 (Product B64P) – $15,420 (Product I00E)

Fixed expenses for the entire company were $33,100.

If the sales mix were to shift toward Product B64P with total dollar sales
remaining constant, the overall break-even point for the entire company:

would not change.

would decrease.

would increase.

could increase or decrease.

23. A cement manufacturer
has supplied the following data:

Tons of cement produced and sold – 260,000

Sales Revenue- $1,118,000
Variable Manufacturing Expense – $429,000
Fixed manufacturing expense – $288,000
Variable selling and administrative expense – $91,000

Fixed Selling and
administrative expense – $228,000
Net Operating Income – $82,000

What is the company’s unit contribution margin?

$2.00

$0.32

$4.30

$2.30

24.A company that makes
organic fertilizer has supplied the following data:

Bags produced and sold – 680,000

Sales Revenue- $4,352,000

Variable Manufacturing Expense – $1,972,000

Fixed manufacturing expense – $730,000

Variable selling and administrative expense – $782,000

Fixed Selling and administrative expense – $412,000

Net Operating Income – $456,000

The company’s unit contribution margin is closest to:

$5.25

$4.05

$3.50

$2.35

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