Question 3\t\u00a0\tIf a company increases its fixed costs for Product Z, then the contribution margin per unit will\tRemain the same\tDecrease\tIncrease\tIncomplete information\t\u00a0\tQuestion 4\t\u00a0\tWhen production levels are expected to increase within a relevant range, and a flexible budget is used, what effect would be anticipated with respect to each of the following costs?\t\u00a0 \u00a0 \u00a0 \u00a0Fixed costs per unit\u00a0\u00a0\u00a0\u00a0 Variable costs per unit\tNo change\u00a0\u00a0\u00a0\u00a0 \ufffd \ufffd\u00a0\u00a0\u00a0No change\tDecrease \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0 No change\tNo change \ufffd \ufffd \ufffd\u00a0 Decrease\tDecrease \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0 Decrease\t\u00a0\t\u00a0\tQuestion 5\t\u00a0\tWang Company provides the following information for their first year of operation:\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tSales\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t5,000 units @ $10\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tSelling and administrative costs:\t\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\u00a0\u00a0Fixed\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t$1,000\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\u00a0\u00a0Variable\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t$1 per unit\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tVariable production costs per unit:\t\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\u00a0\u00a0Direct materials\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t$2\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\u00a0\u00a0Direct labor\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t$2\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\u00a0\u00a0Variable overhead\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t$1\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tFixed factory overhead\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t$7,500\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tProduction\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t7,500 units\t\t\t\t\t\t\t\t\t\u00a0\tIf Wang uses variable costing, operating income would be:\t\u00a0\t$11,500\t$14,000\t$16,500\t$20,000\t\u00a0\tQuestion 6\t\u00a0\tThe management of Ahad Engineering Services has been approached about purchasing a new management information system. The perceived advantages of the system include each of the following, except:\tThe new system will reduce confusion by doing away with dual presentations of information by line item and object of expenditure.\tThe new system will enable customized business dashboards, with each executive having real-time reports of critical business information.\tThe new system will enable automatic preparation of both internal variable costing information and external absorption costing information.\tThe new system will facilitate disaggregation of overall results into business segment information.\t\u00a0\tQuestion 7\tStrickland Company prepared segment information relative to its office furniture manufacturing division. The controllable contribution margin differed from the segment margin by $100,000. This amount corresponds to the:\tTotal variable costs.\tControllable fixed costs.\tUncontrollable fixed costs.\tNon-traceable costs.\t\u00a0\tQuestion 8\tMaverick Corporation had four operating segments. Information for each segment is included in the following table. Maverick has a threshold rate of return of 7%. Which segment has the largest residual income?\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tSegment A\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tSegment B\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tSegment C\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tSegment D\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tOperating Income\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t$100,000\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t$200,000\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t$300,000\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t$400,000\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\u00a0\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tOperating Assets\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t$200,000\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t$300,000\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t$300,000\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t$5,000,000\t\t\t\t\t\t\t\t\tSegment A\tSegment B\tSegment C\tSegment D\t\u00a0\tQuestion 9\tWhich of the following decisions involve differential analysis?\tThe decision by University to drop its intercollegiate football program\tThe decision to close a segment of a business\tThe decision by a record store to add videotapes to the product line.\tAll of the above.\tQuestion 10\tFixed costs are $90,000, variable cost per unit is $1.80, and budgeted units of output are 200,000 units. Determine the budgeted production costs.\t$360,000\t$450,000\t$414,000\t$540,000\t\u00a0\tQuestions 11 and 12 are based on the following information:\tAnderson Enterprises incurred the following costs while producing 500 units: direct materials, $15 per unit; direct labor, $37.50 per unit; variable manufacturing overhead, $22.50 per unit; total fixed overhead costs, $15,000; variable selling and administrative costs, $7.50 per unit; total fixed selling and administrative costs, $11,250.\t\u00a0\tQuestion 11\tWhat is the per unit product cost using variable costing?\t$105 per unit\t$82.50 per unit\t$75 per unit\t$135 per unit\t\u00a0\tQuestion 12\tWhat is the operating income using variable costing if 450 units are sold for $150 each?\t$4,125\t$7,500\t$750\t$3,750\t\u00a0\tQuestion 13\tProduction costs (including $30,000 of fixed costs) are budgeted at $150,000 for an expected output of 100,000 units. Actual output was 90,000 units, while actual costs were $142,500. What is the budget variance and is it favorable or unfavorable.\t$4,500 unfavorable\t$6,500 favorable\t$5,500 unfavorable\t$4,500 favorable\tQuestion 14\tInformation technology has made it easier for managers to perform all of the following tasks except\tCombining individual units’ budgets into the companywide budget.\tRemoving budgetary slack from the budget.\tSensitivity analyses\tPreparing performance reports that identify variances between actual and budgeted revenues and costs.\tUse the following information to answer questions 15 and 16.\tSuppose Amazon sells 1,000 hardcover books per day at an average price of $15. Assume that Amazon’s cost for the books is 75% of the selling price it charges retail customers. Amazon has no beginning inventory, but it wants to have a three-day supply of ending inventory. Assume that selling and administrative expenses are $500 per day.\t\u00a0\tQuestion 15\tCompute Amazon’s budgeted sales for the next (seven-day) week.\t$78,750\t$108,500\t$217,500\t$105,000\t\u00a0\tQuestion 16\tDetermine Amazon’s budgeted purchases for the next (seven-day) week.\t$150,000\t$112,500\t$78,750\t$37,500\t\u00a0\tQuestion 17\tThe budgeted statement of cash flows is part of which element of the master budget?\tThe financial budget\tThe operating budget\tThe capital expenditures budget\tNone of the above\t\u00a0\tQuestion 18\tThe Best buy company had the following revenue over the past three years:\t2007\u00a0\u00a0 $300,000\t2008\u00a0\u00a0 $350,000\t2009\u00a0\u00a0 $450,000\tTo forecast revenues for 2010, Best Buy Company uses the average for the past three years. The company’s breakeven revenue is $400,000 per year. What is Best buy predicted margin of safety for 2010\t$400,000\t$0\t$100,000\t$50,000\t\u00a0\tQuestion 19\tIf a company increases its selling price per unit for Product A, the new breakeven point will\tRemain the same\tDecrease\tIncrease\tNone of the above\t\u00a0\tQuestion 20\tStraight-line depreciation on a company truck is a\tVariable cost.\tFixed cost\tMixed cost\tHigh-low cost\t\u00a0\tPART 2\t\u00a0\tQuestion 1\tJacob Davis recently graduated from medical school. He is considering opening his own family practice doctor office. A doctor’s office is a high-fixed cost business, as it requires considerable expenditures for facilities, labor, and equipment, no matter how many families are served. Assume the annual fixed cost of operations is $400,000. Further assume that the only significant variable cost relates to patients served. An average patient served costs $250. Jacob’s banker has asked a variety of questions in contemplation of providing a loan for this business.\tRequirements:\tIf the average family is charged $475 for services, how many families must be served to clear the break-even point?\tIf the banker believes Jacob will only serve 1,000 families during the first year in business, how much will the business lose during its first year of operation?\tIf Jacob believes his profits will be at least $100,000 during the first year, how much is he anticipating for total revenue?\tThe banker has suggested that Jacob can reduce his fixed costs by $100,000 if he will not purchase certain equipment. Jacob can instead lease or rent this equipment as needed. The variable cost of leasing this equipment is $55 per family served. Will this suggestion help Jacob reach the break-even point sooner?\t\u00a0\tQuestion 2\tCarpet Clean manufactures a chemical cleaner. The company was formed during the current year. As a result, there was no beginning inventory. Management is evaluating performance and inventory management issues, and desires to know both net income and ending inventory under generally accepted accounting principles (absorption costing) as well as variable costing methods. Relevant facts are as follows:\tSelling price per gallon\u00a0\u00a0\u00a0\u00a0 $11.00\tVariable manufacturing cost per gallon $2.00\tVariable SG&A costs per gallon \ufffd\u00a0 $2.25\tFixed manufacturing costs\u00a0\u00a0 $2,900,000\tFixed SG&A \ufffd\u00a0\u00a0\u00a0 \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0\u00a0$470,000\tTotal gallons produced\u00a0\u00a0 1,625,000\tTotal gallons sold \ufffd \ufffd\u00a0\u00a0 1,500,000\tRequirement:\tPrepare income statements based on the absorption costing and variable costing methods.<\/p>\n","protected":false},"excerpt":{"rendered":"
Question 3 \u00a0 If a company increases its fixed costs for Product Z, then the contribution margin per unit will Remain the same Decrease Increase Incomplete information \u00a0 Question 4 \u00a0 When production levels are expected to increase within a Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-200736","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/200736","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=200736"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/200736\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=200736"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=200736"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=200736"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}