Reference no: EM132593178

Questions -

Q1. Chris bakes chocolate cakes for sale in his bakery shop. He sells each cake for $10, the unit variable cost is $2.50 and the fixed costs per week are $750. Chris budgets to sell 400 chocolate cakes per week. His margin of safety (in cakes per week) is:

a. 75

b. 100

c. 300

d. 500

Q2. Alclear Pool & Spa presently provides a weekly maintenance service to 150 homes. Variable costs amount to approximately $12 per week for labour, mileage, chemicals and other supplies. Fixed costs are approximately $13 000 per quarter (13 weeks). Customers pay $270 per quarter for the weekly service. All contracts are written for one quarter (13 weeks).

Determine the number of customers (rounded) to break even.

a. 95

b. 103

c. 114

d. 197

Q3. Which of the following will not result in inaccurate product costs when conventional approaches to product costing are used?

a. The proportion of manufacturing overhead costs increases.

b. The proportion of manufacturing overhead costs not related directly to production volume increases.

c. Non-manufacturing costs that are product-related become substantial.

d. Product diversity decreases.

Q4. The 'direct method' ignores the fact that:

A. some support departments provide services to other support departments

B. cost allocation is a major factor in its accountability

C. each department's cost is allocated only for the service consumed by it

D. All of the given answers