Reference no: EM13507458
Question Detail:
1)Under a relevant range of production, when total quantities sold increase, total fixed costs
|
increase
|
|
decrease
|
|
remain equal
|
|
there is no relationship
|
2)Conversion costs are
|
only direct material
|
|
only direct labor
|
|
only overhead
|
|
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
|
$5,000
|
|
5,000 units
|
|
10,000
|
|
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.
|
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
|
|
FOAR = $120.00 per hour worked
|
|
FOAR = 120.00 per dollar
|
|
FOAR = $60.00 per hour worked
|
|
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
8) Non value added activities are
|
Direct material (only)
|
|
Direct labor (only)
|
|
Overhead (only)
|
|
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
|
|
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.
|
between $100 and $120
|
|
between $120 and $140
|
|
between $140 and $160
|
|
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.
|
$100,000
|
|
$60,000 / 40%
|
|
$60,000 / 60%
|
|
$60,000 X 60%
|
12) If a company raises its required net income
|
the tax rate will decrease
|
|
break even point is negative
|
|
required contribution margin increases
|
|
required contribution margin decreases
|
13)If a company raises its required operating profit
|
break even point is negative
|
|
break even point is zero
|
|
required contribution margin increases
|
|
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
15) Which of the following examples is a short term decision?
|
Make or buy decision
|
|
Purchase of land
|
|
Issuing bonds
|
|
Joint venture
|
|
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
|
|
$70,000.00
|
|
($70,000.00)
|
|
$10,000.00
|
|
($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?
|
Yes
|
|
No
|
|
Indifferent to to make or to buy
|
|
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?
|
|
Yes, accept
|
|
No, reject
|
|
Indifferent to reject or not
|
|
Always reject
|
Which of the following costs should be considered in short term decisions?