Cost Accounting

1. Which of the following is true regarding the contribution margin ratio of a single product company? (Points : 2)

[removed]As fixed expenses decrease, the contribution margin ratio increases.
[removed]The contribution margin ratio multiplied by the selling price per unit equals the contribution margin per unit.
[removed]The contribution margin ratio will decline as unit sales decline.
[removed]The contribution margin ratio equals the selling price per unit less the variable expense ratio.

[removed][removed][removed][removed]

2. If a company is operating at the break-even point: (Points : 2)

[removed]its contribution margin will be equal to its variable expenses.
[removed]its margin of safety will be equal to zero.
[removed]its fixed expenses will be equal to its variable expenses.
[removed]its selling price will be equal to its variable expense per unit.

[removed][removed][removed][removed]

3. Target profit analysis is used to answer which of the following questions? (Points : 2)

[removed]What sales volume is needed to cover all expenses?
[removed]What sales volume is needed to cover fixed expenses?
[removed]What sales volume is needed to earn a specific amount of net operating income?
[removed]What sales volume is needed to avoid a loss?

[removed][removed][removed][removed]

4. The margin of safety can be calculated by: (Points : 2)

[removed]Sales (Fixed expenses/Contribution margin ratio).
[removed]Sales (Fixed expenses/Variable expense per unit).
[removed]Sales (Fixed expenses + Variable expenses).
[removed]Sales Net operating income.

[removed][removed][removed][removed]

5. Sorin Inc., a company that produces and sells a single product, has provided its contribution format income statement for January.

If the company sells 4,600 units, its total contribution margin should be closest to: (Points : 2)

[removed]$54,600
[removed]$59,800
[removed]$69,400
[removed]$13,362

[removed][removed][removed][removed]

6. Decaprio Inc. produces and sells a single product. The company has provided its contribution format income statement for June.

If the company sells 9,200 units, its net operating income should be closest to: (Points : 2)

[removed]$27,077
[removed]$49,900
[removed]$36,700
[removed]$25,900

[removed][removed][removed][removed]

7. The margin of safety in the Flaherty Company is $24,000. If the company’s sales are $120,000 and its variable expenses are $80,000, its fixed expenses must be: (Points : 2)

[removed]$8,000
[removed]$32,000
[removed]$24,000
[removed]$16,000

[removed][removed][removed][removed]

8. Jilk Inc.’s contribution margin ratio is 58% and its fixed monthly expenses are $36,000. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company’s net operating income in a month when sales are $103,000? (Points : 2)

[removed]$23,740
[removed]$59,740
[removed]$67,000
[removed]$7,260

[removed][removed][removed][removed]

9. Borich Corporation produces and sells a single product. Data concerning that product appear below:

The break-even in monthly unit sales is closest to: (Points : 2)

[removed]2,055
[removed]4,030
[removed]4,194
[removed]3,426

[removed][removed][removed][removed]

10. Data concerning Follick Corporation’s single product appear below:

The break-even in monthly dollar sales is closest to: (Points : 2)

[removed]$1,148,400
[removed]$638,851
[removed]$321,552
[removed]$446,600

[removed][removed][removed][removed]

11. Hettrick International Corporation’s only product sells for $120.00 per unit and its variable expense is $52.80. The company’s monthly fixed expense is $396,480 per month. The unit sales to attain the company’s monthly target profit of $13,000 is closest to: (Points : 2)

[removed]7,755
[removed]6,093
[removed]5,753
[removed]3,412

[removed][removed][removed][removed]

12. The costing method that treats all fixed costs as period costs is: (Points : 2)

[removed]absorption costing.
[removed]job-order costing.
[removed]variable costing.
[removed]process costing.

[removed][removed][removed][removed]

13. Under the variable costing method, which of the following is always expensed in its entirety in the period in which it is incurred? (Points : 2)

[removed]fixed manufacturing overhead cost
[removed]fixed selling and administrative expense
[removed]variable selling and administrative expense
[removed]All of these

[removed][removed][removed][removed]

14. Net operating income under variable and absorption costing will generally: (Points : 2)

[removed]always be equal.
[removed]never be equal.
[removed]be equal only when production and sales are equal.
[removed]be equal only when production exceeds sales.

[removed][removed][removed][removed]

15. Fleet Corporation produces a single product. The company manufactured 700 units last year. The ending inventory consisted of 100 units. There was no beginning inventory. Variable manufacturing costs were $6.00 per unit and fixed manufacturing costs were $2.00 per unit. What would be the change in the dollar amount of ending inventory if variable costing was used instead of absorption costing? (Points : 2)

[removed]$800 decrease
[removed]$200 decrease
[removed]$0
[removed]$200 increase

[removed][removed][removed][removed]

16. A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:

What is the total period cost for the month under the absorption costing approach? (Points : 2)

[removed]$56,700
[removed]$65,500
[removed]$8,800
[removed]$37,800

[removed][removed][removed][removed]

17. A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:

What is the unit product cost for the month under variable costing? (Points : 2)

[removed]$118
[removed]$94
[removed]$111
[removed]$87

[removed][removed][removed][removed]

18. A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:

What is the net operating income for the month under variable costing? (Points : 2)

[removed]$12,700
[removed]$5,600
[removed]$1,700
[removed]$14,400

[removed][removed][removed][removed]

19. The following data pertain to last year’s operations at Clarkson, Incorporated, a company that produces a single product:

What was the absorption costing net operating income last year? (Points : 2)

[removed]$44,000
[removed]$48,000
[removed]$50,000
[removed]$49,000

[removed][removed][removed][removed]

20. Beamish Inc., which produces a single product, has provided the following data for its most recent month of operations:

There were no beginning or ending inventories. The unit product cost under absorption costing was: (Points : 2)

[removed]$93
[removed]$97
[removed]$136
[removed]$194

[removed][removed][removed][removed]

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