Which of the following is not a cost classification?
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Mixed
Multiple
Variable
Fixed
Multiple
In using the high-low method, the fixed cost
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--may be determined by subtracting the total variable cost from either the total cost at
the low or high activity level.
-- is determined by adding the total variable cost to the total cost at the low activity level.
--is determined by subtracting the total cost at the high level of activity from the total
cost at the low activity level.
--is determined before the total variable cost.
may be determined by subtracting the total variable cost from either the total cost at the
low or high activity level.
A company has a unit contribution margin of $80 and a contribution margin ratio of 40%.
What is the unit selling price?
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$200
$32
Cannot be determined.
$133
80/0.4 = 200
Fixed costs are $3600000 and the unit contribution margin is $50. What is the
break-even point?
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72000 units
$9000000
9000 units
$7200000
3,600,000/50 = 72,000
Keene, Inc. produces flash drives for computers, which it sells for $20 each. Each flash
drive costs $6 of variable costs to make. During March, 1,000 drives were sold. Fixed
costs for March were $5.60 per unit for a total of $5,600 for the month. If variable costs
decrease by 10%, what happens to the break-even level of units per month for Keene?
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It decreases about 40 units.
It decreases about 16 units.
It depends on the number of units the company expects to produce and sell.
It is 10% higher than the original break-even point.
...
In 2016, Sunland Company sold 3000 units at $400 each. Variable expenses were $360
per unit, and fixed expenses were $270000. The same selling price, variable expenses,
and fixed expenses are expected for 2017. What is Sunland's break-even point in units
for 2017?
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3375.
6750.
750.
675.
400-360= 40
270,000 / 40 = 6750
Sheffield Corp. has two divisions; Sporting Goods and Sports Gear. The sales mix is
65% for Sporting Goods and 35% for Sports Gear. Sheffield incurs $7770000 in fixed
costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it
is 50%. What will be the total contribution margin at the break-even point?
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$6685814.
$9030000.
$7770000.
$7840000.
(0.65)(0.3) + (0.35)(0.5) = 0.37
7,770,000 / 0.37 = 21,000,000
37% 0f 21,000,000 = 7,770,000
Marigold Corp.'s contribution margin is $37.5 per unit for Product A and $45.0 for
Product B. Product A requires 2 machine hours and Product B requires 4 machine
hours. How much is the contribution margin per unit of limited resource for each
product?
AB
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$18.75 $12.50
$15.00 $11.25
$15.00 $12.50
$18.75 $11.25
37.50 / 2 = 18.75
45.00 /4 = 11.25
D
A cost structure which relies more heavily on fixed costs makes the company
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less sensitive to changes in sales revenue.
more sensitive to changes in sales revenue.
have a lower break-even point.
either more or less sensitive to changes in sales revenue, depending on other factors.
more sensitive to changes in sales revenue.
The one primary difference between variable and absorption costing is that under
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--absorption costing, companies charge the fixed manufacturing overhead as an
expense in the current period.
--variable costing, companies charge the variable manufacturing overhead as an
expense in the current period.
--absorption costing, companies charge the variable manufacturing overhead as an
expense in the current period.
--variable costing, companies charge the fixed manufacturing overhead as an expense
in the current period.
variable costing, companies charge the fixed manufacturing overhead as an expense in
the current period.
Incremental analysis would be appropriate for
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acceptance of an order at a special price.
a retain or replace equipment decision.
a sell or process further decision.
all of these answers are correct.
All these answers are correct
A company contemplating the acceptance of a special order has the following unit cost
behavior, based on 10000 units:
Direct materials $ 4
Direct labor 10
Variable overhead 8
Fixed overhead 6
A foreign company wants to purchase 3000 units at a special unit price of $25. The
normal price per unit is $40. In addition, a special stamping machine will have to be
purchased for $4000 in order to stamp the foreign company's name on the product. The
incremental income (loss) from accepting the order is
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$5000.
$(9000).
$9000.
$(3000).
5,000
3000 x 25 = 75000
3000 x (4 + 10 + 8) = 66,000
75,000 - 66,000 - 4,000 = 5,000
00:25
01:
Swifty Corporation currently manufactures a wicket as its main product. The costs per
unit are as follows:
Direct materials and direct labor $10
Variable overhead 5
Fixed overhead 8
Total
$23
The fixed overhead is an allocated common cost. How much is the relevant cost of the
wicket?
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$18
$23
$15
$35
Total - fixed OH
23 - 8 = 15
Bonita Industries has old inventory on hand that cost $19500. Its scrap value is $26000.
The inventory could be sold for $65000 if manufactured further at an additional cost of
$19500. What should Bonita do?
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Hold the inventory at its $19500 cost
Manufacture further and sell it for $65000
Sell the inventory for $26000 scrap value
Dispose of the inventory to avoid any further decline in value
Manufacture further and sell it for $65000
Sheridan Company has several outdated computers that cost a total of $17800 and
could be sold as scrap for $3400. They could be updated for an additional $1800 and
sold. If Sheridan updates the computers and sells them, net income will increase by
$9000.
At what price were the updated versions sold?
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$26800
$14400
$12400
$14200
Add the last 3 numbers
9000 + 1800 + 3400 = 14200
The calculation to determine target cost is
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sales price - (variable manufacturing costs + fixed manufacturing costs).
variable manufacturing costs + selling and administrative variable costs.
sales price - desired profit.
variable manufacturing costs + fixed manufacturing costs.
sales price - desired profit.
A company using cost-plus pricing has an ROI of 14%, total sales of 16000 units and a
desired ROI per unit of $22. What was the amount of investment?
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$49280
$409302
$2514286
$267520
($ x total sales ) / percent
22 x 16,000
-------------- = 2514286
.14
The following data is available for Bonita Repair Shop for 2016:
Repair technicians' wages $270000
Fringe benefits 70000
Overhead 50000
Total $390000
The desired profit margin is $40 per labor hour. The material loading charge is 40% of
invoice cost. It is estimated that 5000 labor hours will be worked in 2016.
Bonita' labor charge per hour in 2016 would be
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$94.
$78.
$108.
$118.
390,000 / 5000 = 78
78 + 40 = 118
The Selling Division's unit sales price is $30 and its unit variable cost is $15. Its capacity
is 10000 units. Fixed costs per unit are $8. Current outside sales are 8000 units.
What is the Selling Division's opportunity cost per unit from selling 2000 units to the
Purchasing Division?
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$30
$7
$0
$15
0
The general formula for the minimum transfer price is: minimum transfer price equals
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fixed cost + opportunity cost.
variable cost + opportunity cost.
external purchase price.
total cost + opportunity cost.
variable cost + opportunity cost.