1 An increase in fixed costs will cause the break-even point to decrease True False
2 Rental of equipment at $5,000 per month plus $6 for each machine hour used over 9,000 hours is a type of mixed cost. True False
3 Conversion costs are made up of direct labor and factory overhead True False
4 Which of the following would be classified as a variable cost?
Straight-line depreciation on production equipment
Copy lease payment of $500 per month plus $0.01 per copy
Fabric for use in quilts to be produced.
None of the above
5.Mixed costs:
have both the characteristics of fixed costs and variable costs.
change in relation to the passage of time.
cannot be accurately plotted on a graph.
None of the above
6 What is the correct formula to calculate the contribution margin ratio?
Fixed Costs / Unit Contribution Margin
(Sales - Variable Costs) / Sales
(Fixed Costs + Target Profit) / Unit Contribution Margin
None of the above
7 The budget process begins with which of the following?
Production budget
Sales budget
Cash Budget
Budgeted Income Statement
8 If the cost of materials purchased in the period is $200,000, and $185,000 is used in the manufacturing process, then:
the unused $15,000 is a period cost.
the unused $15,000 is part of work-in-process inventory in the period.
the unused $15,000 is classified as materials inventory
the unused $15,000 is part of finished goods inventory on the balance sheet.
9 Which statement(s) is True about the uses of managerial accounting?
Managerial accounting is used to support long-term planning decisions.
Managerial accounting helps a company evaluate the performance of company decisions.
Managerial accounting helps users run the day-to-day operations of the business.
All of the above
10 A budgeting system that requires managers to estimate sales and other operating expenses as though operations are being started for the first time is:
static budgeting.
flexible budgeting
zero based budgeting
None of the above
11
Fixed costs for Flag Stamp Co. are $250,000. The selling price per unit is $20.00, and variable costs are $15.00.
The contribution margin ratio is ? (state whole number only - no decimals).
12
Fixed costs for Flag Stamp Co. are $300,000. The selling price per unit is $20.00, and variable costs are $15.00. The break-even sales (in units) are ?
13
Assume sales are $750,000, variable costs are 70% of sales, and income from operations is $100,000. What is the contribution margin ratio and fixed cost, respectively?
14
The following costs were incurred in August:
Direct Materials $25,000
Direct Labor $20,000
Manufacturing (Factory) Overhead $25,000
Selling and Administrative Expenses $40,000
(1) What is the amount of the prime costs?
(2) What is the amount of the period costs?
(3) What is the amount of the conversion costs?
(4) What is the amount of the product costs?
15
If Ragged Edge Arts sells quilts and paintings, and it has estimated selling 50 quilts at $250 each and 42 paintings at $500 each, what are the estimated sales for next year?
