ACCT 526 FINAL Exam Questions with 100% Correct Answers

Overhead costs are assigned to production using an overhead application rate, whereas no such application rate is used to assign the costs of direct materials and direct labor to production. The reason for this difference in procedures is that: Correct Answer overhead is an indirect cost which cannot be traced easily and directly to specific units of a product An advantage of using regression analysis over the high low and scattergraph methods is that Correct Answer regression analysis is a more precide approach than the high-low or scattergraph methods An example of a discretionary fixed cost is: Correct Answer management training When comparing a traditional income statement to a contribution margin income statement: Correct Answer net income will always be identical on both Syndeer corportation, which produces and sells a single product, recently experienced an increase in fixed cost relating to depreciation on new equipment. If variable cost and sales prices remain unchanged, what will happen to contribution margin and the break even point? Correct Answer contribution margin will be unchanged and the break even point will increase A 45% contribution margin ratio means that: Correct Answer 45% of the companys revenue is available to cover fixed costs and to contribute towards the operating income In a decision to retain or replace equipment, the book value of the old equipment is a: Correct Answer sunk cost Which of the following are risks of outsourcing the production of a part? Correct Answer all of these are risks of outsourcing! (Unscheduled price increase, unreliable delivery, unpredictable quality.) If a plant is operating at full capacity and receives a one time opportunity to accept an order at a special price below its usual price then: Correct Answer the order will likely be rejected A job order cost system traces direct materials cost to a particular job by means of: Correct Answer material requisitions In a manufacturing company, the cost of goods is equal to : Correct Answer the beginning inventory of work increase of work in progress, plus total manufacturing costs, less the ending inventory of work in progress The flow of costs in job order costing: Correct Answer parallels the physical flow of materials as they are converted into finished goods