ACCT 526 FINAL EXAM | Questions with 100% Verified
Answers | Latest Update 2026/2027
Question: 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:
Answer: overhead is an indirect cost which cannot be traced easily and directly
to specific units of product
Question: An advantage of using regression analysis over the high-low
and scattergraph methods is that
Answer: regression analysis is a more precise approach than the high-low or scattergraph
methods
Question: An example of a discretionary fixed cost is:
Answer: management training
Question: Tucker, Inc collected the following production data for the
past month:
Units Produced Total Cost
1,600 1,300 1,500 1,100
$22,000 19,000 22,500 16,500
If the high-low method is used, what is the monthly total cost
equation?
Answer: Total cost = $4,400 + $11/unit
Question: Roddy Company has the following cost formulas for
overhead:
Cost
Indirect materials Maintenance Machine setup Utilities
Depreciation
Cost Formula
$2,000 + $0.40/machine hour $1,500 + $0.60/machine hour
$0.30/machine hour$200 + $0.10/machine hour $800
Based on these cost formulas, the total overhead cost at 600
machine hours is expected to be:
Answer: $5,340
Question: When comparing a traditional income statement to a
contribution margin income statement:
Answer: net income will always be identical on both
, Question: Kendra Corporation sells 100,000 wrenches for $12 a unit.
Fixed costs are $300,000, and net income is $200,000. What
should be reported as variable expenses in the CVP income
statement?
Answer: $700,000
Question: Snyder Corporation, which produces and sells a single
product, recently experienced an increase in fixed costs
relating to depreciation on new equipment. If variable costs
and sales price remain unchanged, what will happen to
contribution margin and the break-even point?
Answer: contribution margin will be unchanged and the break-even point will increase
Question: The following is last month's contribution format (CVP) income
statement:
Sales (10,000 units) Less: variable expenses Contribution
margin Less: fixed expenses Net income
$1,200,000 800,000 400,000 240,000 $160,000
What is the company's break-even sales in units?
Answer: 6,000 units
Question: A 45% contribution margin ratio means that:
Answer: 45% of the company's revenue is available to cover fixed costs and to contribute
toward
operating income.
Question: Suppose Motel 6 has annual fixed costs applicable to its
rooms of $1.2 million for its 300-room motel, average daily
room rents of $50, and average variable costs of $10 for each
room rented. It operates 365 days per year.
How much net income on rooms will be generated if the
motel is completely full throughout the entire year?
Answer: $3,180,000
Question: Brant Company manufactures a part for its production cycle.
The costs per unit for 5,000 units of this part are as follows:
Direct materials $3 Direct labor 5 Variable factory overhead 4
Fixed factory overhead 2 Total costs $14
The fixed factory overhead costs are unavoidable.
Assuming no other use of their facilities, the highest price that
Brant Company should be willing to pay for the part is
Answer: $12
Question: In a decision to retain or replace equipment, the book value of
the old equipment is a:
Answer: sunk cost
Answers | Latest Update 2026/2027
Question: 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:
Answer: overhead is an indirect cost which cannot be traced easily and directly
to specific units of product
Question: An advantage of using regression analysis over the high-low
and scattergraph methods is that
Answer: regression analysis is a more precise approach than the high-low or scattergraph
methods
Question: An example of a discretionary fixed cost is:
Answer: management training
Question: Tucker, Inc collected the following production data for the
past month:
Units Produced Total Cost
1,600 1,300 1,500 1,100
$22,000 19,000 22,500 16,500
If the high-low method is used, what is the monthly total cost
equation?
Answer: Total cost = $4,400 + $11/unit
Question: Roddy Company has the following cost formulas for
overhead:
Cost
Indirect materials Maintenance Machine setup Utilities
Depreciation
Cost Formula
$2,000 + $0.40/machine hour $1,500 + $0.60/machine hour
$0.30/machine hour$200 + $0.10/machine hour $800
Based on these cost formulas, the total overhead cost at 600
machine hours is expected to be:
Answer: $5,340
Question: When comparing a traditional income statement to a
contribution margin income statement:
Answer: net income will always be identical on both
, Question: Kendra Corporation sells 100,000 wrenches for $12 a unit.
Fixed costs are $300,000, and net income is $200,000. What
should be reported as variable expenses in the CVP income
statement?
Answer: $700,000
Question: Snyder Corporation, which produces and sells a single
product, recently experienced an increase in fixed costs
relating to depreciation on new equipment. If variable costs
and sales price remain unchanged, what will happen to
contribution margin and the break-even point?
Answer: contribution margin will be unchanged and the break-even point will increase
Question: The following is last month's contribution format (CVP) income
statement:
Sales (10,000 units) Less: variable expenses Contribution
margin Less: fixed expenses Net income
$1,200,000 800,000 400,000 240,000 $160,000
What is the company's break-even sales in units?
Answer: 6,000 units
Question: A 45% contribution margin ratio means that:
Answer: 45% of the company's revenue is available to cover fixed costs and to contribute
toward
operating income.
Question: Suppose Motel 6 has annual fixed costs applicable to its
rooms of $1.2 million for its 300-room motel, average daily
room rents of $50, and average variable costs of $10 for each
room rented. It operates 365 days per year.
How much net income on rooms will be generated if the
motel is completely full throughout the entire year?
Answer: $3,180,000
Question: Brant Company manufactures a part for its production cycle.
The costs per unit for 5,000 units of this part are as follows:
Direct materials $3 Direct labor 5 Variable factory overhead 4
Fixed factory overhead 2 Total costs $14
The fixed factory overhead costs are unavoidable.
Assuming no other use of their facilities, the highest price that
Brant Company should be willing to pay for the part is
Answer: $12
Question: In a decision to retain or replace equipment, the book value of
the old equipment is a:
Answer: sunk cost
