ACC 526 Mid Term Exam

All public companies that are traded on a stock exchange and governed by the Securities and Exchange Commission (SEC) must prepare financial statements following Select one: a. generally accepted accounting principles b. accounting principles set by the Federal Trade Commission c. standards set by the Accounting Principles Board d. generally appropriate accounting standards Your answer is correct. The correct answer is: generally accepted accounting principles Question 2 Correct Mark 3.00 out of 3.00 In defining a cost as fixed, the accountant must consider Select one: a. the contribution margin b. projected sales revenue c. the variable costs d. the relevant range Your answer is correct. The correct answer is: the relevant range ACC 526 Mid Term Exam ACCT526-850_ Grade 75.00 out of 120.00 (63%) Your answer is incorrect. The correct answer is: as the number of units sold increases, total contribution margin and fixed costs increase Question 4 Correct Mark 3.00 out of 3.00 An example of a discretionary fixed cost is: Select one: a. management training b. depreciation of buildings and equipment c. insurance d. taxes on real estate Your answer is correct. The correct answer is: management training There is an important relationship between contribution margin and profit. Which of the following statements is NOT true? Select one: a. as the number of units sold increases, total contribution margin and fixed costs increase b. as the number of units sold rises, profit increases by the additional contribution margin per unit c. as the number of units sold decreases, total contribution margin decreases, but fixed costs remain the same d. as the number of units sold increases, total contribution margin increases, but fixed costs remain the same Question 3 Incorrect Mark 0.00 out of 3.00 The following data pertain to activity and costs for two recent months: Activity level in u October November Assuming that these activity levels are within the relevant range, the mixed costs for November were: Select one: a. $20,000 b. $25,000 c. $35,000 d. $40,000 Your answer is correct. The correct answer is: $25,000 Question 6 Incorrect Mark 0.00 out of 3.00 A limitation of using the scattergraph method to estimate the cost components of total cost is Select one: a. the scattergraph method requires the use of statistical software b. the choice of the line used to estimate the cost components is subjective c. the scattergraph method is not an accepted method for many companies d. the scattergraph method is complex and costly to use Your answer is incorrect. The correct answer is: the choice of the line used to estimate the cost components is subjective nits 5,000 10,000 Variable costs $10,000 ? Fixed costs 30,000 ? Mixed costs 20,000 ? Total costs $60,000 $75,000 Question 5 Correct Mark 3.00 out of 3.00 Your answer is correct. The correct answer is: $5,340 Question 8 Correct Mark 3.00 out of 3.00 If variable costs are increasing in total, Select one: a. variable cost per unit is decreasing b. fixed cost per unit is increasing c. the activity level is decreasing d. the activity level is increasing Your answer is correct. The correct answer is: the activity level is increasing Roddy Company has the following cost formulas for overhead: Cost Cost Formula Indirect materials $2,000 + $0.40/machine hour Maintenance $1,500 + $0.60/machine hour Machine setup $0.30/machine hour Utilities $200 + $0.10/machine hour Depreciation $800 Based on these cost formulas, the total overhead cost at 600 machine hours is expected to be: Select one: a. $5,620 b. $5,340 c. $4,500 d. $5,200 Question 7 Correct Mark 3.00 out of 3.00 Your answer is correct. The correct answer is: net income will always be identical on both Question 10 Correct Mark 3.00 out of 3.00 An advantage of using regression analysis over the high-low and scattergraph methods is that Select one: a. regression analysis is less costly to implement than high-low or scattergraph methods b. both: regression analysis is less costly to implement than high-low or scattergraph methods and is a more precise approach than the high-low or scattergraph methods c. regression analysis is a more precise approach than the high-low or scattergraph methods d. neither: regression analysis is less costly to implement than high-low or scattergraph methods or is a more precise approach than the high-low or scattergraph methods Your answer is correct. The correct answer is: regression analysis is a more precise approach than the high-low or scattergraph methods When comparing a traditional income statement to a contribution margin income statement: Select one: a. net income will always be identical on both b. net income will always be greater on the traditional statement c. net income will always be less on the traditional income statement d. net income will be greater or less depending on the sales volume Question 9 Correct Mark 3.00 out of 3.00 Tucker, Inc collected the following production data for the past month: Units Produced Total Cost If the high-low method is used, what is the monthly total cost equation? Select one: a. Total cost = $3,300 + $12/unit b. Total cost = $5,500 + $10/unit c. Total cost = $4,400 + $11/unit d. Total cost = $0 + $15/unit Your answer is correct. The correct answer is: Total cost = $4,400 + $11/unit Your answer is correct. The correct answer is: $30,000 1,600 $22,000 1,300 19,000 1,500 22,500 1,100 16,500 Question 12 Correct Mark 3.00 out of 3.00 Question 11 Correct Mark 3.00 out of 3.00 Melancon Company produces a single product. The selling price is $30 per unit, and variable costs amount to $21 per unit. Melancon's fixed costs per month total $45,000. What will be the monthly margin of safety (in dollars) if 6,000 units are sold each month? Select one: a. $54,000 b. $30,000 c. $135,000 d. $126,000 Your answer is correct. The correct answer is: 45% of the company's revenue is available to cover fixed costs and to contribute toward operating income Your answer is correct. The correct answer is: $95,000 Question 14 Correct Mark 3.00 out of 3.00 A 45% contribution margin ratio means that: Select one: a. 45% of the company's revenue is available to cover fixed costs and to contribute toward operating income b. 55% of the company's revenue is consumed by fixed and variable costs c. the company's revenue has increase by 45% during the current accounting period d. the company should contribute 45% of its operating income to qualified charities for maximum tax benefits Question 13 Correct Mark 3.00 out of 3.00 ADP company incurs fixed cost of $26,000 per month. Each unit contributes 40 cents of every dollar towards covering fixed cost and profit. How much in sales dollars are required to target a profit of $12,000? Select one: a. $35,000 b. $95,000 c. $15,200 d. $65.000 The following is last month's contribution format (CVP) income statement: What is the company's break-even sales in units? Select one: a. 6,000 units b. 8,000 units c. 0 units d. 12,000 units Your answer is correct. The correct answer is: 6,000 units Your answer is incorrect. The correct answer is: $700,000