BAT Exam – Study Guide, Practice Questions & Certification
Prep
1. (Covering Fixed Costs and Target Profit) How many pillows must Dreamland produce and sell
each month to earn a monthly gross profit of $1,000?
(A) 300
(B) 350
(C) 600
(D) 700 - correct answer ✔✔(D) 700
2. (Make or Buy Decision) Another firm has offered to produce "Old Softy" pillows and sell them
to Dreamland for $12 each. Dreamland cannot avoid the factory lease payments, but can avoid
all labor costs if it does not produce these pillows. Under these conditions, how many "Old
Softy" pillows must Dreamland sell to earn monthly gross profits of $1,000?
(A) 417
(B) 500
(C) 625
(D) 875 - correct answer ✔✔(C) 625
3. (Bank Reconciliation) On May 31, Company O's general ledger shows a cash balance of
$5,123. The May 31 bank statement shows a balance of $4,905. Other information is available
as follows.
1. A May 31 deposit of $300 does not appear on the bank statement; but a $3 service charge
does.
2. A customer's $40 insufficient funds (nsf) check has been returned with the bank statement.
3. Outstanding checks of $10, $15, and $100 are identified on May 31. What is the correct cash
balance on May 31?
(A) $4,905
,(B) $5,080
(C) $5,166
(D) $5,205 - correct answer ✔✔(B) $5,080
4. (Incremental Analysis) Fonseca Corporation has assembled the following information related
to the purchase of a new automated degreasing machine. Using incremental analysis and only
relevant information, decide which machine Fonseca should purchase.
Harvey Machine/Vogle Machine
Increase in Revenues $43,200/$49,300
Increase in annual operating costsDirect materials 12,200/12,200
Direct labor10,200/10,600
Variable manufacturing
overhead 24,500/26,900
Fixed manufacturing overhead (including depreciation) 12,400/12,400 - correct answer
✔✔Harvey Machine-$8500
Vogle Machine-$11800
5. Bixler Company has received a special order for 1000 units of Product YTZ at a selling price of
$20 per unit. This order is over and above normal production, and budgeted production and
sales targets for the year have already been exceeded. Capacity exists to satisfy the special
order. No selling costs will be incurred in connection with this order. Usual unit costs to
manufacture and sell Product YTZ are as follows:
, Direct Materials$7.60
Direct Labor 3.75
Variable manufacturing overhead 9.25
Variable selling costs 2.75
Fixed manufacturing costs 4.85
Fixed general & administrative costs 6.75
Should Bixler accept the order? - correct answer ✔✔Production Cost $20.60 vs. $20 sales price
Answer: No, it costs more to produce than the sales price offered.Fixed manufacturing costs,
variable selling costs & fixed general and administrative costs are not relevant
6. Perez Industries produces 3 products from a single operation. Product A sells for $3 per unit,
Product B sells for $6 per unit, and Product C sells for $9 per unit. When B is processed further,
there are additional unit costs of $3, and its new selling price is $10 per unit. Each product is
allocated $2 of joint costs from the initial production operation. Should Product B be processed
further, or should it be sold at the end of the initial operations? - correct answer ✔✔for further
processing it will be $1 more in contribution margin versus without any further processing. It
would be a bad idea to further process Product B
Original Jurisdiction - - correct answer ✔✔he power to render the initial decision in a case
Appellate Jurisdiction - - correct answer ✔✔he power to review cases that have been tried by a
court of original jurisdiction
Federal Court System - correct answer ✔✔Consists of 12 judicial circuits each encompassing
several district courts, circuit courts of appeals, and the United States Supreme Court consisting
of nine Justices
Prep
1. (Covering Fixed Costs and Target Profit) How many pillows must Dreamland produce and sell
each month to earn a monthly gross profit of $1,000?
(A) 300
(B) 350
(C) 600
(D) 700 - correct answer ✔✔(D) 700
2. (Make or Buy Decision) Another firm has offered to produce "Old Softy" pillows and sell them
to Dreamland for $12 each. Dreamland cannot avoid the factory lease payments, but can avoid
all labor costs if it does not produce these pillows. Under these conditions, how many "Old
Softy" pillows must Dreamland sell to earn monthly gross profits of $1,000?
(A) 417
(B) 500
(C) 625
(D) 875 - correct answer ✔✔(C) 625
3. (Bank Reconciliation) On May 31, Company O's general ledger shows a cash balance of
$5,123. The May 31 bank statement shows a balance of $4,905. Other information is available
as follows.
1. A May 31 deposit of $300 does not appear on the bank statement; but a $3 service charge
does.
2. A customer's $40 insufficient funds (nsf) check has been returned with the bank statement.
3. Outstanding checks of $10, $15, and $100 are identified on May 31. What is the correct cash
balance on May 31?
(A) $4,905
,(B) $5,080
(C) $5,166
(D) $5,205 - correct answer ✔✔(B) $5,080
4. (Incremental Analysis) Fonseca Corporation has assembled the following information related
to the purchase of a new automated degreasing machine. Using incremental analysis and only
relevant information, decide which machine Fonseca should purchase.
Harvey Machine/Vogle Machine
Increase in Revenues $43,200/$49,300
Increase in annual operating costsDirect materials 12,200/12,200
Direct labor10,200/10,600
Variable manufacturing
overhead 24,500/26,900
Fixed manufacturing overhead (including depreciation) 12,400/12,400 - correct answer
✔✔Harvey Machine-$8500
Vogle Machine-$11800
5. Bixler Company has received a special order for 1000 units of Product YTZ at a selling price of
$20 per unit. This order is over and above normal production, and budgeted production and
sales targets for the year have already been exceeded. Capacity exists to satisfy the special
order. No selling costs will be incurred in connection with this order. Usual unit costs to
manufacture and sell Product YTZ are as follows:
, Direct Materials$7.60
Direct Labor 3.75
Variable manufacturing overhead 9.25
Variable selling costs 2.75
Fixed manufacturing costs 4.85
Fixed general & administrative costs 6.75
Should Bixler accept the order? - correct answer ✔✔Production Cost $20.60 vs. $20 sales price
Answer: No, it costs more to produce than the sales price offered.Fixed manufacturing costs,
variable selling costs & fixed general and administrative costs are not relevant
6. Perez Industries produces 3 products from a single operation. Product A sells for $3 per unit,
Product B sells for $6 per unit, and Product C sells for $9 per unit. When B is processed further,
there are additional unit costs of $3, and its new selling price is $10 per unit. Each product is
allocated $2 of joint costs from the initial production operation. Should Product B be processed
further, or should it be sold at the end of the initial operations? - correct answer ✔✔for further
processing it will be $1 more in contribution margin versus without any further processing. It
would be a bad idea to further process Product B
Original Jurisdiction - - correct answer ✔✔he power to render the initial decision in a case
Appellate Jurisdiction - - correct answer ✔✔he power to review cases that have been tried by a
court of original jurisdiction
Federal Court System - correct answer ✔✔Consists of 12 judicial circuits each encompassing
several district courts, circuit courts of appeals, and the United States Supreme Court consisting
of nine Justices
