ACCT 526 FINAL EXAM | QUESTIONS AND ANSWERS|
LATEST UPDATE
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:
overhead is an indirect cost which cannot be traced easily and directly
to specific units of product
An advantage of using regression analysis over the high-low and scattergraph
methods is that
regression analysis is a more precise approach than the high-low or scattergraph
methods
An example of a discretionary fixed cost is:
management training
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?
,Total cost = $4,400 + $11/unit
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:
$5,340
When comparing a traditional income statement to a contribution margin
income statement:
net income will always be identical on both
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?
$700,000
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?
, contribution margin will be unchanged and the break-even point will increase
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?
6,000 units
A 45% contribution margin ratio means that:
45% of the company's revenue is available to cover fixed costs and to contribute
toward operating income.
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?
$3,180,000
Brant Company manufactures a part for its production cycle. The costs per unit
for 5,000 units of this part are as follows:
LATEST UPDATE
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:
overhead is an indirect cost which cannot be traced easily and directly
to specific units of product
An advantage of using regression analysis over the high-low and scattergraph
methods is that
regression analysis is a more precise approach than the high-low or scattergraph
methods
An example of a discretionary fixed cost is:
management training
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?
,Total cost = $4,400 + $11/unit
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:
$5,340
When comparing a traditional income statement to a contribution margin
income statement:
net income will always be identical on both
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?
$700,000
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?
, contribution margin will be unchanged and the break-even point will increase
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?
6,000 units
A 45% contribution margin ratio means that:
45% of the company's revenue is available to cover fixed costs and to contribute
toward operating income.
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?
$3,180,000
Brant Company manufactures a part for its production cycle. The costs per unit
for 5,000 units of this part are as follows:
