IncorrectQuestion 1

0 / 2 pts
Total contribution margin is calculated by subtracting _____________ from revenues

gross profit. xxx

variable costs

fixed costs

manufacturing costs

Question 2
2 / 2 pts
Archman Corporation produces custom-made clothing and other promotional materials for
country clubs. Archman estimated at the beginning of the year that it would incur $75,000 in
manufacturing overhead. The company uses direct labor hours as its overhead allocation base
and estimated at the beginning of the year that it would incur 25,000 direct labor hours. Job
AQ125 consists of 100 shirts and 100 towels with special logos for Gaitskill Country Club, and
Archman charges Gaitskill a total of $10,500 for the order. This job required $4,500 in direct
materials and 50 direct labor hours at a rate of $20 per hour, as well as 100 machine hours. What
is the total cost assigned to Job AQ125?

$10,500

$5,650

$5,500

$4,500

IncorrectQuestion 3
0 / 2 pts
The income statement for Cramer Manufacturing Company for last year is as follows:

Sales (10,000 units) $120,000

Variable expenses 72,000
Contribution margin $ 48,000
Fixed expenses 36,000
Operating income $ 12,000

If sales increase by $60,000, with no change in fixed expenses, what will happen to
profit?

increase by $60,000

increase by $6,000. xxxxxx

increase by $24,000

increase by $36,000

IncorrectQuestion 4
0 / 2 pts
Using normal costing system, the work in process account for a particular job would normally
include

actual direct materials and direct labor and applied manufacturing overhead

actual direct materials, actual direct labor, actual manufacturing overhead

applied materials and labor and actual manufacturing overhead. xxxx

applied direct materials, applied direct labor, applied manufacturing overhead

IncorrectQuestion 5
0 / 2 pts
An example of a period expense for a semiconductor manufacturer is

president's salary.

property taxes on factory building. xxxxxx

insurance on factory equipment.

wages of factory custodians.

Question 6
2 / 2 pts
Which of the following is a potential advantage of participative budgeting?

performance feedback

pseudoparticipation

unrealistic standards

budgetary slack

Question 7
2 / 2 pts
In a job order cost system, a debit to Work in Process inventory would LEAST likely be
accompanied by a credit to

Raw Materials Inventory.

Finished Goods Inventory.

Wages Payable.

Manufacturing Overhead.

IncorrectQuestion 8
0 / 2 pts
Leachman Company provides the following information:

Sales (250,000 units) $625,000

Manufacturing costs:
Variable 212,500
Fixed 37,500
Selling and administrative costs:
Variable 100,000
 Fixed 25,000

What is the break-even point in units?

250,000 units. xxxx

125,000 units

41,668 units

50,000 units

IncorrectQuestion 9
0 / 2 pts
Cloris Company is planning to build a new production facility and has narrowed the decision to
two locations. In choosing the location, which of the following statements is TRUE?

Variable costs may not be relevant when the decision alternatives have the same activity levels.

Variable costs are not relevant when the decision alternatives have different activity levels.

Fixed costs are never relevant.

Variable costs are always relevant. xxxx

Question 10
2 / 2 pts
A store manager is deciding whether to accept a special order at a greater quantity than normally
sold, but at a reduced price. An important qualitative factor to consider is the

avoidable fixed costs associated with the special order.

effect the sale of the special-order units will have on existing customers.
variable costs associated with the special order.

incremental revenue from the special order.

IncorrectQuestion 11
0 / 2 pts
Hammerstein Corporation has the following sales forecasts for the selected three-month period for the
current year:

Month Sales

July $30,000

August 15,000

September 12,000

All sales are on account. Sixty percent of sales are collected in the month of the sale, and the remainder
are collected in the following month.

Accounts receivable balance (July 1) $28,000

Cash balance (July 1) 17,000

Minimum cash balance is $13,000. Cash can be borrowed in $2,000 increments from the local bank
(ignore interest charges).

What is the cash balance at the end of July, assuming that cash is received only from customers and that
$53,000 is paid out during July?

$20,200

$18,500

$25,000. xxxx

$14,000

Question 12
2 / 2 pts
Currently attainable standards
demand maximum sales price.

do not allow for normal breakdowns, interruptions, and less than perfect skill.

can be achieved under efficient operating conditions.

demand maximum efficiency.

IncorrectQuestion 13
0 / 2 pts
Broadbank Corporation has the following data for last month:

Selling price per unit $15

Variable cost per unit $9
Fixed costs $45,000
Units sold 10,000 units

The margin of safety expressed in sales revenue is

$37,500.

$112,500

$75,000. xxxx

$45,000.

IncorrectQuestion 14
0 / 2 pts
During June, 10,000 units were produced. The standard quantity of material allowed per unit was
10 pounds at a standard cost of $3 per pound. The company experienced a favorable direct
materials usage variance of $18,750 for June. The actual quantity of materials used must be

93,750 pounds.

100,000 pounds.

106,250 pounds.
31,875 pounds. xxxx
Rationale:

Question 15
2 / 2 pts
Which of the following factors might cause a favorable material quantity (usage) variance?

receiving discounts for purchasing larger than normal quantities for the materials normally used

using less skilled workers

using new, more efficient machinery

using lower quality materials

IncorrectQuestion 16
0 / 2 pts
Belushi Company uses a standard costing system. The following information pertains to direct materials
for the month of July:

Standard price per lb. $18.00

Actual purchase price per lb. $16.50

Quantity purchased 3,100 lbs.

Quantity used 2,950 lbs.

Standard quantity allowed for actual output 3,000 lbs.

Actual output 1,000 units

The company reports its material price variances at the time of purchase.

What is the standard quantity of direct materials per unit?

3.25 lbs. xxxxx

3.50 lbs.
3.00 lbs.

3.10 lbs.

Question 17
2 / 2 pts
The primary objective of the cost management information system is NOT necessarily to provide

management with information for budgeting purposes.

Stockholders and creditors with information useful in making investment and lending decisions.

management with information to assist in the control function..

management with information for budgeting purposes.

IncorrectQuestion 18
0 / 2 pts
Nesla Company has the following sales forecast for the next quarter: April, 20,000 units; May, 24,000
units; June, 28,000 units. Sales totaled 16,000 units in March. The March ending finished goods inventory
was 4,000 units. End-of-month finished goods inventory levels are planned to be equal to 20 percent of
the next month's planned sales.
The planned production for April is

24,800 units.

20,800 units.

21,200 units. xxxxx

19,200 units.
Rationale:

Question 19
2 / 2 pts
Future costs that do not differ across alternatives when making an outsourcing decision describe

irrelevant costs.

mixed costs.
full costs.

relevant costs.

IncorrectQuestion 20
0 / 2 pts
Leonides Corporation has the following usage data related to 100 units of final product:
Materials:

Standard: 300 pounds at $3.00 per pound

Actual: 280 pounds at $2.75 per pound

What is the material usage variance?

$60 unfavorable

$55 favorable

$60 favorable

$55 unfavorable. xxxx

IncorrectQuestion 21
0 / 2 pts
Which of the following expenses incurred by a large department store is a direct cost for the
women's shoe department?

the advertising expense for the service department

the salaries of the bookkeeping department for the store.

the department supervisor's salary.

the salaries for individuals working in the accounting department. xxxxx

Question 22
2 / 2 pts
Potter Company manufactures books. Manufacturing a book takes 10 units of B1 and 1 unit of B2.
Scheduled production of books for the next two months is 1,000 and 1,200 units, respectively. Beginning
inventory is 4,000 units of B1 and 30 units of B2. The ending inventory of B1 is planned to decrease 500
units in each of the next two months, and the B2 inventory is expected to increase 5 units in each of the
next two months.
Based on this information, the number of units of B1 that needs to be purchased during the first month is

10,000 units.

10,500 units.

9,500 units.

1,000 units.

IncorrectQuestion 23
0 / 2 pts
Viceroy Company has calculated a predetermined overhead rate of 75% of direct labor cost.
During the month, $600,000 of factory labor costs are incurred of which $160,000 is indirect
labor. Actual overhead incurred was $320,000. The amount of overhead debited to Work in
Process Inventory should be:

$320,000. xxxxx

$440,000

$330,000

$450,000

IncorrectQuestion 24
0 / 2 pts
Buchalter Corporation experienced an unfavorable direct labor rate variance last month. Which
of the following is the most likely cause?

using more unskilled workers

using higher quality materials

using low-efficiency workers. xxxxx

using more highly skilled workers

IncorrectQuestion 25
0 / 2 pts
In multiple-product analysis, common fixed costs are typically

fixed costs that are not traceable to the products and would remain even if one of the products
were eliminated.

fixed costs which can be traced to each product and would remain even if one of the products
were eliminated.

fixed costs that are not traceable to the products and would be avoided if the product were not
sold any longer.

the fixed costs which can be traced to each product and would be avoided if the product were not
sold any longer. xxxxx

IncorrectQuestion 26
0 / 2 pts
Committed costs are

never relevant in decision-making. xxxx

relevant to a decision if the demand increase for the resource is less than unused capacity

relevant to a decision if demand for the resources stays constant

relevant to a decision if the increase in demand is more than the unused capacity.

IncorrectQuestion 27
0 / 2 pts
Ezra Company produces and sells mattresses. It expects to sell 10,000 mattresses in the current year and
had 1,000 mattresses in finished goods inventory at the end of the previous year. Ezra would like to
complete operations in the current year with at least 1,250 completed mattresses in inventory. There is no
ending work-in-process inventory. The mattresses sell for $300 each.
What would be the total budgeted sales for the current year?
$3,300,000

$3,375,000. xxxx

$3,675,000

$3,000,000

IncorrectQuestion 28
0 / 2 pts
During June, 16,000 pounds of materials were purchased at a cost of $6 per pound. If the
company experienced an unfavorable direct materials price variance of $3,000 in June, the
standard cost per pound must be _____. (Round to two decimal places.)

$0.19

$6.19. xxxx

$5.81

$6.00

IncorrectQuestion 29
0 / 2 pts
Sallywood Corporation applies overhead on the basis of machine hours. At the beginning of the
year, Sallywood estimated that manufacturing overhead costs would total $1,600,000. The
company uses machine hours as its allocation base to distribute overhead costs to jobs and
estimated that 400,000 hours would be used, but ultimately only used 396,000 hours during the
year. Actual overhead costs incurred during the year were $1,590,000. By how much would
overhead be underapplied or overapplied?

$6,000 overapplied. xxxxx

$6,000 underapplied

$10,000 underapplied

$10,000 overapplied
IncorrectQuestion 30
0 / 2 pts
Shortcut Corporation needs to budget its anticipated cash inflows for the next quarter by month. Cash
sales are 10 percent of total sales each month. Historically, sales on account have been collected as
follows: 60 percent in the month of sale, 30 percent in the month after the sale, and the remaining 10
percent two months after the sale. Sales for the quarter are projected as follows: April, $120,000; May,
$100,000; and June, $80,000. Accounts receivable on March 31 totaled $60,000.

The expected cash collections for June are

$68,000.

$98,000.

$89,000.

$48,000. xxxx

Question 31
2 / 2 pts
Manufacturing overhead for Samsung, a manufacturer of televisions and other electronics, would
likely consist of all

costs other than direct materials.

manufacturing costs other than direct materials.

manufacturing costs other than direct materials and direct labor.

costs other than direct materials and direct labor.

Question 32
2 / 2 pts
If a National Football League team has four quarterbacks under contract, but only played two of
them last season, the team has

unused capacity.

practical capacity.
ideal capacity.

activity capacity.

IncorrectQuestion 33
0 / 2 pts
The standard cost per unit is

the price standard for each unit.

the product of the standard price times the standard quantity for each unit.

the amount of actual cost to produce a unit in a standardized process.

the actual cost for a standard product. xxxxx

IncorrectQuestion 34
0 / 2 pts
Hawood Corporation forecasts the following sales:

Month Sales
September $400,000
October 500,000
November 300,000
December 200,000

Collection pattern:
40 percent in month of sale
60 percent in month following the sale

Accounts receivable as of August 31 $70,000

Finished goods inventory as of August 31 8,000 units

The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20
percent of next month's sales.

How much is Accounts Receivable as of October 31?

$460,000

$420,000. xxxx
$200,000

$300,000

IncorrectQuestion 35
0 / 2 pts
Lanowski Company manufactures a product with the following costs per unit at the expected
production level of 84,000 units:
Direct materials $12
Direct labor 36
Variable manufacturing overhead 18
Fixed manufacturing overhead 24

The company has the capacity to produce 90,000 units. The product regularly sells for $120.

If a wholesaler offered to buy 4,500 units for $100 each, the effect of the special order on income
would be a

$450,000 increase.

$45,000 increase. xxxx

$90,000 decrease.

$153,000 increase.

SUPPORTING CALCULATIONS:

Question 36
2 / 2 pts
Newman Company expects to incur the following per unit costs for 2,000 units of production:

Direct materials 3 lb. @ $5 = $15

Direct labor 1 hr @ $20 = $20
Variable overhead 75% of direct labor costs
Fixed overhead 50% of direct labor costs
What is the total amount of direct labor cost included in the direct labor budget?

$30,000

$40,000
$90,000

$70,000

Question 37
2 / 2 pts
Nowalski Corporation has the following projected figures for next year:

Selling price per unit $160.00

Contribution margin per unit $60.00
Total fixed costs $630,000

How many units must be sold to obtain a target before-tax profit of $270,000?

9,000 units

5,625 units

15,000 units

10,500 units

IncorrectQuestion 38
0 / 2 pts
Which of the following items would be classified as flexible resources for a university?

depreciation on an administrative building

electricity costs in an academic building

tenured faculty members. xxxx

long-term lease on a storage facility

Question 39
2 / 2 pts
If an aircraft manufacturer maintains separate facilities for its headquarters and for its
manufacturing facilities, recording utilities expense on the headquarters would affect which of
the following?

Work in process.

Selling and Administrative expenses.

Cost of goods sold.

Manufacturing overhead.

Question 40
2 / 2 pts
Verner Company uses a standard costing system. The following information pertains to direct labor costs
for the month of March:

Standard direct labor rate per hour $15.00

Actual direct labor rate per hour $13.50
Labor rate variance $18,000 favorable
Actual output 1,000 units
Standard hours allowed for actual production 10,000 hours

What is the total direct labor budget variance?

$18,000 (F)

$12,000 (F)

$12,000 (U)

$18,000 (U)

IncorrectQuestion 41
0 / 2 pts
An employee for Yankton Yachts is working on two custom yachts on a given day and completes
a requisition that morning for some materials that can be traced directly to jobs and for some
miscellaneous materials that cannot be traced to the job in a practical manner. The journal
entry(ies) to record this requisition of materials from storage will increase which of the
following?
Both Work in Process and Manufacturing Overhead.

Work in Process Inventory. xxx

Manufacturing Overhead.

Both Work in Process and Raw Materials Inventory

IncorrectQuestion 42
0 / 2 pts
Which of the following is NOT a component of the Cash Budget?

Financing. xxxxx

Depreciation Expense

Cash Disbursements

Cash excess or deficiency

IncorrectQuestion 43
0 / 2 pts
Assume that the top management at your company is very cost-conscious and takes a hard line
on budgeting. Management does not even assume that your department is needed from one year
to the next and requires you to "re-justify your existence" each year. A budget constructed in this
manner is referred to as

incremental budget

zero-based budget

continuous budget

flexible budget. xxxx

IncorrectQuestion 44
0 / 2 pts
The sales volume at the break-even point is

where total fixed costs are equal to total contribution margin.

where only variable costs are covered.

where only product costs are recovered. xxxxx

where total costs equal total contribution margin.

IncorrectQuestion 45
0 / 2 pts
The operations of Williamson Corporation are divided into the Henry Division and the Obion
Division. Projections for the next year are as follows:

Henry Obion
Division Division Total
Sales $250,000 $180,000 $430,000
Variable costs 90,000 100,000 190,000
Contribution margin $160,000 $ 80,000 $240,000
Direct fixed costs 75,000 62,500 137,500
Segment margin $ 85,000 $ 17,500 $102,500
Allocated common costs 35,000 27,500 62,500
Operating income (loss) $ 50,000 $(10,000) $ 40,000

Operating income for Williamson Corporation as a whole if the Obion Division were dropped
would be

$22,500.

$60,000.

$50,000.

$40,000. xxxx

Question 46
2 / 2 pts
Buffer Company has an operating leverage of 2. Sales for 2021 were $500,000 with a
contribution margin of $250,000. Sales are expected to be $750,000 in 2022. Operating
income for 2022 is expected to be
$175,000

$350,000

$250,000

$500,000

IncorrectQuestion 47
0 / 2 pts
Skyview Corporation's job cost sheets showed the following at the end of June:
Job A1 $4,980
Job A2 $5,750
Job A3 $3,675
Job A4 $4,250
Job A5 $5,100
Job A6 $3,800

Jobs A1 and A2 were in Finished Goods Inventory at the beginning of June. Jobs A3 and A4
were in process at the beginning of the month. Jobs A5 and A6 were started during the month.
During the month, Jobs A3, A5, and A6 were completed and sent to finished goods. The goods
produced for Jobs A1 and A5 were sent to customers during June.

What is Cost of Goods Sold for June?

$10,080

$10,850

$12,575. xxxx

$4,250

Question 48
2 / 2 pts
Tactical decision making should normally consider
only sunk costs due to the high amount.

only qualitative factors because of their importance.

relevant costs and qualitative factors.

only relevant cost information.

IncorrectQuestion 49
0 / 2 pts
Which of the following is NOT an advantage of budgeting?

It provides resource information that can be used to improve decision making.

It provides organizational independence.

It aids in the use of resources and employees by setting a benchmark that can be used for the subsequent
evaluation of performance. xxxx

It forces managers to plan.

IncorrectQuestion 50
0 / 2 pts
If a manager wished to decrease the break-even point, which of the following might the manager
target, other factors held constant?

An increase in fixed expenses.

A decrease in variable costs per unit.

a decrease in contribution margin ratio.

A decrease in the selling price. xxxx

Question 51
2 / 2 pts
A company suffered an uninsured loss on a piece of equipment as a result of a storm. In deciding
whether to replace the machine, its original cost is a(n)
discretionary cost.

opportunity cost.

sunk cost.

relevant cost.

IncorrectQuestion 52
0 / 2 pts
The sum of direct material and direct labor is referred to as

indirect product costs.

conversion costs.

period costs. xxxx

prime costs.

Question 53
2 / 2 pts
Snow Lake Industries manufactures 20,000 units of a particular component per year for its end
products. The manufacturing cost of the component was determined as follows:

Direct materials $140,000

Direct labor 230,000
Variable manufacturing overhead 80,000
Allocated fixed manufacturing overhead 120,000
Total $570,000

An outside supplier has offered to sell the component for $23.50.

If Snow Lake does not make this component any longer and begins purchasing it from the
outside supplier instead, the company can make an additional contribution margin of $45,000
from producing another product in the portion of the facilities previously dedicated to this
component.

What is the effect on income if Snow Lake purchases the component from the outside supplier?

$105,000 increase

$75,000 decrease

$25,000 increase

$45,000 increase

Question 54
2 / 2 pts
The Seinfeld Division earns a contribution margin of $200,000 and has a divisional margin of
$70,000. If this division is closed, all of the direct expenses of the division can be eliminated and
the overall company will further save $90,000 in corporate advertising costs. These facts indicate
that closing the division will cause the overall company's operating income to

increase by $20,000.

decrease by $70,000.

increase by $130,000.

decrease by $90,000.

IncorrectQuestion 55
0 / 2 pts
Assume that you are a potential investor reviewing the financial statements of a publicly-traded
electric vehicle manufacturer as of the end of most recent fiscal year. You might reasonably
expect inventories on the balance sheet to consist of

Materials, Labor, and Selling/Administrative Expenses.

Materials, Work-in-Process, and Finished Goods.

Materials, Finished Goods, and Cost of Goods Sold.

Materials, Overhead, and Cost of Goods Sold. xxx

Question 56
2 / 2 pts
Variable costs for Ackroyd, Inc. are 75% of sales. Its selling price is $100 per unit. If the
company sells one unit more than break-even units, how much will profit increase?

$75

$25

$400

$133

Question 57
2 / 2 pts
CVP (Cost-Volume-Profit) analysis is typically useful for all of the following except

Determining how many units must be sold to obtain an after-tax target profit.

Assigning costs to a job.

The anticipated effect on profits of a sudden decrease in demand for the company's products and
services.

Determining the impact on the break-even point of an increase or decrease in fixed costs.

IncorrectQuestion 58
0 / 2 pts
A capital expenditures budget is included in a(n):
operating budget. xxxx

production budget.

flexible budget.

financial budget.

Question 59
2 / 2 pts
Burney Company sells two products; Thing 1 and Thing 2. The contribution margin ratios are
38% for Thing 1 and 52% for Thing 2. Which of the following is TRUE?

Profits will increase if total sales remain constant from period to period, but shift more toward
Thing 1 over Thing 2

Profits may decline with an increase in total dollars of sales if the sales mix shifts to sell
relatively more of Thing 1.

Profits will remain constant with an increase in total sales dollars if the total sales mix shifts
from one product to another.

Profits will decline with an increase in total dollars of sales if the sales mix shifts to sell
relatively more of Thing 2.

IncorrectQuestion 60
0 / 2 pts
A division sold 250,000 projectors last year with the following results:
How much is the contribution margin per projector?

$5.20

$6.50

$8.00. xxxx

$1.20

IncorrectQuestion 61
0 / 2 pts
When the volume of activity decreases within the relevant range, the fixed cost per unit

increases.

remains the same. xxxx

increase at first, then decreases.

decreases.

IncorrectQuestion 62
0 / 2 pts
Kemmons Equipment manufacturers various models of lawnmowers and snowblowers, all in one
factory. Which of the following costs is relevant to a make-or-buy decision regarding a particular
component the company has been making for lawnmowers?

the supervisor's salary of $85,000 that will be avoided if the part is purchased from an outside
supplier

The salary of the plant foreman. xxx

$40,000 of depreciation on the factory.

Property taxes on the factory.

Question 63
2 / 2 pts
Aristide Company decided to implement an advertising campaign that would cost $75,000.
Variable costs will remain at $15 per unit. The company is currently selling 100,000 units of its
product at $25 per unit. The marketing department is estimating that there will be a 10 percent
increase in sales volume. With all else remaining the same, what will be the result of this
decision?

none of the above

An increase in sales of $25,000

A decrease in operating income of $75,000

An increase in operating income of $25,000

Question 64
2 / 2 pts
Messier Company is considering purchasing a new machine to replace a machine purchased one
year ago that is not achieving the expected results. The following information is available:
Expected maintenance costs of new machine $ 12,000 per year
Purchase price of existing machine $150,000
Expected cost savings of new machine $ 20,000 per year
Expected maintenance costs of existing machine $ 8,000 per year
Resale value of existing machine $ 35,000
Which of these items is IRRELEVANT?

Expected resale value of existing machine

Expected maintenance costs of existing machine

Purchase cost of existing machine

Expected maintenance costs of new machine