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##### Saint MBA565 week 6 quiz (april 08, 2014)

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Question;Question;1. 1. Gypsy Joe's operates a chain of coffee shops.;The company pays rent of \$10,000 per year for each shop. Supplies (napkins;bags and condiments) are purchased as needed. The managers of each shop are;paid a salary of \$2,500 per month and all other employees are paid on an hourly;basis. The costs of supplies relative to the number of customers in a;particular shop and relative to the number of customers in the entire chain of;shops is which kind of cost, respectively? (Points: 2);Variable cost / fixed cost;Fixed cost / fixed cost;Variable cost / fixed cost;Variable cost /;variable cost;Question;2. 2. Hico Bottling Company pays its production;manager a salary of \$5,000 per month. Salespersons are paid strictly on;commission, at \$2 for each case of product sold.;For Hico Bottling Company, the;salespersons? commissions are an example of: (Points: 2);a variable cost.;a fixed cost.;a mixed cost.;none of the above.;Question;3. 3. Tri-State Food Service operates six fast food;restaurants in the New England area. The company pays rent of \$10,000 per year;for each shop. The managers of each shop are paid a salary of \$3,200 per month;and all other employees are paid on an hourly basis. Relative to the number of;hours worked, total compensation cost for a particular shop is which kind of;cost? (Points: 2);Variable cost;Fixed cost;Mixed cost;None of the above;Question;4. 4. Whether a cost behaves as a fixed cost or as;a variable cost depends upon the: (Points: 2);activity base used.;company.;industry.;presence of mixed costs.;Question;5. 5. The magnitude of operating leverage for;Perkins Corporation is 3.4 when sales are \$100,000. If sales increase to \$110,000;profits would be expected to increase by what percent? (Points: 2);34%;2.9%;3.4%;37%;Question;6. 6. Ajani Company has variable costs equal to 40%;of sales. The company is considering a proposal that will increase sales by;\$10,000 and total fixed costs by \$6,000. By what amount will net income;increase? (Points: 2);\$6,000;\$4,000;\$2,000;\$0;Question;7. 7. At its \$25 selling price, Paciolli Company;has sales of \$10,000, variable manufacturing costs of \$4,000, fixed;manufacturing costs of \$1,000, variable selling and administrative costs of;\$2,000 and fixed selling and administrative costs of \$1,000. What is the;company's contribution margin per unit? (Points: 2);\$15;\$10;\$0.60;\$0.40;Question;8. 8. Wall Company incurred \$30,000 of fixed cost;and \$40,000 of variable cost when 1,000 units of product were made and sold. If;the company?s volume increases to 1,500 units, the company?s total costs will;be: (Points: 2);\$80,000;\$105,000;\$87,500;\$90,000;Question;9. 9. Which of the following equations can be used;to compute a firm's magnitude of operating leverage? (Points: 2);Net income/sales;Fixed costs/contribution margin;Net income/gross margin;Contribution;margin/net income;Question;10. 10. Wall Company incurred \$30,000 of fixed cost;and \$40,000 of variable cost when 1,000 units of product were made and sold. If;the company?s volume doubles, the company?s total cost will: (Points: 2);stay the same.;double as well.;increase but will;not double.;decrease.;Question;11. 11. Once sales reach the breakeven point, each;additional unit sold will: (Points: 2);increase fixed cost by a proportionate amount.;reduce the margin of safety.;increase profit by;an amount equal to the per unit contribution margin.;increase the company's operating leverage.;Question;12. 12. Cost objects may be: (Points: 2);products.;processes.;departments.;all of the above.;Question;13. 13. Which of the following statements is true;regarding the salary of the manager of a fast food hamburger restaurant? (Points;2);The salary is a fixed cost that is directly traceable to the cost of;making hamburgers.;The salary is a;fixed cost that is directly traceable to the cost of operating a specific;restaurant.;The salary is a variable cost that cannot be traced to the cost of;operating a specific restaurant.;None of the above.;Question 14. 14.;Overhead costs include: (Points: 2);direct and indirect;costs.;direct costs only.;indirect costs only.;neither direct nor indirect costs.;Question;15. 15. Humboldt Corporation manufactures;electronic products, including calculators and printers.;Cost;items of the company include;1 Labor on assembling a printer;2 Salary of an employee who supervises;calculator manufacturing;3 Materials used in making a printer;4 Company president?s salary;5 Salary of the manager of the Calculator;Division;6 Depreciation on corporate headquarters;building;7 Ink cartridges installed in printer;during manufacture;8 Depreciation on equipment used in making;calculators;9 Supplies used in corporate offices;Which of the costs listed above is a direct;cost assuming the cost object is an individual printer? (Points: 2);Numbers 1 and 3;Numbers 1, 3, and 7;Number 3 only;None of the costs is direct to an individual print;Question;16. 16. Select the true statement from the;following. (Points: 2);Only direct costs are assigned to cost objects.;The same cost may;be assigned to more than one cost object.;General, selling, and administrative;costs are not assigned to cost objects.;A given cost cannot be driven by more than one cost driver.;Question;17. 17. Milton Company has three departments;occupying the following amount of floor space;Department 1 15,000 sq. ft.;Department 2 10,000 sq. ft.;Department 3 25,000 sq. ft.;How much store rent should be allocated to;Department 2 if total rent is equal to \$100,000? (Points: 2);\$25,000;\$50,000;\$20,000;None of the above;Question;18. 18. Overhead costs: (Points: 2);can be traced to cost objects in a cost-effective manner.;cannot be traced to;cost objects cost effectively but can be allocated to cost objects.;primarily are variable costs.;are not incurred by most companies.;Question;19. 19. Which of the following costs is most likely;to be directly traceable to a specific department in a retail clothing store?;(Points: 2);The cost of heating and air conditioning the department;The cost of supplies;The cost of;commissions paid to the sales staff;All of the above;Question;20. 20. Hamlin Company expects to incur overhead;costs of \$100,000 per year and direct production costs (materials and labor) of;\$125 per unit. The estimated production activity for the upcoming year is;10,000 units. If the company desires to earn a gross profit of \$50 per unit;what would be the sales price per unit? (Points: 2);\$185;\$175;\$160;\$205

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