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Saint leo MBA560 quiz 6 (feb 12, 2014)




Question;1.;Select the correct statement regarding fixed costs.;(Points: 2);There is a contradiction between the term "fixed cost per unit" and the behavior pattern implied by the term.Fixed cost per unit is not fixed.Total fixed cost remains constant when volume changes.All of the above are correct statements.;Question 2.;2.;Larry's Lawn Care incurs significant gasoline costs. This;cost would be classified as a variable cost if the total gasoline cost;(Points: 2);varies inversely with the number of hours the lawn equipment is operated.increases in direct proportion to the number of hours the lawn equipment is not affected by the number of hours the lawn equipment is operated.Both A or B.;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 costFixed costMixed costNone of the above;Question 4.;4.;Romo Corporation normally produces between 150,000 and;175,000 units each year. Producing more than 175,000 units alters the;company's cost structure. For example, fixed costs increase because more;space must be rented, and additional supervisors must be hired. The;production range between 150,000 and 175,000 is called the;(Points: 2);differential range.relevant range.opportunity range.leverage range.;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.;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 7.;7.;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 8.;8.;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 9.;9.;The excess of a product's selling price over its variable costs is referred to as;(Points: 2);gross profit.contribution margin.gross margin.manufacturing margin.;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.;Zoro, Inc. produces a product that has a variable cost of;$6.00 per unit. The company's fixed costs are $30,000. The product sells;for $10.00 a unit and the company desires to earn a $20,000 profit.;What is the volume of sales in units required to achieve the target;profit?;(Points: 2);5,0007,5008,33312,500;Question 12.;12.;Cost objects may be;(Points: 2);products.processes.departments.all of the above.;Question 13.;13.;Milton Company has three departments occupying the following amount of floor space:Department 115,000 sq. ft.Department 210,000 sq. ft.Department 325,000 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$20,000None of the above;Question 14.;14.;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 15.;15.;A chair manufacturer makes custom chairs using hand tools;wood, glue, and varnish. Which of the following statements is true?;(Points: 2);The costs of wood and glue would be treated as direct costs.Wood, glue, and varnish would all be direct materials.Wood would be accounted for as a direct cost, and glue and varnish as indirect costs.The concepts of direct and indirect costs are not applicable here.;Question 16.;16.;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 departmentThe cost of suppliesThe cost of commissions paid to the sales staffAll of the above;Question 17.;17.;Which of the following statements is true?;(Points: 2);Direct costs can easily be traced to a cost object, indirect costs cannot be.Both direct and indirect costs can easily be traced to a cost object.Neither direct nor indirect costs are easily traced to a cost object.Indirect costs can be traced easily to a cost object, but direct costs cannot be.;Question 18.;18.;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 19.;19.;The KnitWitt Corporation manufactures knitted shawls and;scarves. The company expects to incur $1,500,000 in overhead costs;during 2010. The following budget information is for 2010:ShawlsScarvesTotalNumber of units expected to be produced50,000100,000150,000Direct labor hours250,000800,0001,050,000Machine hours100,00080,000180,000If the company uses direct labor hours as the cost driver, what will be the allocation rate for 2010?;(Points: 2);$1.43 per direct labor hour$10 per direct labor hour$8.33 per direct labor hour$1.88 per direct labor hour;Question 20.;20.;Humboldt Corporation manufactures electronic products, including calculators and printers.Cost items of the company include:Labor on assembling a printerSalary of an employee who supervises calculator manufacturingMaterials used in making a printerCompany president?s salarySalary of the manager of the Calculator DivisionDepreciation on corporate headquarters buildingInk cartridges installed in printer during manufactureDepreciation on equipment used in making calculatorsSupplies 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 3Numbers 1, 3, and 7Number 3 onlyNone of the costs is direct to an individual printer


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