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saint mba560 quiz 6




Question;Question 1.1.Select the;correct statement regarding fixed costs. (Points: 2);They do not change;because fixed costs should be ignored in decision making.The fixed cost per;unit increases when volume increases.The fixed cost per;unit decreases when volume increases.The fixed cost per;unit does not change when volume decreases.;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 production manager?s salary is an example;of: (Points: 2);a variable cost.a fixed cost.a mixed cost.none of the above.;Question 3.3.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 4.4.Java Joe's;operates a chain of coffee shops. The company pays rent of $12,000 per year;for each shop. Supplies (napkins, bags and condiments) are purchased as;needed. The manager of each shop is paid a salary of $2,000 per month, and;all other employees are paid on an hourly basis. Relative to the number of;customers for a shop, the cost of rent is which kind of cost? (Points: 2);Fixed costVariable costMixed costRelevant cost;Question 5.5.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 6.6.Select the;incorrect statement regarding the contribution margin income statement.;(Points: 2);The contribution;margin approach for the income statement is acceptable for external;reporting.Contribution margin;represents the amount available to cover fixed expenses and thereafter to;provide profit.The contribution;margin approach to preparing an income statement requires that all costs be;classified as fixed or variable.Assuming no change;in fixed costs, a $1 increase in contribution margin will result in a $1;increase in profit.;Question 7.7.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 8.8.The following;income statement is provided for Flint, Inc.;Sales revenue (2,500 @ $20 a;unit);$50,000;Variable costs (2,500 x $11);27,500;Fixed costs;17,000;Net income;$ 5,500;What is this company's magnitude of operating leverage? (Points: 2);;Question 9.9.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 10.10.Operating;leverage exists when: (Points: 2);small percentage;changes in revenue produce large percentage changes in buys;enough of the company's shares of stock to take control of the corporation.the organization;makes purchases on credit instead of paying cash.the organization;avoids all fixed costs in its operations.;Question 11.11.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 12.12.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 13.13.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$20,000None of the above;Question 14.14.Cost allocation;involves: (Points: 2);identifying a cost;driver for each cost to be allocated.calculating an;allocation rate for each cost to be allocated.multiplying the;allocation rate by the weight of the cost driver.all of the above.;Question 15.15.Allocation of;costs to various cost objects: (Points: 2);may affect;managers? performance evaluation.may affect resource;allocations within a company.may affect the;apparent profitability of the various products a company makes.all of the above.;Question;16.16.Parker;Co. expects overhead costs of $400,000 per year and direct production;costs of $12 per unit. The estimated production activity for the 2010;accounting period is as follows;1stQuarter;2ndQuarter;3rdQuarter;4thQuarter;Units produced;11,500;9,000;8,250;11,250;The predetermined overhead rate based on units produced is (rounded to the;nearest penny) is: (Points: 2);$0.75 per unit.$9.00 per unit.$34.80 per unit.$10.00 per unit.;Question 17.17.Select the;incorrectstatement from;the following. (Points: 2);The cost object;determines whether a cost is classified as direct or indirect.The same cost;cannot be classified as both direct and indirect.Relevant costs can;include direct and indirect costs.Direct costs can;display a fixed or variable behavior pat.;Question 18.18.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 19.19.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 the Calculator Division? (Points: 2);Numbers 2, 5, and 6Numbers 2, 5, and 8Number 2 onlyNone of the costs;is direct to the Calculator Division;Question 20.20.A chair;manufacturer makes custom chairs using hand tools, wood, glue, and varnish.;Which of the following statements is true? (Points: 2);The cost of wood is;a direct and variable cost.The cost of wood is;a fixed and indirect cost.The cost of wood is;indirect and variable.The cost of wood is;a fixed and direct cost.


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