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Managerial Accounting question bank




Question;Managerial Accounting;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?Felix Company produces a product that has a;selling price of $12.00 and a variable cost of $9.00 per unit. The company?s fixed costs are;$60,000. What is the breakeven;point measured in sales dollars?Kritzberg Company sells a product at $60 per unit;that has unit variable costs of $40.;The company?s break-even sales volume is $120,000. How much profit will the company make if;it sells 4,000 units?;Berkut Company would break even at $600,000 in;total sales. Assuming the company;sells its product for $50 per unit, what is its margin of safety in units;if budgeted sales total $800,000?The Euro Company sells two kinds of luggage. The company projected the following cost;information for the two products;Canister;Bag;Tote Bag;Unit selling price;$250;$120;Unit variable cost;$110;$ 80;Number of units produced;and sold;6,000;4,000;The;company?s total fixed costs are expected to be $280,000. Based on this information, what is the;combined number of units of the two products that would be required to;breakeven? (round your answer to the;nearest whole number);Shadow Lake Bottling Company produces a soft;drink that is sold for a dollar.;The company pays $500,000 in production costs, half of which are;fixed costs. General, selling, and;administrative costs amount to $200,000 of which $50,000 are fixed;costs. Assuming production and;sales of 800,000 units, what is the amount of contribution margin per;unit?Owens Company expects to;incur overhead costs of $10,000 per month and direct production costs of;$125 per unit. The estimated production activity for the upcoming year is;1,200 units. If the company desires to earn a gross margin of $50 per;unit, the sales price per unit would be which of the following amounts?;Joint products A and B;emerge from common processing that costs $100,000 and yields 2,000 units;of Product A and 1,000 units of Product B. Product A can be sold for $100;per unit. Product B can be sold for $120 per unit. How much of the joint;cost will be assigned to Product A if joint costs are allocated on the;basis of relative sales values?;The East and West Railroad Company has two divisions, the East Division and;the West Division. The company recently invested $800,000 to maintain its;railroad track. Pertinent data for the two divisions are as follows:Total Miles Traveled;East Division 800,000 miles;West Division 1,200,000 miles;What;is the amount of track improvement cost that should be allocated to the West;Division?;10. Which of the following costs would NOT be capitalized in the;inventory of a manufacturing company?;a.;Commissions paid;to product salespeople;b.;Utility expenses;for the manufacturing plant;c.;Monthly salary;paid to the production manager;d.;Indirect;materials used in manufacturing;e.;All of the above;costs would be capitalized in inventory.;11. During its first;year of operations, Martin Company paid $4,000 for direct materials and $8,500;for production workers' wages. Lease payments and utilities on the production;facilities amounted to $7,500 while general, selling, and administrative;expenses totaled $3,000. The company produced 5,000 units and sold 4,000 units;at a price of $7.50 a unit.;What is the amount of gross margin for the first year?;12. Greenwave Products Co. incurred the following costs in;2006, the company?s first year of operations: $28,000 for direct materials used;in manufacturing, $42,000 for manufacturing equipment to be straight-line;depreciated over five years with a $2,000 salvage value, $16,000 for office;furniture to be straight-line depreciated over four years with no salvage;value, $14,000 for utilities associated with the manufacturing facility, $4,000;for office utilities, $38,000 for the company president?s salary, $24,000 for;the manufacturing manager?s salary, $48,000 for production workers? wages, and;$22,000 for commissions paid to salespeople. If the company produced 7,625;units during the year and sold 6,400 units for $22 each, what would be the company?s;gross margin for 2006?;Creative Construction Company (CCC) expects to;build three new homes during the first quarter of 2008. The estimated direct materials and labor;costs are as follows:Expected;Costs Home 1 Home 2 Home 3;Direct labor $50,000 $40,000 $60,000;Direct materials $60,000 $80,000 $70,000;CCC;needs to allocate two major overhead costs for the quarter - $30,000 of;employee health insurance and $168,000 of indirect materials costs between the;three houses. CCC decides to allocate;heath insurance based on labor cost and indirect material based on material;cost.;CCC;uses a cost-plus pricing strategy to set the selling price of each home. The company would like to have a gross margin;of 20% of total production cost for each home sold. Based on this information, what would be the;estimated selling price for Home 2?;14. Which of the following is an example of a downstream;cost?;a.;Research and;development (R&D);b.;Direct materials;used in manufacturing;c.;Depreciation for;the manufacturing facility;d.;Salaries for;production supervisors;e.;None of the above;Romo Company?s manufacturing operation is divided;into two departments. Department A;is an assembly department. The;assembly department uses robotic equipment to construct the company?s;products. Department B is a;packaging and shipping department.;This department is labor intensive and requires a large number of;workers to prepare the products for delivery. The company has total overhead cost of;$300,000 for the year. Expected machine and labor consumption;patterns are as follows:Machine;Hours Labor Hours Labor Cost;Department A 27,000 6,000 $120,000;Department B 3,000 14,000;$168,000;Total 30,000 20,000;$288,000;Company;management places great emphasis on cost control. Managers who are able to minimize their;department?s cost are rewarded with bonuses.;Based on this information, what cost driver should the manager of;Department B recommend to allocate total overhead?;16. If a product cost is mistakenly reported as a period;cost, which of the following describes the Income Statement effect during the;year when the misreporting occurs?;Assume all inventory levels do not change (i.e. all inventory produced;was sold).;a.;Revenues will be;overstated.;b.;Cost of Goods;Sold will be overstated.;c.;Gross Margin will;be unaffected.;d.;Selling, General;and Administrative Expenses will be overstated.;e.;None of the;above.;17. What is the effect;on the financial statements of recording a $100 purchase of raw materials?;a.;Item A;b.;Item B;c.;Item C;d.;Item D;e.;Insufficient;Information to Answer;18. Based on the;following cost data, items labeled (a) and (b) in the table below are which of;the following amounts, respectively?;a.;(a) = $3.00, (b) = $3.00;b.;(a) = $2.50;(b) = $2.00;c.;(a) = $5.00, (b) = $4.00;d.;(a) = $10.00, (b);= $4.00;19. Quick Change and;Fast Change are competing oil change businesses. Both companies have 5,000;customers and currently make the same amount of profit. The price of an oil change at both companies;is $20. Quick Change pays its employees on a salary basis, and its salary;expense is $40,000. Fast Change pays it employees $8 per customer served.;Suppose Quick Change is able to lure 1,000 customers from Fast Change by;lowering its price to $18 per vehicle. Thus, Quick Change will have 6,000;customers and Fast Change will have only 4,000 customers. Select the correct;statement from the following.;Quick Fast;Rev $100,0000 $100,000;Cost (40,000) (40,000);NI $ 60,000 $ 60,000;After;Change;Rev $108,000 $80,000;Cost (40,000) (32,000);NI $ 68,000 $48,000;a.;Quick Change's;profit will remain the same while Fast Change's profit will fall.;Fast Change?s profit will fall but it will still;earn a higher profit than Quick Change.Profits will decline for both Quick Change and;Fast Change.Quick Change?s profit will increase, and Fast;Change?s profit will decrease.None of the above.;20. Companies A and B;are in the same industry and are identical except for cost structure. At a;volume of 50,000 units, the companies have equal net incomes. At 60,000 units;Company B?s net income would be substantially higher than A?s. Based on this;information;a.;Company B?s cost;structure has more variable costs than A?s.;b.;Company A?s cost;structure has higher fixed costs than B?s.;c.;Company B?s cost;structure has higher fixed costs than A?s.;d.;At a volume of;50,000 units, Company B?s magnitude of operating leverage was lower than A?s.;e.;All of the above.;21. Based on the income;statements shown below, which division has the cost structure with the lowest;operating leverage?;What is this company's magnitude of;operating leverage?;Production in;2007 for Stowe Snow Mobile was at its highest point in the month of June;when 40 units were produced at a total cost of $600,000. The low point in;production was in January when only 15 units were produced at a cost of;$340,000. The company is preparing a budget for 2008 and needs to project;expected fixed cost for the budget year. Using the high/low method, the;projected amount of fixed cost per month isAt 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?


Paper#45186 | Written in 18-Jul-2015

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