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##### Saint MBA560 week 6 quiz

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Question;1.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 costQuestion 2.2.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 3.3.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 costFixed cost / fixed costVariable cost / fixed costVariable cost / variable costQuestion 4.4.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 5.5.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) 5,0007,5008,33312,500Question 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\$0Question 8.8.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? (Points: 2) \$240,000\$120,000\$80,000\$100,000Question 9.9.Hard Nails and Bright Nails are competing nail salons. Both companies have the same number of customers. Both charge the same price for a manicure. The only difference is that Hard Nails pays its manicurists on a salary basis (i.e., a fixed cost structure) while Bright Nails pays its manicurists on the basis of the number of customers they serve (i.e., a variable cost structure). Both companies currently make the same amount of net income. If sales of both salons increase by an equal amount, Hard Nails: (Points: 2) will earn a lower profit than Bright Nails.will earn a higher profit than Bright Nails.will earn the same amount of profit as Bright Nails.The answer cannot be determined from the information provided.Question 10.10.Operating leverage exists when: (Points: 2) small percentage changes in revenue produce large percentage changes in profit.management 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.Which of the following equations can be used to compute a firm's magnitude of operating leverage? (Points: 2) Net income/salesFixed costs/contribution marginNet income/gross marginContribution margin/net incomeQuestion 12.12.Booker Company operates a factory with two departments, X and Y. The rent paid on the manufacturing facility would most likely be allocated to departments X and Y on the basis of: (Points: 2) direct labor hours.machine hours.square footage occupied.units sold.Question 13.13.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 hourQuestion 14.14.Ransom Manufacturing Company operates its three production departments within a single facility. Each department produces its own products and maintains its own production equipment. Although they share a common facility, each department is overseen by separate supervisor. Which one of the following costs is a direct cost of each department? (Points: 2) Lease payment on facilityDepreciation on the facilityPlant manager salaryCost of goods soldQuestion 15.15.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 16.16.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 17.17.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 officesWhich of the costs listed above is a direct cost assuming the cost object is the company as a whole? (Points: 2) All of the costs listedAll of the costs except number 4All of the costs except numbers 4 and 6None of the aboveQuestion 18.18.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 aboveQuestion 19.19.The margin of safety can be defined as the excess of budgeted sales over: (Points: 2) break-even sales.net income.fixed costs.variable costs.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 officesWhich 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

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