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Multiple Choice;Identify the choice that best completes the statement or answers the question.;1. The two categories of cost comprising conversion costs are;a. direct labor and indirect labor;b. direct labor and factory overhead;c. factory overhead and direct materials;d. direct labor and direct materials;2. The four steps necessary to determine the cost of goods completed and the ending inventory valuation in a;process cost system are;1. allocate costs to transferred and partially completed units;2. determine the units to be assigned costs;3. determine the cost per equivalent unit;4. calculate equivalent units of production;The correct ordering of the steps is;a. 2, 4, 3, 1;b. 4, 2, 3, 1;c. 2, 3, 4, 1;d. 2, 3, 1, 4;3. Which of the following costs incurred by a paper manufacturer would be included in the group of costs;referred to as conversion costs?;a. Advertising costs;b. Raw lumber (direct materials);c. Machine operator's wages (direct labor);d. Sales salaries;4. If Department K had 2,000 units, 45% completed, in process at the beginning of the period, 12,000 units;were completed during the period, and 1,200 units were 40% completed at the end of the period, what was;the number of equivalent units of production for the period if the first-in, first-out method is used to cost;inventories?;a. 11,580;b. 11,280;c. 13,680;d. 10,000;Name: ________________________ ID: A;2;5. Department G had 3,600 units, one-third completed at the beginning of the period, 12,000 units were;completed during the period, 2,000 units were one-fifth completed at the end of the period, and the following;manufacturing costs were debited to the departmental work in process account during the period;Work in process, beginning of period $30,000;Costs added during period;Direct materials (10,400 at $8) 83,200;Direct labor 62,000;Factory overhead 24,800;Assuming that all direct materials are placed in process at the beginning of production and that the first-in;first-out method of inventory costing is used, what is the total cost of the departmental work in process;inventory at the end of the period?;a. $19,100;b. $26,000;c. $23,200;d. $12,000;6. Department G had 3,600 units, one-third completed at the beginning of the period, 12,000 units were;completed during the period, 2,000 units were one-fifth completed at the end of the period, and the following;manufacturing costs were debited to the departmental work in process account during the period;Work in process, beginning of period $30,000;Costs added during period;Direct materials (10,400 at $8) 83,200;Direct labor 62,000;Factory overhead 24,800;Assuming that all direct materials are placed in process at the beginning of production and that the first-in;first-out method of inventory costing is used, what is the total cost of 3,600 units of beginning inventory;which were completed during the period?;a. $61,200;b. $48,600;c. $38,400;d. $45,600;7. Department S had no work in process at the beginning of the period. 12,000 units of direct materials were;added during the period at a cost of $84,000, 9,000 units were completed during the period, and 3,000 units;were 30% completed as to labor and overhead at the end of the period. All materials are added at the;beginning of the process. Direct labor was $49,500 and factory overhead was $9,900. The total cost of units;completed during the period were;a. $117,000;b. $143,400;c. $121,000;d. $127,450;Name: ________________________ ID: A;3;8. The following production data were taken from the records of the Finishing Department for June;Inventory in process, 6-1;1/3 completed 1,500 units;Transferred to finished goods;during June 5,000 units;Equivalent units of production;during June 5,200 units;Determine the number of equivalent units of production in the June 30 Finishing Department inventory;assuming that the first-in, first-out method is used to cost inventories.;a. 700 units;b. 200 units;c. 1,000 units;d. 300 units;9. Department A had 1,000 units in Work in Process that were 70% completed at the beginning of the period at;a cost of $7,000. 4,000 units of direct materials were added during the period at a cost of $8,200. 4,500 units;were completed during the period, and 500 units were 60% completed at the end of the period. All materials;are added at the beginning of the process. Direct labor was $28,700 and factory overhead was $4,510. The;cost of the 500 units in process at the end of the period if the first-in, first-out method is used to cost;inventories was;a. $1,025;b. $5,000;c. $5,075;d. $3,455;10. A form prepared periodically for each processing department summarizing (1) the units for which the;department is accountable and the units to be assigned costs and (2) the costs charged to the department and;the allocation of these costs is termed a;a. factory overhead production report;b. manufacturing cost report;c. process cost report;d. cost of production report;11. Department W had 2,400 units, one-third completed at the beginning of the period, 12,000 units were;transferred to Department X from Department W during the period, and 1,800 units were one-half completed;at the end of the period. What is the equivalent units of production used to compute unit conversion cost on;the cost of production report for Department W (Assuming the company uses FIFO)?;a. 12,100 units;b. 12,000 units;c. 15,000 units;d. 11,400 units;Name: ________________________ ID: A;4;12. Lombardi Company manufactures a single product by a continuous process, involving three production;departments. The records indicate that direct materials, direct labor, and applied factory overhead for;Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct;materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000;respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000;and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs;into Department 1 during the period for direct materials is;a. Work in Process--Department 1 100,000;Materials 100,000;b. Work in Process--Department 1 50,000;Materials 50,000;c. Materials 100,000;Work in Process--Department 1 100,000;d. Materials 50,000;Work in Process--Department 1 50,000;13. Lombardi Company manufactures a single product by a continuous process, involving three production;departments. The records indicate that direct materials, direct labor, and applied factory overhead for;Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct;materials, direct labor, and applied factory overhead for Department 2 were $50,000, $60,000, and $70,000;respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000;and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs;from Department 1 into Department 2 during the period is;a. Work in Process--Department 2 390,000;Work in Process--Department 1 390,000;b. Work in Process--Department 2 330,000;Work in Process--Department 1 330,000;c. Work in Process--Department 2 255,000;Work in Process--Department 1 255,000;d. Work in Process--Department 2 375,000;Work in Process--Department 1 375,000;14. Lombardi Company manufactures a single product by a continuous process, involving three production;departments. The records indicate that direct materials, direct labor, and applied factory overhead for;Department 1 were $100,000, $125,000, and $150,000, respectively. Work in process at the beginning of the;period for Department 1 was $75,000, and work in process at the end of the period totaled $60,000. The;records indicate that direct materials, direct labor, and applied factory overhead for Department 2 were;$50,000, $60,000, and $70,000, respectively. In addition, work in process at the beginning of the period for;Department 2 totaled $75,000, and work in process at the end of the period totaled $60,000. The journal entry;to record the flow of costs into Department 3 during the period is;a. Work in Process--Department 3 585,000;Work in Process--Department 2 585,000;b. Work in Process--Department 3 570,000;Work in Process--Department 2 570,000;c. Work in Process--Department 3 555,000;Work in Process--Department 2 555,000;d. Work in Process--Department 3 165,000;Work in Process--Department 2 165,000;Name: ________________________ ID: A;5;15. Lombardi Company manufactures a single product by a continuous process, involving three production;departments. The records indicate that direct materials, direct labor, and applied factory overhead for;Department 2 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct;materials, direct labor, and applied factory overhead for Department 3 were $50,000, $60,000, and $70,000;respectively. In addition, work in process at the beginning of the period for Department 3 totaled $75,000;and work in process at the end of the period totaled $60,000. The journal entry to record the flow of costs;into Department 3 during the period for direct materials is;a. Work in Process--Department 3 100,000;Materials 100,000;b. Work in Process--Department 3 125,000;Materials 125,000;c. Work in Process--Department 3 50,000;Materials 50,000;d. Work in Process--Department 3 70,000;Materials 70,000;16. Just-in-time processing is a business philosophy that focuses on reducing time and cost and eliminating poor;quality. This is accomplished in manufacturing and nonmanufacturing processes by;a. moving a product from process to process as each function is completed;b. combining processing functions into work centers and cross-training workers to perform;more than one function;c. having production supervisors attempt to enter enough materials into manufacturing to;keep all manufacturing departments operating;d. having workers typically perform one function on a continuous basis;17. The debits to Work in Process--Assembly Department for April, together with data concerning production;are as follows;April 1, work in process;Materials cost, 3,000 units $ 7,500;Conversion costs, 3,000 units;2/3 completed 6,000;Materials added during April, 10,000 units 26,000;Conversion costs during April 31,000;Goods finished during April, 11,500 units ---;April 30 work in process, 1,500 units;1/2 completed ---;All direct materials are placed in process at the beginning of the process and the average cost method is used;to cost inventories. The conversion cost per equivalent unit (to the nearest cent) for April is;a. $2.70;b. $2.53;c. $3.02;d. $5.60;18. Cost behavior refers to the manner in which;a. a cost changes as the related activity changes;b. a cost is allocated to products;c. a cost is used in setting selling prices;d. a cost is estimated;Name: ________________________ ID: A;6;19. Which of the following costs is an example of a cost that remains the same in total as the number of units;produced changes?;a. Direct labor;b. Salary of a factory supervisor;c. Units of production depreciation on factory equipment;d. Direct materials;20. Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service;such as United Postal Service?;a. Number of trucks employed;b. Number of miles driven;c. Number of trucks in service;d. Number of packages delivered;21. Most operating decisions of management focus on a narrow range of activity called the;a. relevant range of production;b. strategic level of production;c. optimal level of production;d. tactical operating level of production;22. Which of the graphs in Figure 18(3)-1 illustrates the behavior of a total variable cost?;Figure 18(3)-1;a. Graph 2;b. Graph 3;c. Graph 4;d. Graph 1;23. The graph of a variable cost when plotted against its related activity base appears as a;a. circle;b. rectangle;c. straight line;d. curved line;Name: ________________________ ID: A;7;24. A cost that has characteristics of both a variable cost and a fixed cost is called a;a. variable/fixed cost;b. mixed cost;c. discretionary cost;d. sunk cost;25. Which of the following costs is a mixed cost?;a. Salary of a factory supervisor;b. Electricity costs of $2 per kilowatt-hour;c. Rental costs of $5,000 per month plus $.30 per machine hour of use;d. Straight-line depreciation on factory equipment;26. For purposes of analysis, mixed costs are generally;a. classified as fixed costs;b. classified as variable costs;c. classified as period costs;d. separated into their variable and fixed cost components;27. Ingram Co. manufactures office furniture. During the most productive month of the year, 3,500 desks were;manufactured at a total cost of $84,400. In its slowest month, the company made 1,100 desks at a cost of;$46,000. Using the high-low method of cost estimation, total fixed costs in August are;a. $56,000;b. $28,400;c. $17,600;d. cannot be determined from the data given;28. What ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a;profit?;a. Margin of safety ratio;b. Contribution margin ratio;c. Costs and expenses ratio;d. Profit ratio;29. A firm operated at 80% of capacity for the past year, during which fixed costs were $210,000, variable costs;were 65% of sales, and sales were $1,000,000. Operating profit was;a. $140,000;b. $150,000;c. $310,000;d. $200,000;30. If sales are $425,000, variable costs are 63% of sales, and operating income is $50,000, what is the;contribution margin ratio?;a. 37%;b. 26.8%;c. 11.8%;d. 63%;31. If fixed costs are $750,000 and variable costs are 70% of sales, what is the break-even point (dollars)?;a. $1,071,429;b. $525,000;c. $2,500,000;d. $1,275,000;Name: ________________________ ID: A;8;32. If fixed costs are $1,400,000, the unit selling price is $220, and the unit variable costs are $120, what is the;amount of sales required to realize an operating income of $200,000?;a. 14,000 units;b. 12,000 units;c. 16,000 units;d. 13,333 units;33. If fixed costs are $300,000, the unit selling price is $25, and the unit variable costs are $20, what is the;break-even sales (units) if fixed costs are reduced by $40,000?;a. 60,000 units;b. 52,000 units;c. 62,000 units;d. 64,000 units;34. If fixed costs are $200,000 and the unit contribution margin is $20, what amount of units must be sold in;order to have a zero profit?;a. 25,000;b. 20,000;c. 200,000;d. 10,000;35. If fixed costs are $500,000 and the unit contribution margin is $12, what amount of units must be sold in;order to realize an operating income of $100,000?;a. 5,000;b. 41,667;c. 50,000;d. 58,333;36. If fixed costs are $500,000 and the unit contribution margin is $20, what is the break-even point in units if;fixed costs are reduced by $80,000?;a. 25,000;b. 29,000;c. 4,000;d. 21,000;37. If variable costs per unit increased because of an increase in hourly wage rates, the break-even point would;a. decrease;b. increase;c. remain the same;d. increase or decrease, depending upon the percentage increase in wage rates;38. If fixed costs increased and variable costs per unit decreased, the break-even point would;a. increase;b. decrease;c. remain the same;d. increase, decrease, or remain the same, depending upon the amounts of increase in fixed;cost and decrease in variable cost;39. Which of the following conditions would cause the break-even point to decrease?;a. Total fixed costs increase;b. Unit selling price decreases;c. Unit variable cost decreases;d. Unit variable cost increases;Name: ________________________ ID: A;9;40. Which of the following conditions would cause the break-even point to increase?;a. Total fixed costs decrease;b. Unit selling price increases;c. Unit variable cost decreases;d. Unit variable cost increases;41. Flynn Co. has the following operating data for its manufacturing operations;Unit selling price $ 250;Unit variable cost 100;Total fixed costs $840,000;The company has decided to increase the wages of hourly workers which will increase the unit variable cost;by 10%. Increases in the salaries of factory supervisors and property taxes for the factory will increase fixed;costs by 4%. If sales prices are held constant, the next break-even point for Flynn Co. will be;a. increased by 640 units;b. increased by 400 units;c. decreased by 640 units;d. increased by 800 units;42. The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents;a. the maximum possible operating loss;b. the maximum possible operating income;c. the total fixed costs;d. the break-even point;43. The point where the total costs line intersects the left-hand vertical axis on the cost-volume-profit chart;represents;a. the minimum possible operating loss;b. the maximum possible operating income;c. the total fixed costs;d. the break-even point;44. The relative distribution of sales among the various products sold by a business is termed the;a. business's basket of goods;b. contribution margin mix;c. sales mix;d. product portfolio;45. Assume that Crowley Co. sold 8,000 units of Product A and 2,000 units of Product B during the past year.;The unit contribution margins for Products A and B are $20 and $45 respectively. Crowley has fixed costs of;$350,000. The break-even point in units is;a. 14,000 units;b. 25,278 units;c. 8,000 units;d. 10,769 units;Name: ________________________ ID: A;10;46. Phipps Co. sells two products, Arks and Bins. Last year Phipps sold 12,000 units of Arks and 28,000 units of;Bins. Related data are;Product;Unit Selling;Price;Unit Variable;Cost;Unit Contribution;Margin;Arks $120 $80 $40;Bins 80 60 20;What was Phipps Co.'s overall unit contribution margin?;a. $26;b. $60;c. $92;d. $20;47. Phipps Co. sells two products, Arks and Bins. Last year, Phipps sold 12,000 units of Arks and 28,000 units of;Bins. Related data are;Product;Unit Selling;Price;Unit Variable;Cost;Unit Contribution;Margin;Arks $120 $80 $40;Bins 80 60 20;Assuming that last year's fixed costs totaled $910,000, what was Phipps Co.'s break-even point in units?;a. 40,000 units;b. 12,000 units;c. 35,000 units;d. 28,000 units;48. If a business had a capacity of $10,000,000 of sales, actual sales of $6,000,000, break-even sales of;$4,500,000, fixed costs of $1,800,000, and variable costs of 60% of sales, what is the margin of safety;expressed as a percentage of sales?;a. 25%;b. 18%;c. 33.3%;d. 15%;49. If a business had a margin of safety ratio of 20%, variable costs of 75% of sales, fixed costs of $240,000, a;break-even point of $960,000, and operating income of $60,000 for the current year, what are the current;year's sales?;a. $1,200,000;b. $1,040,000;c. $1,260,000;d. $1,020,000;50. Under absorption costing, which of the following costs would not be included in finished goods inventory?;a. Direct labor cost;b. Direct materials cost;c. Variable and fixed factory overhead cost;d. Variable and fixed selling and administrative expenses;Name: ________________________ ID: A;11;51. Under absorption costing, which of the following costs would not be included in finished goods inventory?;a. Hourly wages of assembly worker;b. Straight-line depreciation on factory equipment;c. Overtime wages paid factory workers;d. Advertising costs for a furniture manufacturer;52. Under variable costing, which of the following costs would not be included in finished goods inventory?;a. Direct labor cost;b. Direct materials cost;c. Variable factory overhead cost;d. Fixed factory overhead cost;53. Under variable costing, which of the following costs would be included in finished goods inventory?;a. Advertising costs;b. Salary of vice-president of finance;c. Wages of carpenters in a furniture factory;d. Straight-line depreciation on factory equipment;54. A business operated at 100% of capacity during its first month and incurred the following costs;Production costs (20,000 units);Direct materials $180,000;Direct labor 240,000;Variable factory overhead 280,000;Fixed factory overhead 100,000 $800,000;Operating expenses;Variable operating expenses $130,000;Fixed operating expenses 50,000 180,000;If 1,600 units remain unsold at the end of the month, what is the amount of inventory that would be reported;on the variable costing balance sheet?;a. $64,000;b. $56,000;c. $66,400;d. $68,000;Name: ________________________ ID: A;12;55. A business operated at 100% of capacity during its first month and incurred the following costs;Production costs (10,000 units);Direct materials $170,000;Direct labor 340,000;Variable factory overhead 190,000;Fixed factory overhead 50,000 $750,000;Operating expenses;Variable operating expenses $ 60,000;Fixed operating expenses 18,000 78,000;If 300 units remain unsold at the end of the month, what is the amount of inventory that would be reported on;the variable costing balance sheet?;a. $22,500;b. $21,000;c. $23,040;d. $24,300;56. A business operated at 100% of capacity during its first month and incurred the following costs;Production costs (10,000 units);Direct materials $140,000;Direct labor 40,000;Variable factory overhead 20,000;Fixed factory overhead 4,000 $204,000;Operating expenses;Variable operating expenses $ 34,000;Fixed operating expenses 2,000 36,000;If 2,000 units remain unsold at the end of the month and sales total $300,000 for the month, what is the;amount of the manufacturing margin that would be reported on the variable costing income statement?;a. $100,000;b. $108,000;c. $140,000;d. $114,800;Name: ________________________ ID: A;13;57. A business operated at 100% of capacity during its first month, with the following results;Sales (160 units) $160,000;Production costs (200 units);Direct materials $100,000;Direct labor 20,000;Variable factory overhead 10,000;Fixed factory overhead 4,000 134,000;Operating expenses;Variable operating expenses $ 12,000;Fixed operating expenses 2,000 14,000;What is the amount of the manufacturing margin that would be reported on the variable costing income;statement?;a. $30,000;b. $38,800;c. $56,000;d. $44,000;58. A business operated at 100% of capacity during its first month, with the following results;Sales (80 units) $80,000;Production costs (100 units);Direct materials $50,000;Direct labor 10,000;Variable factory overhead 5,000;Fixed factory overhead 2,000 67,000;Operating expenses;Variable operating expenses $ 6,000;Fixed operating expenses 1,000 7,000;What is the amount of the contribution margin that would be reported on the variable costing income;statement?;a. $15,000;b. $19,400;c. $28,000;d. $22,000;59. Under which inventory costing method could increases or decreases in income from operations be;misinterpreted to be the result of operating efficiencies or inefficiencies?;a. Variable costing;b. Absorption costing;c. Incremental costing;d. Differential costing;Name: ________________________ ID: A;14;60. It would be acceptable to have the selling price of a product just above the variable costs and expenses of;making and selling it in;a. the long run;b. the short run;c. both the short run and long run;d. monopoly situations;61. In contribution margin analysis, the effect of a change in the number of units sold, assuming no change in;unit sales price or unit cost, is referred to as the;a. sales factor;b. cost of goods sold factor;c. quantity factor;d. price factor;62. In contribution margin analysis, the quantity factor is computed as;a. the increase or decrease in the number of units sold multiplied by the planned unit sales;price or unit cost;b. the increase or decrease in unit sales price or unit cost multiplied by the planned number;of units to be sold;c. the increase or decrease in the number of units sold multiplied by the actual unit sales;price or unit cost;d. the increase or decrease in the unit sales price or unit cost multiplied by the actual;number of units sold;63. The difference between the planned and actual contribution margin can be caused by;a. an increase or decrease in the amount of sales;b. an increase in the amount of variable costs and expenses;c. a decrease in the amount of variable costs and expenses;d. A, B, or C;64. The systematic examination of the differences between planned and actual contribution margin is termed;a. gross profit analysis;b. contribution margin analysis;c. sales mix analysis;d. volume variance analysis;65. In which of the following types of firms would it be appropriate to prepare contribution margin reporting and;analysis?;a. Boat manufacturing;b. A chain of beauty salons;c. Home building;d. A, B, and C;Name: ________________________ ID: A;15;Problem;66. The inventory at June 1 and costs charged to Work in Process - Department 60 during June are as follows;3,800 units, 80% completed $ 60,400;Direct materials, 32,000 units 368,000;Direct labor 244,000;Factory overhead 188,000;Total cost to be accounted for $860,400;========;During June, 32,000 units were placed into production and 31,200 units were completed, including those in;inventory on June 1. On June 30, the inventory of work in process consisted of 4,600 units which were 40%;completed. Inventories are costed by the first-in, first-out method and all materials are added at the;beginning of the process.;Determine the following, presenting your computations;(a) equivalent units of production for conversion cost;(b) conversion cost per equivalent unit;(c) total and unit cost of finished goods started in prior period and completed in the current;period;(d) total and unit cost of finished goods started and completed in the current period;(e) total cost of work in process inventory at June 30;Name: ________________________ ID: A;16;Name: ________________________ ID: A;17;67. The estimated total factory overhead cost and total machine hours for Department 40 for the current year are;$225,000 and 56,250 respectively. During January, the first month of the current year, actual machine hours;used totaled 5,100 and factory overhead cost incurred totaled $19,800.;(a) Determine the factory overhead rate based on machine hours.;(b) Present the entry to apply factory overhead to production in Department 40 for;January.;(c) What is the balance of Factory Overhead - Department 40 at January 31?;(d) Does the balance of Factory Overhead - Department 40 at January 31 represent;overapplied or underapplied factory overhead?;Name: ________________________ ID: A;18;68. Chang Co. manufacturers its products in a continuous process involving two departments, Machining and;Assembly. Present entries to record the following selected transactions related to production during June;(a) Materials purchased on account, $225,000.;(b) Materials requisitioned by: Machining, $73,000 direct and $9,000 indirect;materials, Assembly, $4,900 indirect materials.;(c) Direct labor used by Machining, $23,000, Assembly, $47,000.;(d) Depreciation expenses: Machining, $2,000, Assembly, $8,000.;(e) Factory overhead applied: Machining, $9,700, Assembly, $11,300.;(f) Machining Department transferred $98,300 to Assembly Department, Assembly;Department transferred $83,400 to finished goods.;(g) Cost of goods sold, $72,000.;Name: ________________________ ID: A;19;Name: ________________________ ID: A;20;69. The inventory at June 1 and costs charged to Work in Process - Department 60 during June are as follows;3,800 units, 80% completed ($25,000 Materials, $35,400 conversion) $ 60,400;Direct materials, 32,000 units 368,000;Direct labor 244,000;Factory overhead 188,000;Total cost to be accounted for $860,400;=======;During June, 32,000 units were placed into production and 31,200 units were completed, including those in;inventory on June 1. On June 30, the inventory of work in process consisted of 4,600 units which were 40%;completed. Inventories are costed by the average cost method and all materials are added at the beginning of;the process.;Determine the following, presenting your computations;(a) equivalent units of production for conversion cost;(b) conversion cost per equivalent unit and material cost per equivalent unit.;(c) total and unit cost of finished goods completed in the current period;(d) total cost of work in process inventory at June 30;Name: ________________________ ID: A;21;Name: ________________________ ID: A;22;70. For the current year ending January 31, Bell Company expects fixed costs of $178,500 and a unit variable;cost of $41.50. For the coming year, a new wage contract will increase the unit variable cost to $45. The;selling price of $50 per unit is expected to remain the same.;(a) Compute the break-even sales (units) for the current year.;(b) Compute the anticipated break-even sales (units) for the coming year, assuming the;new wage contract is signed.;71. For the past year, Holcomb Company had fixed costs of $6,552,000, a unit variable cost of $444, and a unit;selling price of $600. For the coming year, no changes are expected in revenues and costs, except that a new;wage contract will increase variable costs by $6 per unit. Determine the break-even sales (units) for (a) the;past year and (b) the coming year.;72. A company with a break-even point at $900,000 in sales revenue and had fixed costs of $225,000. When;actual sales were $1,000,000 variable costs were $750,000. Determine (a) the margin of safety expressed in;dollars, (b) the margin of safety expressed as a percentage of sales, (c) the contribution margin ratio, and (d);the operating income.;Name: ________________________ ID: A;23;73. A company has a margin of safety of 25%, a contribution margin ratio of 30%, and sales of $1,000,000.;(a) What was the break-even point?;(b) What was the operating income?;(c) If neither the relationship between variable costs and sales nor the amount of fixed;costs is expected to change in the next year, how much additional operating income;can be earned by increasing sales by $110,000?;Name: ________________________ ID: A;24;74. On August 31, the end of the first year of operations, during which 18,000 units were manufactured and;13,500 units were sold, Finberg Inc. prepared the following income statement based on the variable costing;concept;Finberg Inc.;Income Statement;For Year Ended August 31, 20--;Sales $297,000;Variable cost of goods sold;Variable cost of goods manufactured $279,000;Less ending inventory 67,500;Variable cost of goods sold 211,500;Manufacturing margin $ 85,500;Variable selling and administrative;expenses 40,500;Contribution margin $ 45,000;Fixed costs;Fixed manufacturing costs $ 12,000;Fixed selling and administrative;expenses 10,800 22,800;Income from operations $ 22,200;========;Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the;absorption costing concept.;Name: ________________________ ID: A;25;75. Based upon the following data taken from the records of Willis Inc., prepare a contribution margin analysis;report for the year ended December 31, 2002.;For Year Ended;December 31, 2005;Actual Planned;Difference;Increase;(Decrease);Sales $312,000 $325,000 ($13,000);Less;Variable cost of goods sold $169,200 $182,000 ($12,800);Variable selling and administrative;expenses 32,400 39,000 (6,600);Total $201,600 $221,000 ($19,400);Contribution margin $110,400 $104,000 $ 6,400;======= ======= =======;Number of units sold 120,000 130,000;Per unit;Sales price $2.60 $2.50.10;Variable cost of goods sold 1.41 1.40.01;Variable selling and administrative;expenses.27.30 (.03)

 

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