1. Expense A is a fixed cost; expense B is a variable cost. During the current year the activity level has increased, but is still within the relevant range. In terms of cost per unit of activity, we would expect that:

A. expense A has remained unchanged.

B. expense B has decreased.

C. expense A has decreased.

D. expense B has increased.

2. The following data pertains to activity and utility costs for two recent years:

Using the high-low method, the cost formula for utilities is:

A. $1.50 per unit

B. $8,000 plus $0.50 per unit

C. $1.25 per unit

D. $6,000 plus $0.75 per unit

3. Once the break-even point is reached:

A. the total contribution margin changes from negative to positive.

B. net operating income will increase by the unit contribution margin for each additional item sold.

C. variable expenses will remain constant in total.

D. the contribution margin ratio begins to decrease.

4. The ratio of fixed expenses to the unit contribution margin is the:

A. Break-even point in unit sales.

B. Profit margin.

C. Contribution margin ratio.

D. Margin of safety.

5. Last year, Black Company reported sales of $640,000, a contribution margin of $160,000, and a net loss of $40,000. Based on this information, the break-even point was:

A. $640,000

B. $480,000

C. $800,000

D. $960,000

6. Jatry Corporation's budgeted sales are $300,000, its budgeted variable expenses are $210,000, and its budgeted fixed expenses are $60,000. The company's break-even in dollar sales is:

A. $200,000

B. $330,000

C. $210,000

D. $270,000

7. Ringstaff Corporation produces and sells a single product. Data concerning that product appear below:

The company is currently selling 7,000 units per month. Fixed expenses are $615,000 per month. The marketing manager believes that a $21,000 increase in the monthly advertising budget would result in a 180 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

A. increase of $600

B. decrease of $600

C. decrease of $21,000

D. increase of $21,600

8. The general model for calculating a quantity variance is:

A. Actual quantity of inputs used x (actual price - standard price).

B. Standard price x (actual quantity of inputs used - standard quantity allowed for output).

C. (actual quantity of inputs used at actual price) - (standard quantity allowed for output at Standard price).

D. actual price x (actual quantity of inputs used - standard quantity allowed for output).

9. The general model for calculating a price variance is:

A. Actual quantity of inputs used x (actual price - standard price).

B. Standard price x (actual quantity of inputs used - standard quantity allowed for output).

C. (Actual quantity of inputs used at actual price) - (standard quantity allowed for output at Standard price).

D. Actual price x (actual quantity of inputs used - standard quantity allowed for output).

10. The materials price variance should be computed:

A. When materials are purchased.

B. When materials are used in production.

C. Based upon the amount of materials used in production when only a portion of materials purchased is actually used.

D. Based upon the difference between the actual quantity of inputs and the standard quantity allowed for output times the standard price.

11. The following materials standards have been established for a particular product:

The following data pertain to operations concerning the product for the last month:

What is the materials quantity variance for the month?

A. $15,240 U

B. $6,350 U

C. $14,340 U

D. $5,975 U

12. The following labor standards have been established for a particular product:

The following data pertain to operations concerning the product for the last month:

What is the labor rate variance for the month?

A. $2,955 F

B. $4,935 F

C. $2,955 U

D. $1,890 U

13. Which of the following costs are always irrelevant in decision making?

A. Avoidable costs

B. Sunk costs

C. Opportunity costs

D. Fixed costs

14. A study has been conducted to determine if one of the departments in Parry Company should be discontinued. The contribution margin in the department is $50,000 per year. Fixed expenses charged to the department are $65,000 per year. It is estimated that $40,000 of these fixed expenses could be eliminated if the department is discontinued. These data indicate that if the department is discontinued, the company's overall net operating income would:

A. Decrease by $25,000 per year

B. Increase by $25,000 per year

C. Decrease by $10,000 per year

D. Increase by $10,000 per year

15. Green Company produces 1,000 parts per year, which are used in the assembly of one of its products. The unit product cost of these parts is:

The part can be purchased from an outside supplier at $20 per unit. If the part is purchased from the outside supplier, one third of the fixed manufacturing costs can be eliminated. The annual impact on the company's net operating income as a result of buying the part from the outside supplier would be:

A. $1,000 increase

B. $1,000 decrease

C. $5,000 increase

D. $5,000 decrease

Answer rating: 100% (QA)

1 C expense A has decreased 2 D 6000 plus 075 per u... View the full answer