21 (3 points) The principal difference between variable (direct) costing and absorption (full) costing is: Question 21 options: The treatment of fixed selling and administrative costs. Whether variable manufacturing costs should be included as product costs. Whether fixed manufacturing [fixed MOH] costs should be included as product costs. Whether variable selling and administrative costs should be included as product costs. Whether total fixed costs [both factory and non-factory related] should be included as product costs. Question 22 (3 points) If a cost cannot be allocated to a particular segment on a meaningful basis, that cost should be: Question 22 options: Capitalized to an asset account. Treated as a common cost but allocated on the basis of contribution margin. Treated as a product cost rather than a common cost. Allocated to segments on the basis of segment sales. Treated as a common cost and not allocated. Question 23 (3 points) Slick Co. sells product X for $30 per unit. Variable costs are $20 per unit and fixed costs total $15,000. How many units of X must be sold to earn an operating income of $35,000? Question 23 options: 5,000 units 3,500 units 1,500 units 6,000 units 2,500 units Question 24 (3 points) The following information is provided for Alpha Co.: Sales $200,000 Variable expenses 140,000 Contribution margin 60,000 Fixed expenses 20,000 Net Income $ 40,000 By applying the principles of operating leverage, one would expect that a 15 percent increase in sales (and no changes in the fixed costs) will cause net income to increase to: Question 24 options: $60,000 $46,000 $44,000 $49,000 $66,667 Question 25 (3 points) Which of the following is a correct statement about the costs included or excluded in inventory when using the Variable (Direct) Costing method? Question 25 options: Both variable Selling/Administrative costs and variable MOH costs are included Both variable Selling/Administrative costs and variable MOH costs are excluded Variable Selling/Administrative costs are included but variable MOH costs are excluded Variable Selling/Administrative costs are excluded but variable MOH costs are included Question 26 (3 points) X Corp. produces several products, each with a different contribution margin ratio. Assume the number of units sold in July were the same as the number of units sold in June. However, there was a change in the sales mix moving from June to July. Which of the following statements below is TRUE? Question 26 options: NOI [Net Operating Income] would be the same for both June and July. Fixed expenses for July would be substantially higher than those in June. Total contribution margin [in dollars] in July would be different from that in June. The company's overall (average) contribution margin ratio would be the same for both June and July. Question 27 (3 points) Variable costs per unit : Production $ 30 Selling & Administrative 6 Fixed costs (in total) : Production $ 40,000 Selling & Administrative 16,000 Beginning Finished Goods Inventory (in units) -0- Production (in units) 10,000 Sales (in units) 8,000 Based on the data above, calculate the unit production cost using Variable (Direct) Costing. Question 27 options: $40 per unit $36 per unit $35 per unit $30 per unit $34 per unit Question 28 (3 points) The long-run performance of a segment as an economic investment is best measured by the concept of SEGMENT MARGIN. Which of the following is the correct formula to calculate segment margin? Question 28 options: Contribution margin for a segment less the direct (traceable) fixed costs Contribution margin for a segment less the common fixed costs Contribution margin for a segment plus the direct (traceable) fixed costs Contribution margin for a segment plus the common fixed costs Question 29 (3 points) Jones Corp. has the following data available: Sales = $200,000 CM RATIO (%) = 20 % Margin of safety in dollars = $80,000 [ at the sales level noted above] REQUIRED : Calculate the FIXED COSTS involved. Question 29 options: $16,000 $96,000 $120,000 $24,000 $80,000 Question 30 (3 points) Erb Co. has generated sales of $900,000 for Product X for the most recent period. The following data per unit is also available. Sales price = $20 DM cost = $2 DL cost = $4 MOH Variable = $1 Fixed = $7 Selling & Admin costs Variable = $1 Fixed = $3 REQUIRED : Calculate the breakeven point in units. HINT: First compute unit sales then compute the total fixed costs involved. Next, compute the unit breakeven point. Question 30 options: 50,000 units 25,000 units 45,000 units 37,500 units 31,500 units Question 31 (3 points) Which of the following statements is correct regarding Discretionary Fixed Costs [DFC]? Question 31 options: They include such costs as plant, equipment and essential management salaries. They can be cut back for short periods of time with minimal effect on organizational goals and profits. They are classified as such because they include both a fixed and variable element. They have a long-term planning horizon, generally encompassing many (10-25) years. They are also known as committed fixed costs. Question 32 (3 points) Which of the following is the correct JE to record the issuance of BOTH direct and indirect materials to production? Question 32 options: Work In Process X MOH X Work In Process X Raw Materials Inventory X Work In Process X MOH X Raw Materials Inventory X MOH X Raw Materials Inventory X Question 33 (3 points) Which of the following is the correct JE to close over-applied overhead to COGS [cost of goods sold]? Question 33 options: Finished Goods Inventory X MOH X MOH X COGS X COGS X MOH X Finished Goods Inventory X COGS X Question 34 (3 points) Given data: Work in process (beg. balance) = zero ($0) Work in process (ending balance) = $15,000 Direct materials (cost ) issued to production = $5,000 COGM ( cost of goods manufactured) = $80,000 Assume the PDR [predetermined overhead rate] is 200% of DLC (direct labor cost) Compute: the manufacturing overhead (cost) applied to production. Question 34 options: $30,000 $40,000 $60,000 $90,000 $100,000 Question 35 (3 points) Which of the following is a correct statement about managerial (cost) accounting? Question 35 options: It has a heavy emphasis on GAAP [generally accepted accounting principles] related accounting rules. It has a focus on internal, decision-making issues as they pertain to the management team. It is focused primarily on reporting matters from the past history of the organization. It involves primarily external reporting issues including the preparation of the financial statements. Question 36 (3 points) Tammy Smith is considered a direct-laborer employed in the production of various electronic products and earns $16 per hour. She is paid time-and-a-half for work is excess of 40 hours per week. During a given week she works 48 hours of which 2 hours are considered idle time. How much of her week's wages would be charged to manufacturing overhead [MOH]? Question 36 options: $32 $64 $96 $128 $112 Question 37 (3 points) Which of the following is the correct JE to record Advertising costs incurred by a manufacturing company? Assume these costs were paid in cash. Also, assume use of a job order costing system. Question 37 options: MOH X Cash X Work In Process X Cash X Advertising Expense X Cash X Finished Goods Inventory X Cash X Question 38 (3 points) Given data : Raw materials inventory (4/1) = $10,000 Raw materials inventory (4/30) = $5,000 Purchases of raw materials = $125,000 REQUIRED: Compute the cost of Raw Materials used in (issued to) production. Question 38 options: $130,000 $140,000 $145,000 $120,000 $125,000 Question 39 (3 points) Net operating income under absorption costing may differ from net operating income determined under variable (direct) costing. How is this difference calculated (determined)? Question 39 options: number of units produced during the period times the relevant fixed cost per unit. number of units produced during the period times the relevant variable cost per unit. number of units sold during the period times the relevant fixed cost per unit. change in the quantity of units in finished goods inventory times the relevant fixed cost per unit. change in the quantity of units in finished goods inventory times the relevant variable cost per unit. Question 40 (3 points) Given data : PDR [Predetermined Overhead Rate] = $14 per DLH [Direct Labor Hour] Estimated DLHs for the period = 40,000 Actual DLHs for the period = 35,000 Compute the MOH applied to production for the period. Question 40 options: $520,000 $560,000 $490,000 $433,000 $469,000 Question 41 (3 points) Assume a company applies overhead to production through the use of a predetermined overhead rate [PDR]. A credit balance in the manufacturing overhead [MOH] account at the end of the period means : Question 41 options: that MOH is underapplied for the period. that the actual MOH costs are GREATER than the applied MOH amount. that the actual MOH costs are EQUAL to the applied MOH amount. that the actual MOH costs are LESS than the applied MOH amount. Question 42 (3 points) Given the following cost estimates for X Corp. : Estimated Direct Labor Cost (DLC) = $125,000 Estimated MOH Cost = $400,000 Assume X Corp. uses estimated direct labor cost as the basis for applying overhead [MOH] to production. Which of the following reflects the correct PDR [Predetermined Overhead Rate]? Question 42 options: 32 % of DLC 320 % of DLC $3.20 per DLH [Direct Labor Hour] 31.25 % of DLC $31.25 per DLH [Direct Labor Hour] Question 43 (3 points) Which of the following is the correct JE to record the cost of goods sold [COGS] in a job order costing system? Question 43 options: COGS X Finished Goods Inventory X Finished Goods Inventory X COGS X COGS X Cost of Goods Manufactured X COGS X Work In Process X Question 44 (3 points) Gary Co. produces a single product. Variable manufacturing costs have been consistent at $8 per unit. Fixed manufacturing costs total $120,000. Other relevant data for he current year is shown below. Production in units = 80,000 Sales in units = 50,000 Using Variable (Direct) Costing, compute the cost of goods sold[COGS] for the year. Question 44 options: $800,000 $400,000 $640,000 $475,000 $500,000 Question 45 (3 points) Slick Co. sells product X for $30 per unit. Variable costs are $20 per unit and fixed costs total $15,000. For product X, what amount of sales revenue would be needed to reach the breakeven point? Question 45 options: $37,500 $90,000 $45,000 $60,000 $20,000 Question 46 (3 points) The principles of Operating Leverage allow management to quickly identify the effect on net operating income [NOI] based on an expected increase to sales in : Question 46 options: Percentage (%) terms Cash flow per dollar of long-term debt Cash flow per share of common stock Dollars ($) Units Question 47 (3 points) Which of the following is the correct JE to record the cost of goods manufactured [COGM]? Assume use of a job order costing system. Question 47 options: Work In Process X Finished Goods Inventory X Cost of Goods Manufactured X Work In Process X Finished Goods Inventory X Work In Process X Cost of Goods Manufactured X Finished Goods Inventory X Question 48 (3 points) Variable costs per unit Production $ 30 Selling & Administrative 6 Fixed costs (in total) : Production $ 40,000 Selling & Administrative 16,000 Beginning Finished Goods Inventory (in units) -0- Production (in units) 10,000 Sales (in units) 8,000 Based on the data above, compute the unit production cost using Absorption Costing. Question 48 options: $34 per unit $36 per unit $35 per unit $30 per unit $40 per unit Question 49 (3 points) Which of the following is the correct JE to record BOTH direct labor and indirect labor cost incurred for production purposes? Assume a job order costing system is used. Question 49 options: MOH X Wages/Salaries Payable X Work In Process X Wages/Salaries Payable X Finished Goods Inventory X Wages/Salaries Payable X Work In Process X MOH X Wages/Salaries Payable X Question 50 (3 points) X Corp. incurred $200,000 of depreciation expense. One-half of the depreciation cost was for factory equipment and the other half was for selling and administrative assets. The correct JE to record the depreciation is: Question 50 options: MOH [manufacturing overhead] X Depreciation Expense X Accumulated Depreciation X Depreciation Expense X MOH [manufacturing overhead] X MOH [manufacturing overhead] X Accumulated Depreciation X Depreciation Expense X Work in Process X Accumulated Depreciation X Depreciation Expense X Accumulated Depreciation X