Multiple choice

21. Electrical Savers, Inc. sells power plants for $4,000 each. The company receives a special order from an elderly service company that wants 15 power plants and offers to pay at the rate of $3,100 per plant. Electrical Savers, Inc. incurs $1,700 of variable cost per unit. Assuming that ABC has sufficient capacity to produce the additional units (operating at less than 100% capacity), how would accepting this order affect the company's operating income?

a. Increases operating income by $46,500 b. Increases operating income by $13,500 c. Increases operating income by $21,000 d. Decreases operating income by $13,500

22. The margin of safety in dollars is:

a. None of the alternatives is correct. b. the excess of budgeted costs that is above the tie point in dollars. c. the excess of budgeted sales that is below the tie point in dollars. d. It is the amount by which sales can decrease before the company begins to make a loss.

23. The cost of raw material of the company Bloques Amrica, Inc. decreased and the price per unit did not change. As a result:

a. the tie point will increase. b. the marginal contribution will increase. c. the tie point will not be affected. d. the marginal contribution will not be affected.

24. The correct order of flow of costs of a manufacturing company is:

a. Raw material, Goods in process, Finished goods, Cost of goods sold. b. Raw materials, Finished goods, Work in process, and Cost of goods sold. c. Work in process, Raw materials, Finished goods, Cost of goods sold. d. Raw material, Work in process, Cost of goods sold, Finished goods.

25. If the volume of activity increases, which of the following statements best describes the behavior of costs within the relevant scope (relevant range)?

a. The fixed cost per unit does not change. b. The total fixed cost changes. c. The variable cost per unit does not change. d. Variable cost per unit increases.

26. Empresa Musik aus Costa Rica presents the following statement of income and expenses with a marginal contribution approach: Sales (30,000 units) $200,000 Less Variable Costs 90,000 Marginal Contribution 110,000 Less Fixed Costs 30,000 Net Income $80,000 What is the marginal contribution per unit?

a. $2.50 b. $6.67 c. $2.67 d. $3.67

27. The company Discos Modernos incurred the following costs during 2022: Purchase of Direct Materials $190,000 Direct labor used 200,000 Indirect manufacturing costs 399,000 The balance (balance) of the inventory accounts for 2022 was as follows: 1-1-2020 12-31-2020 Direct materials $14,000 $50,000 Items in process 12,000 61,000 Finished items 44,000 89,000 What was the Cost of Direct Materials Used for 2020?

a. $154,000 b. $105,000 c. $254,000 d. $200,000

28. The Jardines Edwin company is considering manufacturing a part that it currently buys from a supplier. If management decides to manufacture the part, they will stop earning rental income from that factory space. This rent represents a cost of:

a. production b. chance. c. inevitable production d. fixed production

29. The R&F company incurred the following costs during 2022: Direct material purchases $190,000 Direct labor used 200,000 Indirect manufacturing costs 399,000 The balance (balance) of the R&F inventory accounts for 2022 was as follows: 1-1-2020 12-31-2020 Direct materials $14,000 $50,000 Items in process 12,000 61,000 Finished items 44,000 89,000 How much was the Cost of manufactured goods (Cost of goods manufactured) in 2022?

a.$305,000 b. $659,000 c. $704,000 d. $105,000

30. Empresas Frutas Frescas CR made the following projections (estimates) for the year 2023: Manufacturing overhead $300,000 Direct labor hours 40,000 The company used 8,500 direct labor hours. It uses normal costing and determines the allocation rate (predetermined overhead rate) based on the number of direct labor hours. The company incurred $62,000 of manufacturing overhead costs during that month. How much are the manufacturing overhead costs allocated for that month?

a. $62,000 b. $63,750 c. $300,000 d. $60,750

31. Empresas Luz del Cielo is a company that manufactures wooden tables. Luz del Cielo is considering purchasing a piece that it currently manufactures in its production process. Information related to your costs (per unit) is: direct material $11.00, direct labor $18, variable manufacturing overhead cost $5.00, fixed costs $10,000 per year. The purchase price of the part would be $40.00. Total units produced: 6,000 units. What decision should Light from Heaven make?

a. Cannot be determined with the information provided b. buy the part c. Continue manufacturing the part d. There is no difference between manufacturing or buying.

32. The depreciation of the administrative office building represents:

a. Product costs-direct b. Product cost-indirect c. period cost

33. Below is the result of operations of Empresas Hartings for the month of April: Sales (2,000 units) $8,000 Variable Costs (4,000) Fixed costs (3,000) Net income $1,000 What is the effect on net income if Hartings sells an additional 650 units per month? a. Increase by $1,300 b. Increase by $2,600 c. Increase by $325 d. Increase by $3,900

34. Empresas Casas Yabucoa requested a loan from a banking institution. What type of information would the bank want to analyze to decide whether to grant the loan?

a. General information b. Financial information

35. The cost of metal for the manufacture of shutters is considered a:

a. Product cost-direct b. period cost c. Product cost-indirect

36. Which of the following statements is true regarding period costs?

a. They are presented in as Cost of goods sold in the Statement of Income and Expenses. b. They are presented as Selling, General and Administrative Expenses in the Statement of Income and Expenses. c. They are presented in the Statement of Financial Position until the moment they are sold. d. They are part of the product in process.

37. The Clean Waters company presents the following information: Sale price per unit $50 Variable costs per unit $30 Fixed costs (total) $27,000 How many units must I sell to make a profit of $43,000?

a. 4,667 b. 800 c. 3,500 d. 860

38. Suppose that HD Lenses, Inc. has three activity pools: Estimated Manufacturing Overhead Costs Expected Activity Labor related $52,000 8,000 direct labor hours Machine related $100,000 15,000 machine hours Machine setups $32,000 950 setups Please indicate the assignment rate (default rate) per direct labor hour (labor related):

a. $6.50 b. $6.67 c. $33.68 d. $7.68