# Each Question 2 points.

Maximum Points 100 1 A company has \$27 per unit in variable costs and \$1,000,000 per year in fixed costs. Demand is estimated to be 100,000 units annually. What is the price if a markup of 40% on total cost is used to determine the price? A) \$51.80 B) \$37 C) \$27 D) \$37.80 2 True or False: Firms that have high levels of fixed costs have low operating leverage A) True B) False 3 According to the theory of constraints, everything else should be subordinate to the binding constraint. A) True B) False Use the following to answer questions 4-7: RNO Company's market for the Model 55 has changed significantly, and RNO has had to drop the price per unit from \$265 to \$125. There are some units in the work in process inventory that have costs of \$150 per unit associated with them. RNO could sell these units in their current state for \$100 each. It will cost RNO \$10 per unit to complete these units so that they can be sold for \$125 each. 4 Which of the following is the amount of sunk costs in this problem? A) \$150 per unit B) \$125 per unit C) \$10 per unit D) \$265 per unit 5 A new employee looks at the analysis and exclaims, “We'll lose money with either of these alternatives! Let's just throw these units in the trash!” Suppose the alternative to trashing is choosing the more profitable of the two alternatives (that the new employee looked at and did not like). What effect will the trashing option (that the new employee wants) have on net income? A) B) C) D) Net income will increase by \$35 per unit for each unit discarded. Net income will decrease by \$115 per unit for each unit discarded. It will have no effect on net income. Net income will decrease by \$265 per unit for each unit discarded.

6 When the incremental revenues and expenses are analyzed, the company is better off by A) \$10 per unit if the sell the units in their current state. B) \$25 per unit if they sell the units in their current state. C) \$15 per unit if they complete the units. 1

they A) may appear to be variable costs. \$30. and makes 5 returns. 7 Which of the following is not a relevant value in this problem? A) \$10 = cost to complete units B) \$265 = former price C) \$125 = current price D) \$100 = price for partially completed units 8 Budgets are financial plans prepared by managerial accountants. orders 300 separate items.330 2 . A) True B) False 13 The most difficult part of determining the profit maximizing price is determining profit at a given level of unit sales.Each Question 2 points. Indirect costs are charged as follows: \$8. B) may cause managers to make decisions that are not in the best interest of the company as a whole. A) True B) False 9 Indirect costs occur because resources are shared by more than cost object. C) are stated on a per unit basis. 12 Financial accounting is concerned with presenting results of past transactions while managerial accounting places considerable emphasis on the future. D) One 11 When fixed costs are unitized. Maximum Points 100 D) \$125 per unit if they complete the units. A) True B) False 14 A company using activity based pricing marks up the direct cost of goods by 30% plus charges customers for indirect costs based on the activities utilized by the customer. \$4.00 per return. What will the customer be charged? A) \$5. D) All of the above are true.000. A customer places 10 orders with a total direct cost of \$3. A) True B) False 10 How many joint products can come from a set of common inputs? A) no more than four B) only two or three C) It depends on the process involved.00 per order placed.00 per separate item ordered.

667 B) \$43.000 in the month of February on advertising they feel that they can expect occupancy rate to increase by 5%.759 D) \$3. B) \$173. Each room rents at \$110 per night and variable costs total \$16 per room per night of occupancy. costs were budgeted at \$125. Maximum Points 100 B) \$3.000 machine hours were anticipated. In a year when 20.600. the more the supplier will be paid under the contract.000 machine hours. 3 .000 C) \$5.Each Question 2 points. Net income will increase by \$26.320. Net income will increase by \$16.750 C) \$1.680.120 D) \$50.560. how much manufacturing overhead will be allocated to this product? A) \$41.000 16 One of the reasons that companies allocate costs is to reduce the frivolous use of common resources. 19 If 80% of the rooms are occupied each night in the month of February (28 days) what will total costs be for the month? A) \$86.500. What would be the financial impact of spending this additional money on advertising for the month of February (28 days)? A) B) C) D) Total fixed costs will increase by \$10. C) \$71. Total fixed costs will remain the same. D) \$155. 18 Go back to the original data. A) True B) False Use the following to answer questions 18-20: The Sunrise Hotel has 200 rooms.000 per month. If the hotel spends an additional \$10. Fixed costs total \$84. If a product requires 7. A) True B) False 17 The more costs that are allocated to a cost plus contract.900 15 Manufacturing overhead is allocated to products based on the number of machine hours required.320.680.000.

but are more expensive.360.800 C) \$208.Each Question 2 points. B) More cost pools usually provide more accurate information. What is the amount of avoidable costs if Jones buys rather than makes the components? A) \$60.568. how many dollars of revenue must K-Henry's generate in order to reach the break-even point? A) \$282. A) True B) False 22 Jones Company manufactures widgets. The following costs are associated with this part of the process when 50. D) \$15.000 units are produced: Direct material Direct labor Manufacturing overhead Total \$44.000 \$124. The remaining manufacturing overhead will continue whether or not Jones makes the components. 21 Cost allocation methods that provide the most accurate full cost for financial reporting also provide the most accurate information for making decisions within the company.000 D) \$100.000 C) \$124. Maximum Points 100 20 If the hotel is able to increase occupancy to 90% by how much will total costs increase for the month of February (28 days)? A) \$7. B) \$8.000 units. If fixed costs are \$176.000 23 K-Henry's Dull Diner has a contribution margin ratio of 16%.000 24 Which of the following statements about cost pools is not true? A) Only four different kinds of costs may be included in a single cost pool.000 20.168.880 B) \$1060.800.476 D) \$1.000 for 50.960.000 60. Jones is currently making these components in its own factory.105.000 of costs that will be eliminated if the components are no longer produced by Jones. C) \$17. 4 .000 The manufacturing overhead consists of \$32. Old Ham Company has approached Jones with a proposal to sell the company one of the components used to make widgets at a price of \$100.000 B) \$96. C) Managers must make a cost-benefit decision when determining how many cost pools are appropriate.

Average production was 20. what is the selling price per unit? A) \$210 B) \$180 C) \$5 D) \$150 5 .49.00. 30 At Caleb's Tights. D) \$0. to the nearest cent. 26 Which of the following is not a term used to describe the additional costs incurred as a result of selecting one decision alternative over another? A) sunk costs B) incremental costs C) relevant costs D) differential costs 27 A retailer purchased some trendy clothes that have gone out of style and must be marked down to 20% of the original selling price in order to be sold. the break-even point is 2. Utilities cost was \$8. Maximum Points 100 D) The costs in each of the cost pools should be homogeneous or similar.40. 25 Conan Company's monthly activity level ranged from a low of 17.250 in May and \$10. The variable cost per unit is \$20.00 B) \$62.50 29 Sunk costs: A) would include the cost of your tuition after the refund deadline has passed.000 and variable costs are \$30 per unit.000 units in October. is: A) \$0. B) Are costs that have been incurred in the past.000 units. C) are not relevant for decision making D) All of the above are correct.47. If fixed costs total \$300.000 units.25.500 in October.00 per unit at a volume of 100.50 C) There is not enough information in the problem to answer D) \$67. The variable utility cost per unit. B) \$0. C) \$0.Each Question 2 points. What would the price be if the company expected a volume of 120.000 units and used a markup of 50%? A) \$75.000 units per month. Which of the following is a sunk cost in this situation? A) the original selling price B) the original purchase price C) the anticipated profit D) the current selling price 28 A company has a total cost of \$50.000 units in May to a high of 26.

Each Question 2 points. A) True B) False 32 Incremental revenue is the additional revenue received as a result of selecting one decision alternative over another. Maximum Points 100 31 The margin of safety is the difference between the current level of sales and break-even sales. A) True B) False 6 .

C) opportunity cost.000 120.000 100. D) incremental benefit. Maximum Points 100 Use the following to answer questions 33-35: Crede Company sells a single product that has variable costs of \$10 per unit. Units Sold 80. B) sunk cost. if any information given was not relevant to the profit maximization decision? A) The variable costs per unit B) The quantities demanded C) All of the information was relevant D) The selling prices E) The total fixed costs 36 A company should never accept any orders below its normal selling price.000 across all levels of sales shown.000 110. 7 . A) True B) False 37 The value of benefits foregone by selecting one decision alternative over another is a(n) A) differential revenue. Fixed costs will be \$700.000 90.000 Price per unit \$35 \$33 \$31 \$30 \$28 33 What price should Crede charge to maximize profits? A) \$28 B) \$30 C) \$35 D) \$31 E) \$33 34 What price would Crede charge to maximize revenues? A) \$30 B) \$31 C) \$35 D) \$28 E) \$33 35 What.Each Question 2 points.

000 125.000 40 Cost-plus contracts are common in which of the following industries? A) defense contractors B) newspaper publishers C) soft drink bottlers D) manufactured home builders 41 The price which maximizes revenues is the price that should be selected.000 D) \$120.000 C) (\$23.00) Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Net income \$800. However. Variable costs will be the same as the current production and accepting the special order will not have any impact on the rest of the company's orders.000 \$180.000 110.000 Dye Company approaches Anderson with a special order for 15.000 150. Budget information regarding the current period is given below: Revenue (100.500) D) \$27.000 39 What is the incremental revenue associated with accepting the special order? A) \$170.000 B) \$112.000 units at \$8.000 235.Each Question 2 points.500 C) \$70. A) True B) False 42 Which of the following is a direct cost in relation to the cost of teaching the managerial accounting course you are currently taking? A) The cost of the registration system that allowed you to enroll in the class B) The cost of the paper that you receive as handouts for the class C) The cost of the financial aid department that helps you fund the cost of taking the class D) The cost of the room you are using for the class 8 .50 per unit. Anderson is operating at capacity and will incur an additional \$50. 38 What is the incremental income (loss) associated with accepting the special order? A) (\$14.000) B) \$36.000 units at a price of \$7.000 in fixed manufacturing overhead if the order is accepted. Maximum Points 100 Information for Questions 38-39 Anderson Manufacturing makes a single product.

If production and sales are expected to increase by 10% next month.000 pizzas last month and had fixed costs of \$6.000 units at \$12 per unit. 44 Total fixed costs divided by the contribution margin ratio equals the breakeven point. The company is currently selling 100. If demand falls to 80. A) True B) False 45 The Dynamaco Company uses cost-plus pricing with a 50% mark-up.95 46 The contribution margin is fixed costs minus total variable costs. which of the following statements is true? A) Total fixed costs will decrease. C) Total fixed costs will increase.000 units and the company wants to continue to earn a 50% return.55 C) \$13. B) Fixed cost per unit will decrease. A) True B) False 9 .Each Question 2 points.50 D) \$10. D) Fixed cost per unit will increase.75 B) \$14.000 in fixed costs annually. Each unit has a variable cost of \$6. what price should the company charge? A) \$12.000. In addition. Maximum Points 100 43 Paul's Pizza produced and sold 2. the company incurs \$200.

200 27.000 what markup percentage is the company using? A) 100% B) 4% C) 200% D) 50% 50 The high-low method fits a straight line to the data points that represent the highest and lowest levels of activity. Maximum Points 100 Use the following to answer questions 47-48: Taylor's Treasures has collected the following information over the last six months.100 D) \$5.000 B) \$4.600 26.000 13.00 48 Using the high-low method.000 units of a single product. what is the total fixed cost? A) \$1.600 26.000 15.25 B) \$2.500 C) \$23. Total products costs are \$14 per unit.000 18.000 26.450 26.22 D) \$2. what is the variable cost per unit? A) \$0. If total sales were \$560.000 12. A) True B) False 10 .Each Question 2 points.000 Total costs \$25. Month March April May June July August Units produced 10.500 47 Using the high-low method.56 C) \$0.000 12.600 49 A manufacturing company produces and sells 20.