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MacCloud Industries

Price: $6.00


1. MacCloud Industries has two divisions—Standard and Premium. Each division has hundreds of different types of tennis racquets and tennis products. The following information is available:
Standard Division Premium Division Total

Standard Division
Premium Division
Total
Sales
$400,000
$600,000
$1,000,000
Variable costs
  280,000
  360,000
Contribution margin
$120,000
$240,000
Total fixed costs
    $320,000

What is the break-even point in dollars?

$888,889
$941,117
$914,286
$115,200

2. Roosevelt Corporation has a weighted-average unit contribution margin of $40 for its two products, Standard and Supreme. Expected sales for Roosevelt are 40,000 Standard and 60,000 Supreme. Fixed expenses are $1,800,000. How many Standards would Roosevelt sell at the break-even point?
18,000
45,000
27,000
30,000

3. The degree of operating leverage

does not provide a reliable measure of a company's earnings volatility.
cannot be used to compare companies.
is computed by dividing total contribution margin by net income.
measures how much of each sales dollar is available to cover fixed expenses.

4. Warner Manufacturing reported sales of $2,000,000 last year (100,000 units at $20 each), when the break-even point was 75,000 units. Warner's margin of safety ratio is

125%.
25%.
33%.
75%.

5. In a sales mix situation, at any level of units sold, net income will be higher if

more higher contribution margin units are sold than lower contribution margin units.
more lower contribution margin units are sold than higher contribution margin units.
weighted-average unit contribution margin decreases.
more fixed expenses are incurred.

6. Moonwalker's CVP income statement included sales of 4,000 units, a selling price of $100, variable expenses of $60 per unit, and fixed expenses of $88,000. Net income is

$160,000.
$152,000.
$400,000.
$72,000.

7. Swanson Company has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Swanson incurs $4,440,000 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%. What will sales be for the Sporting Goods Division at the break-even point?

$7,800,000
$4,200,000
$3,600,000
$6,711,628

8. A company can sell all the units it can produce of either Product A or Product B but not both. Product A has a unit contribution margin of $16 and takes two machine hours to make and Product B has a unit contribution margin of $30 and takes three machine hours to make. If there are 3,000 machine hours available to manufacture a product, income will be

$6,000 more if Product A is made.
$6,000 less if Product B is made.
$6,000 less if Product A is made.
the same if either product is made.

9. In 2012, Hagar Corp. sold 3,000 units at $500 each. Variable expenses were $350 per unit, and fixed expenses were $455,000. The same variable expenses per unit and fixed expenses are expected for 2013. If Hagar cuts selling price by 4%, what is Hagar's break-even point in units for 2013?

3,159
3,360
3,500
3,033

10. The sales mix percentages for Novotna's Boston and Seattle Divisions are 70% and 30%. The contribution margin ratios are: Boston (40%) and Seattle (30%). Fixed costs are $1,110,000. What is Novotna's break-even point in dollars?

$388,500
$3,000,000
$3,363,636
$3,171,428

11. For Wilder Corporation, sales is $1,200,000 (6,000 units), fixed expenses are $360,000, and the contribution margin per unit is $80. What is the margin of safety in dollars?

$60,000
$840,000
$300,000
$540,000

12. Swanson Company has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Swanson incurs $4,440,000 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%. What will be the total contribution margin at the break-even point?

$4,480,000
$5,160,000
$4,440,000
$3,820,466

13. A shift from low-margin sales to high-margin sales

will always decrease net income.
will always decrease units sold.
may increase net income, even though there is a decline in total units sold.
will always increase net income.

14. What is the key factor in determining sales mix if a company has limited resources?
Contribution margin per unit of limited resource
Total contribution margin
The cost of limited resources
The amount of fixed costs per unit

Cunningham Walters

Price: $6.00


1. A company sells a product which has a unit sales price of $5, unit variable cost of $3 and total fixed costs of $180,000. The number of units the company must sell to break even is

360,000 units.
90,000 units.
60,000 units.
36,000 units.

2. Cunningham, Inc. sells MP3 players for $60 each. Variable costs are $40 per unit, and fixed costs total $90,000. What sales are needed by Cunningham to break even?

$270,000.
$120,000.
$360,000.
$225,000.

3. Cost behavior analysis is a study of how a firm's costs

respond to changes in the level of business activity.
respond to changes in the gross national product.
relate to general price level changes.
relate to competitors' costs.

4. Sales are $500,000 and variable costs are $350,000. What is the contribution margin ratio?

43%
30%
70%
Cannot be determined because amounts are not expressed per unit

5. If graphed, fixed costs that behave in a curvilinear fashion resemble a(n)

S-curve.
inverted S-curve.
straight line.
stair-step pattern.

6. Which of the following is not a plausible explanation of why variable costs often behave in a curvilinear fashion?

Availability of quantity discounts
Labor specialization
Overtime wages
Total variable costs are constant within the relevant range

7. If a company had a contribution margin of $750,000 and a contribution margin ratio of 40%, total variable costs must have been

$300,000.
$1,875,000.
$450,000.
$1,125,000.

8. The relevant range of activity refers to the

levels of activity over which the company expects to operate.
activity level where all costs are curvilinear.
geographical areas where the company plans to operate.
level of activity where all costs are constant.

9. Walters Corporation sells radios for $50 per unit. The fixed costs are $420,000 and the variable costs are 60% of the selling price. As a result of new automated equipment, it is anticipated that fixed costs will increase by $100,000 and variable costs will be 50% of the selling price. The new break-even point in units is:

16,800
20,800
20,600
21,000

10. Reliable Manufacturing wants to sell a sufficient quantity of products to earn a profit of $80,000. If the unit sales price is $10, unit variable cost is $8, and total fixed costs are $160,000, how many units must be sold to earn income of $80,000?

1,200,000 units
30,000 units
120,000 units
80,000 units

11. Hayduke Corporation reported the following results from the sale of 6,000 units in May: sales $300,000, variable costs $180,000, fixed costs $90,000, and net income $30,000. Assume that Hayduke increases the selling price by 10% on June 1. How many units will have to be sold in June to maintain the same level of net income?

5,160.
4,800.
5,400.
6,000.

12. How much sales are required to earn a target income of $160,000 if total fixed costs are $200,000 and the contribution margin ratio is 40%?

$600,000
$400,000
$900,000
$660,000

13. A mixed cost contains

both operating and nonoperating costs.
both retailing and manufacturing costs.
a variable element and a fixed element.
both selling and administrative costs.

14. Kaplan, Inc. produces flash drives for computers, which it sells for $20 each. The variable cost to make each flash drive is $13. During April, 700 drives were sold. Fixed costs for April were $2 per unit for a total of $1,400 for the month. How much is the monthly break-even level of sales in dollars for Kaplan?

$4,000
$200
$14,000
$8,400

15. A cost structure which relies more heavily on fixed costs makes the company
less sensitive to changes in sales revenue.
have a lower break-even point.
either more or less sensitive to changes in sales revenue, depending on other factors.
more sensitive to changes in sales revenue.


Kale Thompson Sneed CPAs

Price: $1.99


Kale Thompson, an auditor with Sneed CPAs, is performing a review of Strawser
Company’s inventory account. Strawser did not have a good year and top management is under
pressure to boost reported income. According to its records, the inventory balance at year-end
was $740,000. However, the following information was not considered when determining that
amount.
1. Included in the company’s count were goods with a cost of $250,000 that the company is holding
on consignment.The goods belong to Superior Corporation.
2. The physical count did not include goods purchased by Strawser with a cost of $40,000 that
were shipped FOB destination on December 28 and did not arrive at Strawser’s warehouse
until January 3.
3. Included in the inventory account was $17,000 of office supplies that were stored in the warehouse
and were to be used by the company’s supervisors and managers during the coming year.
4. The company received an order on December 29 that was boxed and was sitting on the loading
dock awaiting pick-up on December 31.The shipper picked up the goods on January 1 and
delivered them on January 6.The shipping terms were FOB shipping point.The goods had a
selling price of $40,000 and a cost of $30,000. The goods were not included in the count
because they were sitting on the dock.
5. On December 29 Strawser shipped goods with a selling price of $80,000 and a cost of $60,000
to District Sales Corporation FOB shipping point. The goods arrived on January 3. District
Sales had only ordered goods with a selling price of $10,000 and a cost of $8,000. However, a
sales manager at Strawser had authorized the shipment and said that if District wanted to ship
the goods back next week, it could.
6. Included in the count was $40,000 of goods that were parts for a machine that the company no
longer made. Given the high-tech nature of Strawser’s products, it was unlikely that these obsolete
parts had any other use. However, management would prefer to keep them on the
books at cost, “since that is what we paid for them, after all.”

Instructions
Prepare a schedule to determine the correct inventory amount. Provide explanations for each
item above, saying why you did or did not make an adjustment for each item.

walter payton 900000

Price: $1.99


In 2008, Walter Payton Company had net sales of $900,000 and cost of goods sold of
$540,000. Operating expenses were $230,000, and interest expense was $11,000. Payton prepares
a multiple-step income statement.

Instructions
(a) Compute Payton’s gross profit.
(b) Compute the gross profit rate.Why is this rate computed by financial statement users?
(c) What is Payton’s income from operations and net income?
(d) If Payton prepared a single-step income statement, what amount would it report for net
income?
(e) In what section of its classified balance sheet should Payton report merchandise inventory?

ACC560 Week4 Quiz

Price: $6.00


1. Which of the following is not a unit-level activity?
Inspecting
Drilling
Cutting
Sanding

2. The costs that are easiest to trace directly to products are
direct materials and direct labor.
direct labor and overhead.
direct materials and overhead.
None of these; all three costs are equally easy to trace to the product.

3. Which of the following is a batch-level activity?

Purchase ordering
Assembling
Engineering changes
Product design

4. Port Accounting performs two types of services, Audit and Tax. Port's overhead costs consist of computer support, $240,000; and legal support, $120,000. Information on the two services is:


Audit
Tax
Direct labor cost
$50,000
$100,000
CPU minutes
40,000
10,000
Legal hours used
200
800

Port Accounting performs tax services for Cathy Kane. Direct labor cost is $1,200; 600 CPU minutes were used; and 1 legal hour was used. What is the total cost of the Kane job using activity-based costing?

$4,080
$3,000
$4,200
$2,880

5. Non-value-added activities

increase both the cost and perceived value of a product.
cannot be differentiated from value-added activities.
involve those activities that are essential to a company's operations.
should be minimized or eliminated.

6. Which of the following is a limitation of activity-based costing?
Some arbitrary allocations continue
Less control over overhead costs
Poorer management decisions
More cost pools

7. An activity-based overhead rate is computed as follows:
actual overhead divided by estimated use of cost drivers.
estimated overhead divided by estimated use of cost drivers.
actual overhead divided by actual use of cost drivers.
estimated overhead divided by actual use of cost drivers.

8. The first step in activity-based costing is to

assign overhead costs to products, using overhead rates determined for each cost pool.
compute the activity-based overhead rate per cost driver.
identify and classify activities involved in the manufacture of specific products, and allocate overhead to cost pools.
identify the cost driver that has a strong correlation to the activity cost pool.

9. The primary benefit of ABC is it provides

more cost pools.
more accurate product costing.
enhanced control over overhead costs.
better management decisions.

10. The presence of any of the following factors would suggest a switch to ABC except when
production managers are ignoring data provided by the existing system.
product lines differ greatly in volume.
overhead costs constitute a minor portion of total costs.
the manufacturing process has changed significantly.

11. Sitwell Corporation manufactures titanium and aluminum tennis racquets. Sitwell's total overhead costs consist of assembly costs and inspection costs. The following information is available:

Cost
Titanium
Aluminum
Total Cost
Assembly
500 mach. hours
500 mach. hours
$45,000
Inspections
350
150
$75,000

2,100 labor hours
1,900 labor hours


Sitwell is considering switching from one overhead rate based on labor hours to activity-based costing.
Using activity-based costing, how much inspections cost is assigned to titanium racquets?

$22,500
$37,500
$52,500
$35,625

12. Wilder Company manufactures two models of its banjo, the Basic and the Luxury. The Basic model requires 10,000 direct labor hours and the Luxury requires 30,000 direct labor hours. The company produces 3,400 units of the Basic model and 600 units of the Luxury model each year. The company inspects one Basic for every 100 produced, and inspects one Luxury for every 10 produced. The company expects to incur $84,600 of total inspecting costs this year. How much of the inspecting costs should be allocated to the Basic model using ABC costing?

$71,910
$42,300
$21,150
$30,600

13. Which of the following is true about activity-based costing?

Eliminates arbitrary allocations
Same base as traditional costing
Less cost pools
More costly to use

14. A company incurs $2,700,000 of overhead each year in three departments: Ordering and Receiving, Mixing, and Testing. The company prepares 2,000 purchase orders, works 50,000 mixing hours, and performs 1,500 tests per year in producing 200,000 drums of Goo and 600,000 drums of Slime. The following data are available:
Department
Expected use of Driver
Cost
Ordering and Receiving
2,000
$800,000
Mixing
50,000
1,000,000
Testing
1,500
900,000
Production information for Slime is as follows:

Department
Expected use of Driver
Ordering and Receiving
1,600
Mixing
30,000
Testing
1,000

Compute the amount of overhead assigned to Slime.

$1,840,000
$1,350,000
$2,025,000
$1,645,234

15. Berg Company incurs $320,000 overhead costs each year in its three main departments, setup ($20,000), machining ($220,000), and packing ($80,000). The setup department performs 40 setups per year, the machining department works 5,000 hours per year, and the packing department packs 500 orders per year. Information about Berg's two products is as follows:


Product A1
Product B1
Number of setups
20
20
Machining hours
1,000
4,000
Orders packed
150
350
Number of products manufactured
600
400

Using ABC, how much overhead is assigned to Product B1 each year?

$256,000
$160,000
$242,000
$128,000