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1. Walk Manufacturing gathered the following data about the three products that it produces: Product Present Sales Value Estimated Additional Processing Costs Estimated Sales if Processed Further A $24,000 $16,000 $42,000 B $28,000 $10,000 $36,000 C $22,000 $6,000 $32,000 Which of the products should not be processed further? Answer Product A Product B Product C Products A and C 2 points Question 2 1. Cara Industries incurred the following costs for 50,000 units:

Variable Costs $90,000 Fixed Costs $120,000 Cara has received a special order from a foreign company for 5,000 units. There is sufficient capacity to fill the order without jeopardizing regular sales. Filling the order will require spending an additional $4,250 for shipping. If Cara wants to earn $4,000 on the order, what should the unit price be? Answer $1.65 $5.85 $2.60 $3.45 2 points Question 3 1. Opportunity cost is usually Answer a standard cost. a potential benefit. a sunk cost. included as part of cost of goods sold. 2 points Question 4 1. It costs Ross Co. $24 of variable and $10 of fixed costs to produce one bathroom scale which normally sells for $70. A foreign wholesaler offers to purchase 2,000 scales at $30 each. Ross would incur special shipping costs of $2 per scale if the order were accepted. Ross has sufficient unused capacity to produce the 2,000 scales. If the special order is accepted, what will be the effect on net income? Answer $8,000 increase $8,000 decrease $12,000 decrease $60,000 increase 2 points Question 5 1. Brave Industries is considering buying a machine for $180,000 with an estimated life of ten years and no salvage value. The straight-line method of depreciation will be used. The machine is expected to generate net income of $12,000 each year. The cash payback on this investment is Answer 15 years. 10 years. 6 years. 3 years. 2 points Question 6 1. If a company has limited resources, the key factor in performing incremental analysis is Answer contribution margin.

limited resources required. contribution margin per unit of limited resource. none of these. 2 points Question 7 1. Roger Industries is considering two capital investment proposals. Estimates regarding each project are provided below: Project XR8 Project AAA Initial Investment $800,000 $1,200,000 Annual Net Income $40,000 $84,000 Net Annual Cash Inflow $200,000 $284,000 Estimated Useful Life 5 years 6 years Salvage Value 0 0 The company requires a 10% rate of return on all new investments. Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.890 3.791 3.696 3.605 6 4.486 4.355 4.231 4.111 The annual rate of return for Project XR8 is Answer 5%. 10%. 25%. 50%. 2 points Question 8 1. In incremental analysis, Answer costs are not relevant if they change between alternatives. all costs are relevant if they change between alternatives. only fixed costs are relevant. only variable costs are relevant. 2 points Question 9 1. Begley, Inc. is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine Price $250,000 $500,000 Accumulated Depreciation $75,000 -0Remaining Useful Life 10 years -0Useful Life -0- 10 years Annual Operating Costs $200,000 $150,000 If the old machine is replaced, it can be sold for $20,000. The net advantage (disadvantage) of replacing the old machine is Answer

$15,000 $20,000 $(5,000) $(50,000) 2 points Question 10 1. Debra Manufacturing has identified that the cost of a new computer will be $120,000, but with the use of the new computer, net income will increase by $10,000 a year. If depreciation expense is $6,000 a year, the cash payback period is: Answer 30 years. 20 years. 12 years. 7.5 years. 2 points Question 11 1. A company is considering purchasing factory equipment that costs $640,000 and is estimated to have no salvage value at the end of its 8-year useful life. If the equipment is purchased, annual revenues are expected to be $180,000 and annual operating expenses exclusive of depreciation expense are expected to be $76,000. The straight-line method of depreciation would be used. The cash payback period on the equipment is Answer 13.3 years. 8.0 years. 6.2 years. 3.1 years. 2 points Question 12 1. The rate of return that management expects to pay on all borrowed and equity funds is the Answer cost of capital. cutoff rate. hurdle rate. minimum rate. 2 points Question 13 1. In a make-or-buy decision, opportunity costs are Answer added to the make total cost. deducted from the make total cost. added to the buy total cost. ignored. 2 points Question 14

1. Cost behavior analysis is a study of how a firm s costs Answer relate to competitors costs. relate to general price level changes. respond to changes in the level of business activity. respond to changes in the gross national product. 2 points Question 15 1. CVP analysis does not consider Answer level of activity. fixed cost per unit. variable cost per unit. sales mix. 2 points Question 16 1. Pascal, Inc. is planning to sell 600,000 units for $1.50 per unit. The contribution margin ratio is 20%. If Pascal will break even at this level of sales, what are the fixed costs? Answer $180,000. $420,000. $600,000. $720,000. 2 points Question 17 1. Gregs Golf Carts produces two models: Model 24 has sales of 500 units with a contribution margin of $40 each; Model 26 has sales of 350 units with a contribution margin of $50 each. If sales of Model 26 increase by 200 units, how much will profit change? Answer $10,000 increase $17,500 increase $27,500 increase $28,000 increase 2 points Question 18 1. A company sells a product which has a unit sales price of $5, unit variable cost of $3 and total fixed costs of $150,000. The number of units the company must sell to break even is Answer 75,000 units. 30,000 units. 300,000 units. 50,000 units. 2 points

Question 19 1. Fixed costs are $900,000 and the variable costs are 75% of the unit selling price. What is the break-even point in dollars? Answer $2,100,000 $2,700,000 $3,600,000 $1,200,000 2 points Question 20 1. Variable costs for Abbey, Inc. are 25% of sales. Its selling price is $60 per unit. If Abbey sells one unit more than break-even units, how much will profit increase? Answer $45 $15 $20 $240 2 points Question 21 1. Cost activity indexes might help classify costs as Answer temporary. permanent. variable. transient. 2 points Question 22 1. Which one of the following is a name for the range over which a company expects to operate? Answer Mixed range Fixed range Variable range Relevant range 2 points Question 23 1. The break-even point cannot be determined by Answer computing it from a mathematical equation. computing it using contribution margin. reading the prior years financial statements. deriving it from a CVP graph. 2 points Question 24

1. In applying the high-low method, what is the unit variable cost? Month Miles Total Cost January 80,000 $96,000 February 50,000 $80,000 March 70,000 $94,000 April 90,000 $140,000 Answer $1.44 $1.50 $1.60 Cannot be determined from the information given. 2 points Question 25 1. A CVP graph does not include a Answer variable cost line. fixed cost line. sales line. total cost line. 2 points Question 26 1. If a company had a contribution margin of $300,000 and a contribution margin ratio of 40%, total variable costs must have been Answer $450,000. $180,000. $750,000. $120,000. 2 points Question 27 1. Which of the following is not a management function? Answer Constraining Planning Controlling Directing 2 points Question 28 1. Managerial accounting is applicable to Answer service entities. manufacturing entities. not-for-profit entities.

all of these. 2 points Question 29 1. Which one of the following costs would not be inventoriable? Answer Period costs Factory insurance costs Indirect materials Indirect labor costs 2 points Question 30 1. Assuming the cost of direct materials used is $1,300,000, compute the total manufacturing costs using the information below. Raw materials inventory, January 1 $30,000 Raw materials inventory, December 31 $60,000 Work in process, January 1 $27,000 Work in process, December 31 $18,000 Finished goods, January 1 $60,000 Finished goods, December 31 $48,000 Raw materials purchases $1,300,000 Direct labor $690,000 Factory utilities $225,000 Indirect labor $75,000 Factory depreciation $500,000 Operating expenses $630,000 Answer $2,790,000. $2,781,000. $2,490,000. $3,420,000. 2 points Question 31 1. In an analogous sense, external user is to internal user as generally accepted accounting principles are to Answer timely. special-purpose. relevance to decision. SEC. 2 points Question 32 1. Cost of goods sold Answer only appears on merchandising companies income sta tements. only appears on manufacturing companies income statements.

appears on both manufacturing and merchandising companies income statements. is calculated exactly the same for merchandising and manufacturing companies. 2 points Question 33 1. Which of the following are period costs? Answer Raw materials Direct materials and direct labor Direct labor and manufacturing overhead Selling expenses 2 points Question 34 1. The subtotal, Cost of goods manufactured appears on Answer a merchandising companys income statement. a manufacturing companys income statement. both a manufacturing and a merchandising companys income statement. neither a merchandising nor a manufacturing companys income statement. 2 points Question 35 1. The wages of a timekeeper in the factory would be classified as Answer a period cost. direct labor. indirect labor. compliance costs. 2 points Question 36 1. Assuming that the cost of goods manufactured is $2,760,000 compute the cost of goods sold using the following information. Raw materials inventory, January 1 $30,000 Raw materials inventory, December 31 $60,000 Work in process, January 1 $27,000 Work in process, December 31 $18,000 Finished goods, January 1 $60,000 Finished goods, December 31 $48,000 Raw materials purchases $1,300,000 Direct labor $690,000 Factory utilities $225,000 Indirect labor $75,000 Factory depreciation $500,000 Operating expenses $630,000 Answer $2,769,000.

$2,712,000. $2,748,000. $2,772,000. 2 points Question 37 1. The function that pertains to keeping the activities of the enterprise on track is Answer planning. directing. controlling. accounting. 2 points Question 38 1. Which of the following statements about internal reports is not true? Answer The content of internal reports may extend beyond the double-entry accounting system. Internal reports may show all amounts at market values. Internal reports may discuss prospective events. Most internal reports are summarized rather than detailed. 2 points Question 39 1. Which of the following is not another name for the term manufacturing overhead? Answer Factory overhead Pervasive costs Burden Indirect manufacturing costs 2 points Question 40 1. Which cost is not charged to the product under variable costing? Answer Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 2 points Question 41 1. Hinge Manufacturings cost of goods sold is $420,000 variable and $240,000 fixed. The companys selling and administrative expenses are $300,000 variable and $360,000 fixed. If the compan ys sales is $1,680,000, what is its net income? Answer $360,000 $960,000

$1,020,000 $1,080,000 2 points Question 42 1. In 2012, Teller Company sold 3,000 units at $300 each. Variable expenses were $210 per unit, and fixed expenses were $120,000. What was Tellers 2012 net income? Answer $150,000 $270,000 $630,000 $900,000 2 points Question 43 1. Companies that use just-in-time processing techniques will Answer have greater differences between absorption and variable costing net income. have smaller differences between absorption and variable costing net income. not be able to use absorption costing. not be able to use variable costing. 2 points Question 44 1. Capitol Manufacturing sells 2,000 units of Product A annually, and 3,000 units of Product B annually. The sales mix for Product A is Answer 40%. 60%. 67%. cannot determine from information given. 2 points Question 45 1. For Buffalo Co., at a sales level of 5,000 units, sales is $75,000, variable expenses total $40,000, and fixed expenses are $21,000. What is the contribution margin per unit? Answer $2.80 $7.00 $8.00 $15.00 2 points Question 46 1. Sprinkle Co. sells its product for $60 per unit. During 2012, it produced 60,000 units and sold 50,000 units (there was no beginning inventory). Costs per unit are: directmaterials $15, direct labor $9, and variable overhead $3. Fixed costs are: $720,000 manufacturing overhead, and $90,000 selling and administrative expenses. Under absorption costing, what amount of fixed overhead is deferred to a future period?

Answer $30,000 $120,000 $150,000 $720,000 2 points Question 47 1. For Pierce Company, sales is $500,000, variable expenses are $310,000, and fixed expenses are $140,000. Pierces contribution margin ratio is Answer 10%. 28%. 38%. 62%. 2 points Question 48 1. Variable costing Answer is used for external reporting purposes. is required under GAAP. treats fixed manufacturing overhead as a period cost. is also known as full costing. 2 points Question 49 1. What is the key factor in determining sales mix if a company has limited resources? Answer Contribution margin per unit of limited resource The amount of fixed costs per unit Total contribution margin The cost of limited resources 2 points Question 50 1. For Franklin, Inc., sales is $2,000,000, fixed expenses are $600,000, and the contribution margin ratio is 36%. What is net income? Answer $120,000 $216,000 $504,000 $720,000 2 points Question 51 1. Which cost is charged to the product under variable costing? Answer

Variable manufacturing overhead Fixed manufacturing overhead Variable administrative expenses Fixed administrative expenses 2 points Question 52 1. Ramirez Corporation sells two types of computer chips. The sales mix is 30% (Q-Chip) and 70% (Q-Chip Plus). QChip has variable costs per unit of $36 and a selling price of $60. Q-Chip Plus has variable costs per unit of $42 and a selling price of $78. Ramirezs fixed costs are $540,000. How many units of Q -Chip would be sold at the breakeven point? Answer 5,063 5,869 9,000 11,813

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