Professional Documents
Culture Documents
They are
intended for you to become familiar with the types and formats of questions that
you will be asked on the upcoming exam. Studying ONLY these sample questions
will not adequately prepare you for the exam. You should also review notes,
homework problems, end-of-chapter review questions, and other materials that
your instructor provided you.
Volunteers Company had the following income statement for the most recent year:
Refer to the original data, what will be the operating income (loss), if the selling price
decreases by $3 and the sales volume increases by 50%?
A.$22,500
B.($27,500)
C.$29,750
D.($32,850)
Refer to the original data, how many units of the product must be sold for Volunteers to
realize an operating income of $30,000?
A.19,000
B.20,000
C.22,000
D.23,000
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The Bulldogs Company has the following sales projection for November:
The Tigers Company sells two products with the following data:
Based on the current sales mix, the breakeven point for the company is
A. $200,000
B. $175,000
C. $120,000
D. $150,000
Based on the current sales mix, if total sales increase by $30,000 per month, by how much
will the company’s operating income increase?
A.$11,250
B.$60,000
C.$12,500
D.$90,000
For a company that has an operating leverage that is equal to 5, if sales increase 20%
operating income will
A.increase 20%
B.increase 100%
C.decrease 20%
D.decrease 100%
1
If a company decreases the variable expense per unit while other costs and selling price
remain unchanged
A. contribution margin per unit will decrease.
B. contribution margin per unit will increase.
C. breakeven point will increase.
D. net income will decrease.
Which of the following formulas is used to calculate the break-even point in terms of sales
dollars?
A. Fixed expenses/Unit contribution margin
B. Variable expenses/Contribution margin ratio
C. Fixed expenses/Contribution margin ratio
D. Net operating income/Unit contribution margin
Gamecocks Store, a retailer, has the following data relating to the month of October:
In an income statement prepared using the absorption costing method, which of the following
terms should appear?
1
Total fixed costs normally would be shown separately under an income statement prepared
under
Absorption Variable
costing costing
A. No No
B. No Yes
C. Yes Yes
D. Yes No
Gamecocks Store, a retailer, has the following data relating to the month of October:
What is the amount of sales that Gamecocks will have to achieve at the break-even point?
A.$500,000
B.$300,000
C.$250,000
D.$180,000
What is the amount of sales that Gamecocks will have to achieve to realize a target net
income of $90,000?
A.$475,000.
B.$725,000
C.$300,000.
D.$190,000.
The term “gross profit” appears on an income statement prepared under which of the costing
methods?
A. Direct costing only.
B. Both direct costing and absorption costing.
C. Absorption costing only.
D. Neither direct costing nor absorption costing.
On an income statement prepared under the variable costing method, total contribution margin
can be obtained by
A. Subtracting cost of goods sold from sales.
B. Adding operating income to total fixed costs.
C. Adding operating income to total variable costs.
D. Subtracting total fixed costs from sales.
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QUESTIONS 19 THROUGH 23 ARE BASED ON THE FOLLOWING INFORMATION.
The 49ers Company makes a single product---a bobbling head miner. The product is sold globally via
the Internet to Charlotte fans all over the world. Data for last month’s operations follow:
What is the amount of inventory cost per unit computed under the variable costing method?
A. $30.
B. $25.
C. $22.
D. $19.
What is the amount of inventory cost per unit computed under the absorption costing method?
A.$30.
B.$21
C.$25.
D.$19.
What is the amount of total selling and administrative expenses that would appear on an
income statement prepared using the absorption costing method?
A.$146,000
B.$136,000
C.$240,000
D.$360,000
What is the amount of operating income computed under the variable costing method?
A.$64,000
B.$40,000.
C.$180,000.
D.$120,000.
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What is the amount of operating income computed under the absorption costing method?
A. $44,000.
B. $60,000.
C. $180,000.
D. $120,000.
Which of the following statements is true? In general, when there is an increase in inventory
during a period
A. The amount of operating income computed under absorption costing will be lower than
the amount of operating income computed under direct costing.
B. The amount of operating income computed under absorption costing will be higher than
the amount of operating income computed under direct costing.
C. The amount of contribution margin computed under absorption costing will be lower
than the amount of contribution margin computed under variable costing.
D. The amount of gross margin computed under variable costing will be higher than the
amount of gross margin computed under absorption costing.
Which of the following income statement formats is generally used for external reporting?
A. Variable costing format.
B. Absorption costing format.
C. Flexible budget format.
D. Contribution format.
A “bucket” in which costs are accumulated that relate to a single activity measure in the
activity-based costing system is commonly known as:
A. An activity measure.
B. An activity cost pool.
C. A cost driver.
D. A duration driver.
1
QUESTIONS 28 AND 29 ARE BASED ON THE FOLLOWING INFORMATION
Crimson Tide Company has two products: A and B. The annual production and sales of Product A is
500 units and of Product B is 1,000 units. The company has traditionally used direct labor-hours as
the basis for applying all manufacturing overhead to products. Product A requires 0.4 direct labor
hours per unit and Product B requires 0.2 direct labor hours per unit. The total estimated overhead for
next period is $68,000.
The predetermined overhead rate under the traditional costing system is closest to:
A.$11.71 per direct labor hour.
B.$38.69 per direct labor hour.
C.$170.00 per direct labor hour
D.$23.87 per direct labor hour.
The overhead cost per unit of Product B under the traditional costing system is closest to:
A.$2.34.
B.$7.74.
C.$4.77.
D.$34.00.
1
QUESTIONS 33 AND 34 ARE BASED ON THE FOLLOWING DATA:
Gators Manufacturing Company uses an activity-based costing system with three activity cost
pools: Order Size; Customer Support; and Other. The company has provided the following data
concerning its costs and its activity based costing system:
Costs:
Manufacturing overhead $600,000
Selling and administrative expenses $300,000
Total $900,000
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining
costs.
How much cost, in total, would be allocated to the “Order Size” activity cost pool?
A.$510,000
B.$600,000
C.$240,000
D.$700,000
How much cost, in total, would be to the “Customer Support” activity cost pool?
A.$400,000
B.$305,000
C.$315,000
D.$700,000
The Blue Raiders Company is a wholesale distributor that uses activity-based costing for all of its
overhead costs. The company has identified two activities: Filling Orders activity and Customer
Support activity. The company has the following budgeted data:
The Rebels Bank & Trusts Company (RBTC) uses an activity-based costing system. For the
year 2007, RBTC has the following activity rates:
During October 2007, Phillip Fulmer, a new customer, opened an account with the bank
and used the following services:
Made 20 deposits
Made 30 withdrawals
Applied for a $5,000 loan (considered “other transaction.”)
What is the bank’s total cost for servicing Phil during the month of October?
A. $20
B. $30
C. $50
D. $150
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SUGGESTED ANSWERS
Q A Q A
1 A 28 C
2 B 29 D
3 D 30 B
4 B 31 D
5 C 32 A
6 C 33 A
7 A 34 C
8 B 35 C
9 B 36 A
10 C 37 D
11 C
12 A
13 A
14 B
15 C
16 A
17 C
18 B
19 D
20 B
21 B
22 B
23 A
24 B
25 B
26 B
27 D