1) As sales volume decreases in the relevant range, fixed costs per unit ________, but total fixed costs ________.A) increase; do not changeB) decrease: do not changeC) do not change; increaseD) do not change; decrease

2) Last year, XYZ Company sold 10,000 units that cost $40,000 to produce. This cost included $4,000 in fixed computer resource costs, $6,000 in fixed labor cost and $3.00 per unit for communications resource costs. XYZ Company expects to sell 20,000 units next year. Resource costs are expected to be in the same relevant range next year. What are the total estimated costs for next year?A) $70,000B) $75,000C) $80,000D) $84,000

3) Hot Company, a producer of salsa, has the following information:

Income tax rate 30%Selling price per unit $8.00Variable cost per unit $3.00Total fixed costs $90,000.00

The contribution margin per unit is ________.A) $2.00B) $3.00C) $5.00D) $8.00

4) Cherry Wood Company sells desks at $480 per desk. The variable costs are $372 per desk. Total fixed costs for the period are $456,840. The contribution margin ratio is ________.A) 22.5%B) 29.0%C) 40.6%D) 77.5%

5) Company ZZZ has the following information available:Selling price per unit $100Variable cost per unit $45Fixed costs per year $420,000Expected sales per year 20,000 units

What is the expected operating income for a year?A) $480,000B) $680,000C) $1,580,000D) none of the above

6) A company rents a machine to be used in operations. The rental agreement calls for a flat rent payment of $2,000 per month plus $0.10 for each hour the machine is used. This is an example of a ________.A) fixed cost

B) variable costC) mixed costD) step cost

7) Merkey Motel's cost function is given as:Y = $50,000 + $7.50XWhere:Y = annual custodial costX = number of guest-days of occupancy

In the current year, Merkey Motel has 8,000 guest days. In the next year, Merkey Motel expects an occupancy level of 10,000 guest days. (All costs next year will remain in the same relevant range as the current year.) What is the expected fixed custodial cost for next year?A) $7.50B) $50,000C) $62,500D) $75,000

8) Sunrise Motel's cost function is given as:

Y = $50,000 + $7.50XWhere:Y = annual custodial costX = number of guest-days of occupancy

In the current year, Sunrise Motel has 8,000 guest days. In the next year, Sunrise Motel expects an occupancy level of 10,000 guest days. (All costs next year will remain in the same relevant range as the current year.) What is the expected total custodial cost for next year?A) $50,000B) $62,500C) $125,000D) $137,500

9) Which statement is FALSE?A) A cost may be defined as a sacrifice or giving up of resources for a particular purpose.B) Costs are frequently measured by the monetary units that must be paid for goods and services.C) Only manufacturing firms need some form of cost accounting.D) The first step in a cost accounting system is the collection of costs by some category.

10) Which of the following costs is a direct cost to a manufactured product?A) depreciation expense on factory equipment used for the productB) the wages of an assembly worker who works specifically on the productC) accountants who accumulate the costs of the productD) a factory supervisor who oversees the production of several different types of products

11) The following information was taken from the accounting records of Jackson Manufacturing Company:

Direct materials purchased $95,000Direct materials used 76,000

Direct manufacturing labor costs 10,000Indirect manufacturing labor costs 22,000Sales salaries 35,000Miscellaneous factory expenses 5,000Administrative expenses 40,000Finished goods inventory, beginning 10,000Finished goods inventory, end 12,000Work in process inventory, beginning 0Work in process inventory, end 0

What is Cost of Goods Manufactured?A) $111,000B) $113,000C) $130,000D) $132,00012) The following information was obtained from the accounting records of Stevie Nicks Incorporated:

Direct materials purchased $80,000Direct materials used 76,000Direct manufacturing labor costs 15,000Indirect manufacturing labor costs 13,000Selling expenses 16,000Administrative expenses 22,000Factory utilities costs 23,000Rental cost of factory machines 100,000Work in process inventory, beginning 0Work in process inventory, end 0Finished goods inventory, beginning 10,000Finished goods inventory, end 30,000

What is Cost of Goods Sold?A) $207,000B) $211,000C) $227,000D) $231,000

13) Information is relevant in business decisions if it is a(n) ________.A) expected future cost or it differs among alternativesB) expected future cost and it differs among alternativesC) historical cost and it differs among alternativesD) expected future cost that differs from a past cost

14) Santa Company reported the following information for its only product:

Direct materials used $450,000Direct labor 170,000Indirect manufacturingfixed 80,000Indirect manufacturingvariable 20,000Selling and administrativevariable 40,000Selling and administrativefixed 10,000

Units produced and sold 40,000

Santa Company uses the absorption approach. What is the product cost per unit?

A) $13.00B) $13.50C) $14.75D) $18.00

15) Arizona Company has the following data about its only product:

Direct materials used $270,000Direct labor 180,000Indirect manufacturingfixed 130,000Selling and administrativefixed 150,000Indirect manufacturingvariable 120,000Selling and administrativevariable 60,000Selling price(per unit) 99

Units produced and sold 30,000

Arizona Company uses the contribution approach. What is the operating income?A) $2,060,000B) $2,120,000C) $2,240,000D) $2,970,000

16) The key to determining the financial difference between two alternative courses of action is to identify the ________.A) opportunity cost of one alternativeB) joint cost of both alternativesC) differential costs and revenuesD) joint cost of one alternative

17) The term opportunity cost applies to a resource that a company ________.A) is thinking about purchasingB) already ownsC) has committed to purchaseD) already owns or has committed to purchase

18) Beth is considering leaving her current position to open a coffee shop. Beth's current annual salary is $56,000. Beth is going to invest $200,000 of her own money to start the business. Estimated annual revenue from the new business is $250,000. What is the outlay cost associated with the decision to open the coffee shop?A) $50,000B) $56,000C) $200,000D) $250,000

19) Budgets are generally more effective if they are ________.A) created with the active participation of all affected employeesB) understood and accepted by affected managersC) supported by top managementD) all of the above

20) Which of the following statements about long-range plans is FALSE?A) Long-range plans provide forecasted financial statements for five to ten year periods.B) Long-range plans guide day-to-day operations.C) Companies coordinate long-range plans with capital budgets.D) A decision made during long-range planning is the acquisition of a plant building.

21) Full Hotels operates a 100-room property in Naples, Florida. Occupancy rates average 95% in March and 80% in April. The average room rental rate is $150 per night. Expected revenues for March are ________.A) $372,000B) $418,500C) $427,500D) $441,750

22) The static budget is based on the ________ level of output and the flexible budget is based on the ________ level of output.A) actual; expectedB) expected; actualC) expected; plannedD) actual; projected

23) Yesterday Company has the following information:

Actual operating loss at 5,000 units $(11,000)Budgeted operating income at 5,000 units $5,000Budgeted operating income at 10,000 units $12,000Planned level of operations 10,000 unitsActual level of operations 5,000 units

Assume units of output is the cost driver for product costs. What is the static budget variance for operating income?A) $11,000 UnfavorableB) $12,000 UnfavorableC) $23,000 UnfavorableD) $23,000 Favorable

24) Today Company has the following information:

Actual operating loss at 5,000 units $(11,000)Budgeted operating income at 5,000 units $5,000Budgeted operating income at 10,000 units $12,000Planned level of operations 10,000 unitsActual level of operations 5,000 units

Assume the cost driver of product costs is units of production. What is the flexible budget variance for operating income?A) $5,000 UnfavorableB) $11,000 UnfavorableC) $16,000 UnfavorableD) $16,000 Favorable

25) For most organizations, effective performance measurement requires ________ and ________ measures of performance.

A) rolling; staticB) flexible; staticC) strategic; continuousD) financial; nonfinancial

26) Product profitability is a performance measure used to monitor the achievement of the ________ goal.A) customer satisfactionB) business process improvementC) employee turnoverD) financial strength

27) Responsibility accounting includes ________.A) identifying what parts of the organization have primary responsibility for each actionB) developing performance measures and targetsC) designing reports of measures by responsibility centerD) all of the above

28) The following information pertains to the Lower Division of Peapod Company:

Net Sales $25,000Variable Costs: Cost of merchandise sold 7,200 Operating expenses 2,700Fixed costs: Controllable by segment manager 2,400 Controllable by others 1,000Unallocated costs 600

The contribution controllable by a segment manager is ________.A) $7,100B) $7,700C) $11,100D) $12,700

29) Which of the following statements is NOT a benefit of decentralization?A) Lower-level managers are able to make faster and better decisions on local decisions than higher-level managers.B) By delegating decision-making authority to local managers, higher-level managers free up time to deal with larger issues and fundamental strategy.C) Local managers who are given more authority often have greater motivation and job satisfaction.D) Managers in decentralized units may spend time negotiating transfer prices for goods transferred between units.30) The decentralization of organizations has several disadvantages that include ________.A) lower level managers can make faster decisions than higher level managers.B) innovative ideas are less likely to be shared in decentralized organizations.C) local managers are given the opportunity to develop decision making skills so they can move up in the organization.D) higher level managers are given more time to pursue strategy issues.

31) Frazier Company's revenues are $300 on invested capital of $240. Expenses are currently 84% of sales. If Frazier Company can reduce its expenses to 70% of sales, return

on investment will be ________.A) 20%B) 37.5%C) 70%D) 93.75%

32) A manager is considering the following investment:

Estimated capital investment $270,000Estimated useful life 3 yearsEstimated disposal value in 3 years $10,000Estimated annual savings in cash operating costs $150,000Minimum desired rate of return 12%Present value of ordinary annuity, 3 periods at 12% 2.4018Present value of one, 3 periods at 12% 0.7118

Assume straight-line depreciation is used. Ignore income taxes. The net present value of the investment is ________.A) $50,310B) $57,428C) $90,270D) $97,388

33) Budgeted cost rates are used for allocating variable costs of service departments to user departments because ________.A) it protects user departments from intervening price fluctuationsB) it protects user departments from inefficiencies in service departmentsC) it protects managers in producing departments from uncontrollable costsD) all of the above

34) James Company has two production departments called Mixing and Finishing. The maintenance department serves both production departments. Budgeted fixed costs for the maintenance department are $30,000. Budgeted variable costs for the maintenance department are $5.00 per labor hour. Actual maintenance department costs are $36,000 fixed and $100,000 variable. Other relevant data follow:

Mixing Finishing Capacity available 20,000 labor hours 15,000 labor hoursCapacity used 15,000 labor hours 9,000 labor hours

The amount of variable maintenance department costs allocated to the Mixing Department should be ________.A) $48,000B) $62,500C) $75,000D) $100,000

35) The budgeted factory overhead rate is computed as ________.A) actual factory overhead divided by actual production in unitsB) actual factory overhead divided by actual cost driver activityC) budgeted factory overhead divided by actual cost driver activityD) budgeted factory overhead divided by budgeted cost driver activity

36) USC Company has the following information available:Budgeted factory overhead $90,000

Actual factory overhead $80,000Budgeted direct labor hours 20,000Actual direct labor hours 21,000

Assume direct labor hours are the cost driver of factory overhead costs. The budgeted factory overhead rate is ________.A) $3.57 per direct labor hourB) $3.81 per direct labor hourC) $4.00 per direct labor hourD) $4.50 per direct labor hour

37) Ralph Company uses a job-order costing system and has the following data available:

Beginning direct-materials inventory $26,000Beginning work-in-process inventory 64,000Beginning finished goods inventory 58,000Direct materials purchased on account 148,000Direct materials requisitioned 90,000Direct labor cost incurred 130,000Factory overhead incurred 146,000Cost of goods completed 292,000Cost of goods sold 256,000Overhead application rate(based on direct labor cost) 125%

What is the cost of the ending inventory of Direct Materials?A) $84,000B) $90,000C) $108,000D) $174,000