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Acct. Extra Credit Questions
|When switching from a traditional costing system to an activity-based costing system that includes some batch-level costs:
|The unit product costs of high volume products typically change less than the unit product costs of low volume products.
|Variable manufacturing overhead costs are treated as period costs under both absorption and variable costing. (T/F)
|Which of the following costs is an example of a period rather than a product cost?
|Depreciation on production equipment.
|The contribution margin ratio is 25% for Grain Company and the break-even point in sales is $200,000. To obtain a target net operating income of $60,000, sales would have to be:
|A continuous (or perpetual) budget:
|Is a plan that is updated monthly or quarterly, dropping one period and adding another.
|Remains constant on a per unit basis as the number of units produced increases.
|Moncrief Inc. produces and sells a single product. The selling price of the product is $170.00 per unit and its variable cost is $62.90 per unit. The fixed expense is $300,951 per month. The break-even in monthly unit sales is closest to:
|Property taxes and insurance premiums paid on a factory building are examples of manufacturing overhead. (T/F)
|Net operating income reported under absorption costing will exceed net operating income reported under variable costing for a given period if:
|Production exceeds sales for that period.
|When a decision is made among a number of alternatives, the benefit that is lost by choosing one alternative over another is the:
|All other things being equal, if a division's traceable fixed expenses increase:
|The division's segment margin will decrease.
|Which of the following is the correct formula to compute the predetermined overhead rate?
|Estimated total manufacturing overhead costs divided by estimated total units in the allocation base.
|The master budget is a network consisting of many separate budgets that are interdependent. (T/F)
|Designing a new product is an example of a:
|The amount by which a company's sales can decline before losses are incurred is called the:
|Margin of safety.
|In activity-based costing, the total overhead cost in an activity cost pool can be computed by:
|Multiplying the total activity in the activity cost pool by the activity rate for the activity cost pool.
|Which of the following statements regarding fixed costs is incorrect?
|Expressing fixed costs on a per unit basis usually is the best approach for decision making.
|Joint costs are not relevant to the decision to sell a product at the split-off point or to process the product further. (T/F)
|A sunk cost is a cost that has already been incurred and that cannot be avoided regardless of what action is chosen. (T/F)
|The degree of operating leverage can be calculated as:
|Contribution margin divided by net operating income.
|The break-even point in unit sales is found by dividing total fixed expenses by:
|The contribution margin per unit.
|Zumpano sells a single product. The selling price of the product is $170.00 per unit and its variable cost is $73.10 per unit. The fixed expense is $125,001 per month. The break-even in dollar sales is closest to:
|Direct material costs are generally variable costs. (T/F)
|The budgeted amount of raw materials to be purchased is determined by:
|Adding the desired ending inventory of raw materials to the raw materials needed to meet the production schedule and subtracting the beginning inventory of raw materials.
|When there is a production constraint, a company should emphasize the products with:
|The highest contribution margin per unit of the constrained resource.
|In computing its predetermined overhead rate, Marple Company inadvertently left its indirect labor costs out of the computation. This oversight will cause:
|The Cost of Goods Manufactured to be understated.
|Costs which are always relevant in decision making are those costs which are:
|Budgeted production needs are determined by:
|Adding budgeted sales in units to the desired ending inventory in units and deducting the beginning inventory in units from this total.