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Acct. EC

Acct. Extra Credit Questions

QuestionAnswer
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) False
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: $440,000
A continuous (or perpetual) budget: Is a plan that is updated monthly or quarterly, dropping one period and adding another.
Variable cost: 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: 2,810 units
Property taxes and insurance premiums paid on a factory building are examples of manufacturing overhead. (T/F) True
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: Opportunity cost.
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) True
Designing a new product is an example of a: Product-level activity.
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) True
A sunk cost is a cost that has already been incurred and that cannot be avoided regardless of what action is chosen. (T/F) True
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: $219,300
Direct material costs are generally variable costs. (T/F) True
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: Avoidable
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.
Created by: sfrase