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Acct. EC
Acct. Extra Credit Questions
| Question | Answer |
|---|---|
| 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
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