# 1. mardist corporation has sales of \$100,000

1.   Mardist Corporation has sales of \$100,000, variable expenses of \$75,000, fixed expenses of \$30,000,and a net loss of \$5,000. How much would Mardist have to sell to achieve a profit of 10% of sales?A. \$187,500B. \$225,500C. \$180,000D. \$200,000

2. Use the following information to answer this question.Gargymal Company would like to estimate the variable and fixed components of its electrical costs and hascompiled the following data for the past five months of operations.Using the high-low method of analysis, the estimated variable cost per machine hour for electricity isclosest to which of the following?MachineHoursElectricalCostAugust 1,000 \$1,620September 900 \$1,510October 1,500 \$1,870November 2,000 \$1,950December 1,300 \$1,730A. \$0.40B. \$1.68C. \$2.50D. \$0.98

3. Use the following information to answer this question.Callaham Corporation is a wholesaler that sells a single product. Management has provided the followingcost data for two levels of monthly sales volume. The company sells the product for \$115.80 per unit.Sales volume (units)The best estimate of the total variable cost per unit is4,000 5,000Cost of sales \$338,000 \$422,500Selling and administrative costs \$89,600 \$106,000A. \$84.50.B. \$105.70.C. \$106.90.D. \$100.90.

4. Viren Corporation has provided the following data from its activity-based costing system:The company makes 240 units of product T91H a year, requiring a total of 550 machine hours, 90 orders,and 40 inspection hours per year. The product’s direct materials cost is \$16.98 per unit, and its direct laborcost is \$12.09 per unit. According to the activity-based costing system, the average cost of product T91H isclosest to _______ per unit.Activity Cost Pool Total Cost Total ActivityAssembly \$387,000 25,000 machine-hoursProcessing orders \$68,510 1,700 ordersInspection \$129,117 1,930 inspection-hoursA. \$90.81B. \$75.70C. \$79.66D. \$29.07

5. Indiana Corporation produces a single product that it sells for \$9 per unit. During the first year ofoperations, 100,000 units were produced, and 90,000 units were sold. Manufacturing costs and selling andadministrative expenses for the year were as follows:What was Indiana Corporation’s net operating income for the year using variable costing?Fixed Costs Variable CostsRaw materials \$1.75 per unitproducedDirect labor \$1.25 per unitproducedFactoryoverhead \$100,000 \$0.50 per unitproducedSelling andadministrative \$70,000 \$0.60 per unitsoldA. \$371,000

B. \$281,000C. \$271,000D. \$181,000

6. Use the following information to answer this question.Harris Company produces a single product. Last year, Harris manufactured 17,000 units and sold 13,000units. Production costs for the year were as follows:Sales were \$780,000 for the year, variable selling and administrative expenses were \$88,400, and fixedselling and administrative expenses were \$170,000. There was no beginning inventory. Assume that directlabor is a variable cost.The contribution margin per unit wasProduction Cost DataDirect materials \$153,000Direct labor \$110,500Variable manufacturing overhead \$204,000Fixed manufacturing overhead \$255,000A. \$27.30.B. \$32.50.C. \$17.50.D. \$25.70.

7. Last year, Gransky Corporation’s variable costing net operating income was \$52,100, and its endinginventory increased by 400 units. Fixed manufacturing overhead cost was \$7 per unit. What was theabsorption costing net operating income last year?A. \$49,300B. \$52,100C. \$54,900D. \$2,800

8. Rank the following methods of assigning overhead costs from least accurate to most accurate.A. Plantwide rate, departmental rates, activity-based costingB. Plantwide rate, activity-based costing, departmental ratesC. Activity-based costing, departmental rates, plantwide rateD. Departmental rates, plantwide rate, activity-based costing

9. Use the following information to answer this question.Callaham Corporation is a wholesaler that sells a single product. Management has provided the followingcost data for two levels of monthly sales volume. The company sells the product for \$115.80 per unit.The best estimate of the total contribution margin when 4,300 units are sold isSales volume (units)4,000 5,000Cost of sales \$338,000 \$422,500Selling and administrative costs \$89,600 \$106,000A. \$64,070.B. \$38,270.C. \$134,590.D. \$43,430.

10. A company increased the selling price for its product from \$5 to \$6 per unit when total fixed expensesincreased from \$100,000 to \$200,000 and variable expense per unit remained unchanged. How wouldthese changes affect the break-even point?A. The break-even point in units would decrease.B. The effect can’t be determined from the information given.C. The break-even point in units would increase.D. The break-even point in units would remain unchanged.
11. Use the following information to answer this question.Harris Company produces a single product. Last year, Harris manufactured 17,000 units and sold 13,000units. Production costs for the year were as follows:Sales were \$780,000 for the year, variable selling and administrative expenses were \$88,400, and fixedselling and administrative expenses were \$170,000. There was no beginning inventory. Assume that directlabor is a variable cost.Under variable costing, the company’s net operating income for the year would be _______ than underabsorption costing.Production Cost DataDirect materials \$153,000Direct labor \$110,500Variable manufacturing overhead \$204,000Fixed manufacturing overhead \$255,000A. \$108,000 higherB. \$60,000 higherC. \$60,000 lowerD. \$108,000 lower

12. An increase in the activity level within the relevant range results in a/anA. increase in fixed cost per unit.

B. unchanged fixed cost per unit.C. proportionate increase in total fixed costs.D. decrease in fixed cost per unit.

13. Use the following information to answer this question.Gargymal Company would like to estimate the variable and fixed components of its electrical costs and hascompiled the following data for the past five months of operations.Using the high-low method of analysis, the estimated fixed cost per month for electricity is closest to whichof the following?MachineHoursElectricalCostAugust 1,000 \$1,620September 900 \$1,510October 1,500 \$1,870November 2,000 \$1,950December 1,300 \$1,730A. \$870.00B. \$1,150.00C. \$1,306.50D. \$1,290.00

14. Use the following information to answer this question.Lifsey Wedding Fantasy Company makes very elaborate wedding cakes to order. The owner of thecompany has provided the following data concerning the activity rates in its activity-based costing system:l The measure of activity for the size-related activity cost pool is the number of planned guests at thewedding reception. The greater the number of guests, the larger the cake.l The measure of complexity is the number of tiers in the cake.l The activity measure for the order-related cost pool is the number of orders. (Each wedding involvesone order.)l The activity rates include the costs of raw ingredients, such as flour, sugar, eggs, and shortening. Theactivity rates don’t include the costs of purchased decorations, such as miniature statues and weddingbells, which are accounted for separately.Data concerning two recent orders are listed here:Activity Cost Pools Activity RateSize-related \$0.94 per guestComplexity-related \$31.62 per tierOrder-related \$55.79 per orderAssuming that the company charges \$556.96 for the Smith wedding cake, what would be the overallmargin on the order?PyburnWeddingSmithWeddingNumber of reception guests 72 189Number of tiers on the cake 4 5Cost of purchased decorations for cake \$29.92 \$68.75A. \$460.30B. \$165.41C. \$96.66D. \$152.45

15. Which statement is true for a company that uses variable costing?A. The unit product cost changes because of changes in the number of units manufactured.B. Profit fluctuates with sales.C. Product costs include variable administration costs.D. Any underapplied overhead is included in the product cost.

16. Use the following information to answer this question.Callaham Corporation is a wholesaler that sells a single product. Management has provided the followingcost data for two levels of monthly sales volume. The company sells the product for \$115.80 per unit.The best estimate of the total monthly fixed cost isSales volume (units)4,000 5,000Cost of sales \$338,000 \$422,500Selling and administrative costs \$89,600 \$106,000A. \$478,050.B. \$427,600.C. \$24,000.D. \$528,500.

17. Murdoch Corporation has provided the following data concerning its only product:Murdoch Product DataSelling price \$230 per unitCurrent sales 39,100 unitsBreak-even sales 29,716 unitsWhat is the margin of safety in dollars?A. \$8,993,000B. \$5,995,333C. \$2,158,320D. \$6,834,680

18. Use the following information to answer this question.Lifsey Wedding Fantasy Company makes very elaborate wedding cakes to order. The owner of thecompany has provided the following data concerning the activity rates in its activity-based costing system:l The measure of activity for the size-related activity cost pool is the number of planned guests at thewedding reception. The greater the number of guests, the larger the cake.l The measure of complexity is the number of tiers in the cake.l The activity measure for the order-related cost pool is the number of orders. (Each wedding involvesone order.)l The activity rates include the costs of raw ingredients, such as flour, sugar, eggs, and shortening. Theactivity rates don’t include the costs of purchased decorations, such as miniature statues and weddingbells, which are accounted for separately.Data concerning two recent orders are listed here:Assuming that the company charges \$556.96 for the Smith wedding cake, what would be the overallmargin on the order?Activity Cost Pools Activity RateSize-related \$0.94 per guestComplexity-related \$31.62 per tierOrder-related \$55.70 per orderPyburnWeddingSmithWeddingNumber of reception guests 72 189Number of tiers on the cake 4 5Cost of purchased decorations for cake \$29.92 \$68.75A. \$96.66B. \$152.45C. \$165.41D. \$460.30

19. Daniele Corporation uses an activity-based costing system with the following three activity cost pools:Activity Cost Pool Total ActivityEnd of examThe Other activity cost pool is used to accumulate costs of idle capacity and organization-sustaining costs.The company has provided the following data concerning its costs:The distribution of resource consumption across activity cost pools is given below:The activity rate for the Fabrication activity cost pool is closest to _______ per machine hour.Fabrication 50,000 machine-hoursOrder processing 500 ordersOther not applicableCost DataWages and salaries \$280,000Depreciation \$200,000Occupancy \$140,000Total \$620,000Activity Cost PoolsFabrication OrderProcessing Other TotalWages andsalaries 60% 30% 10% 100%Depreciation 20% 35% 45% 100%Occupancy 10% 50% 40% 100%A. \$7.44B. \$1.24C. \$3.72D. \$4.44

20. Green Company’s variable expenses are 75% of sales. At a sales level of \$400,000, the company’sdegree of operating leverage is 8. At this sales level, fixed expenses areA. \$50,000.B. \$75,000.C. \$87,500.D. \$100,000.

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