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22. The following table presents total cost for three types of cost (x, y, and z) for two three different activity levels in a manufacturing process. Identify which cost type is fixed.
Cost: X Y Z
2,000 units $10,000 $15,000 $20,000
3,000 units $11,000 $15,000 $20,000
4,000 units $12,000 $15,000 $20,000
d. Y and Z
23. During the current year, Britton’s Bread Bakery reported the following costs:
Building rent $60,000
Equipment depreciation $13,000
Supervisor’s salary $50,000
Bread ingredients, per loaf $0.89
Packaging, per loaf $0.07
Britton baked and sold 375,000 loaves of bread during the year. What was the total cost incurred for the year?
24. Which of the following is not a characteristic of managerial accounting? A. Information is used by internal parties. B. Information is subjective, relevant, future-oriented. C. Reports are prepared as needed. D. Information is reported for the company as a whole.
25. Which of the following types of firms would most likely use process costing? A. Superior Auto Body & Repair B. Crammond Custom Cabinets C. Sunshine Soft Drinks D. Jackson & Taylor Tax Service
26. The normal cost for support activity was estimated to be $400,000 for the year and the average usable capacity was estimated to be 20,000 direct labor hours. The actual cost for support activity was $415,000 and actual direct labor hours were 21,000. The activity rate for support activity is: A. $20.00 B. $0.05 C. $20.75 D. $19.05
27. Conversion costs consist of A. all costs of production. B. raw materials and direct labor. C. direct labor and manufacturing overhead. D. raw materials and manufacturing overhead.
28. Which of the following accounts will be treated differently by a process costing system than by a job order costing system? A. Raw Materials Inventory B. Work in Process Inventory C. Finished Goods Inventory D. Cost of Goods Sold
29. When Shasta, Inc. sells 40,000 units, its total variable cost is $96,000. What is its total variable cost when it sells 45,000 units? A. $84,000 B. $96,000 C. $108,000 D. It cannot be determined from the information given.
30. Which of the following is a variable cost? A. A cost that is $20,000 when production is 50,000, and $20,000 when production is 70,000. B. A cost that is $20,000 when production is 50,000, and $28,000 when production is 70,000. C. A cost that is $20,000 when production is 50,000, and $40,000 when production is 70,000. D. A cost that is $40,000 when production is 50,000, and $40,000 when production is 70,000.
31. When Bosco Inc. sells 40,000 units, its total fixed cost is $96,000. What is its total fixed cost when it sells 45,000 units? A. $84,000 B. $96,000 C. $108,000 D. It cannot be determined from the information given.
32. Arnold Corp has a selling price of $20, variable costs of $15 per unit, and fixed costs of $25,000. If Arnold sells 12,000 units, the contribution margin ratio will equal A. $60,000 B. 25% C. 14.6% D. 10.4%
33. Allain Corp has a selling price of $30, and variable costs of $20 per unit. When 12,000 units are sold, profits equaled $70,000. How many units must be sold to break-even? A. 19,000 B. 12,000 C. 14,333 D. 5,000
34. Alfred Corp has a selling price of $25per unit, variable costs of $20 per unit, and fixed costs of $25,000. What sales revenue is needed to break-even? A. $100,000 B. $5,000 C. $125,000 D. $50,000
35. Gavin Inc. currently sells 15,000 units a month for $50 each, has variable costs of $20 per unit, and fixed costs of $300,000. Gavin is considering increasing the price of its units to $60 per unit. This will not affect costs, but demand is expected to drop 20%. Should Gavin increase the cost of its product? A. Yes, profit will increase $30,000. B. Yes, profit will increase $150,000. C. No, profit will decrease $150,000. D. No, profit will decrease $30,000.
36. Nikko Corp sells two products. Product A sells for $100 per unit, and has unit variable costs of $60. Product B sells for $70 per unit, and has unit variable costs of $50. Currently, Nikko sells three units of product B for every one unit of product A sold. Nikko has fixed costs of $750,000. What is Nikko's break-even point in units? A. 30,000 units of A and 30,000 units of B B. 7,500 units of A and 22,500 units of B C. 22,500 units of A and 7,500 units of B D. 15,000 units of A and 15,000 units of B
37. Which of the following statements is false?
A. Sunk costs are never relevant.
B. Sunk costs are costs that occurred in the past. C. To be relevant, a cost must be an opportunity cost. D. To be relevant, a cost must occur in the future.
38. The manager of Jiffy Inc. is trying to decide whether to make or buy a component of the product they sell. Which of the following costs and benefits is not relevant to the decision? A. Direct labor cost involved in making the component. B. The purchase price of the component if it is bought. C. Variable manufacturing overhead involved in making the component. D. The selling price of the product.
39. The law firm of Ginger and Maddux is examining its client base to determine how profitable its regular clients are. Its analysis indicates that Furber, Inc. paid $128,000 in fees last year, but cost the firm $149,000 ($120,000 in billable labor, supplies, and copying, and $29,000 in allocated common fixed costs). If Ginger and Maddux dropped Furber, Inc. as a client, how would profit be affected? A. $0 B. Increase $21,000 C. Decrease $8,000 D. Decrease $128,000
40. Anders Corp produces three products, and is currently facing a labor shortage. The selling price, costs, and labor requirements of the three products are as follows: Anders has unlimited demand for all its products. Which product/s should Anders Corp produce to maximize profit during the labor shortage? A. Product A only B. Product B only C. Product A and B D. Product A, B, and C