@41%. ). + 10:09 PM ccsnh.blackboard.com .11 Sprint 4) In the preparation of the

Question

@41%. ). + 10:09 PM ccsnh.blackboard.com .11 Sprint 4) In the preparation of the schedule of Cost of Goods Manufactured, the accountant incorrectly included as part of manufacturing overhead the rental expense on the firm's retail facilities. This inclusion would: a. overstate period expenses on the income statement. b. overstate the cost of goods sold on the income c. understate the cost of goods manufactured. d. have no effect on the cost of goods manufactured. 5) In CVP analysis, focusing on target net income rather than operating income: a increase the breakeven point b. decrease the breakeven point c. l not change the breakeven point d. does not allow calculation of breakeven point 6) A variable cost is constant if expressed on a per unit basis but the total dollar amount changes as the number of units increases or decreases. a. True b. False 7) As activity increases within the relevant range, fixed costs remain constant on a per unit basis. a. True b. False 8) Which of the following statements is correct with regard to a CVP graph? a. A CVP graph shows the maximum possible profit. b. A CVP graph shows the break-even point as the intersection of the total sales revenue line and the total expense line. direct proportion to unit sales. between total sales revenue and total expense at the c. A CVP graph assumes that total expense varies in d. A CVP graph shows the operating leverage as the gap actual level of sales.

Explanation / Answer

Solution: 4. Answer is b. Overstate the cost of goods sold on the income statement. Notes: If the accountant incorrectly included as part of manufacturing overhead the rental expense on the firms retail facilities. This inclusion would Overstate the cost of goods sold on the income statement. Since it is administration cost not manufacturing cost and as in above it was included As part of Manufacturing overhead it Overstate the cost of goods sold on the income statement. 5. Answer is c. will not change the breakeven point Working Notes: In CVP analysis, focusing on target net income rather than operating income, will not change the breakeven point. As break even point Fixed cost and contribution margin per unit which will remain unaffected. 6. Answer is a. True Working Notes: Its true that Variable cost is constant if expressed on a per unit basis but it changes in total amount with changes in the level of activity or units. 7. Answer is b. False. Working Notes: The total fixed cost does not change with changes in the volume of activity (within a relevant range) means within its capacity without any increase in fixed cost . But Fixed cost per unit changes as units increases or decreases even with in range because for per unit basis total fixed cost divided by total units produced. 8. Answer is b. A CVP graph shows the break-even point as the intersection of the total sales revenue line and the total expense line Working Notes: In a CVP graph it shows the break-even point as the intersection of the total sales revenue line and the total expense line Please feel free to ask if anything about above solution in comment section of the question.

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