. The Blue Company is currently selling its single product for $15. Variable cos
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Question
. The Blue Company is currently selling its single product for $15. Variable costs are estimated to remain at 70% of the current selling price and fixed costs are estimated to be $4,800 per month. If Blue increases its selling price by 10%, its variable cost ratio will (Points : 1) not changedecrease
increase
2. Which field of accounting emphasizes relevancy over comparability? (Points : 1) cost accounting.
financial accounting.
responsibility accounting.
international accounting.
3. Which of the following best distinguishes an opportunity cost from an outlay cost? (Points : 1) Opportunity costs are recorded, whereas outlay costs are not.
Outlay costs are speculative in nature, whereas opportunity costs are easily traceable to products.
Opportunity costs have very little utility in practical applications, whereas outlay costs are always relevant.
Opportunity costs are sacrifices from foregone alternative uses of resources, whereas outlay costs are cash outflows.
4. At a break-even point of 400 units, variable costs were $400 and fixed costs were $200. What will the 401st unit sold contribute to operating profits before income taxes? (Points : 1) $ .50
$1.00
$1.50
$2.00
some other answer _______________.
5. Given the following data:
Per Unit Total Sales $15 $45,000 Less variable expenses 9 27,000 Contribution margin 6 18,000 Less fixed expenses 12,000 Net income $ 6,000
If sales decrease by 500 units, by what % would fixed expenses have to be reduced by to maintain current net income? (Points : 1) 50.0%.
33.3%.
25.0%.
16.7%.
Some other percentage ____________.
6. The Cost of Goods Manufactured Statement summarizes the periodic production operations for a company. On the face of that schedule are intermediate calculations supporting the cost of goods manufactured figure. The beginning Work-in-Process inventory plus the total of the manufacturing costs equals (Points : 1) total finished goods during the period.
cost of goods sold for the period.
total work-in-process during the period.
cost of goods manufactured for the period.
7. A company which manufactures custom-made machinery routinely incurs sizable telephone costs in the process of taking sales orders from customers. Which of the following is a proper classification of this cost? (Points : 1) Product cost
Period cost
Conversion cost
Prime cost
8. Which of the following would not cause the breakeven point to change? (Points : 1) Sales price increases.
Fixed costs decreases.
Sales volume decreases.
Variable costs per unit increases.
Product mix shifts towards the cheaper products.
9. A manufacturing company incurs direct labor costs as it transforms direct material into marketable products. The cost of the direct labor will be treated as a period cost on the income statement when the resulting: (Points : 1) payroll costs are paid.
payroll costs are incurred.
products are completed.
products are sold.
10. Which of the following activities would not be considered a value-added activity? (Points : 1) production
marketing
accounting
distribution
administration Per Unit Total Sales $15 $45,000 Less variable expenses 9 27,000 Contribution margin 6 18,000 Less fixed expenses 12,000 Net income $ 6,000 2. Which field of accounting emphasizes relevancy over comparability? (Points : 1) cost accounting.
financial accounting.
responsibility accounting.
international accounting.
Explanation / Answer
increase
cost accounting.
Opportunity costs are sacrifices from foregone alternative uses of resources, whereas outlay costs are cash outflows.
With 400 units being the break-even point, each of the first 400 units cost $1 invariable cost and $0.50 in fixed cost.
Once the $200 fixed cost has been covered, any additional units produced contribute $0.50 each toward the operating profit. 0.50$
33.3%
total work-in-process during the period.
Period Cost
Variable costs per unit increases.
product costs are paid
distribution
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