Question 1 The break-even point is the point at which
| total contribution margin equals fixed costs |
| fixed costs equal variable costs |
| sales equals variable costs |
| fixed costs equal sales |
Question 2. If both variable costs & fixed costs increase but sales remain the same, what is expected to happen to the Contribution Margin (CM) and to the Break-Even Point (BE) respectively?
| CM-decrease, BE-increase |
| CM-decrease, BE-decrease |
| CM-decrease, BE-can't be determined |
| CM-increase, BE-decrease |
Question 3. Singer Co. reported sales of $416,000, a contribution margin of $5 per unit, fixed costs of $80,000, and a net income of $24,000.
Determine the selling price per unit?
Question 4. Use the following information to answer Questions 4 & 5 Projected cost information for a new product is as follows:
| Variable manufacturing costs: |
$8 per unit |
| Variable selling costs: |
$2 per unit |
| Fixed manufacturing costs: |
$25,000 |
| Fixed selling costs: |
$45,000 |
The product is to be sold at $18 per unit
Determine the break-even point for this product (in $)?
| $8,750 |
| $126,000 |
| $157,500 |
| $45,000 |
Question 5. Use the following information to answer Questions 4 & 5
| Variable manufacturing costs: |
$8 per unit |
| Variable selling costs: |
$2 per unit |
| Fixed manufacturing costs: |
$25,000 |
| Fixed selling costs: |
$45,000 |
The product is to be sold at $18 per unit
What price would the company have to sell this product for if they wish to sell 10,000 units and realize a profit of $50,000?
Question 6. Use the following information to answer questions 6 & 7
Trader Tom's makes and sells frozen 4-cheese pizzas, New York style. The expected selling price is $10 per pizza. The projected variable cost per pizza is $6. The estimated fixed costs per month are $10,000.
Determine the number of pizzas that must be sold to make a monthly Net Income of $20,000?
Question 7. Use the following information to answer questions 6 & 7
Trader Tom's makes and sells frozen 4-cheese pizzas, New York style. The expected selling price is $10 per pizza. The projected variable cost per pizza is $6. The estimated fixed costs per month are $10,000.
If fixed costs increase by $5,000 and 6,000 pizzas are sold in a given month, determine the Net Income for that month?
|
$9,000
|
|
$15,000
|
|
$19,000
|
|
$20,000
|
Question 8. Use the following information to answer Questions 8 & 9:
The following information has been projected for Sommers Inc. for March:
| Sales |
50,000 units |
| Finished Goods Beginning Inventory |
4,000 units |
| Finished Goods Ending Inventory |
8,000 units |
The selling price is $40 per unit. Each unit requires 4 pounds of material which costs $6 per pound. The beginning inventory of raw materials is 12,000 pounds. The company wants to have 3,000 pounds of material in inventory at the end of March.
Determine Sommers' budgeted production for March?
| 46,000 units |
| 38,000 units |
| 62,000 units |
| 54,000 units |
Question 9. Use the following information to answer Questions 8 & 9:
The following information has been projected for Sommers Inc. for March:
| Sales |
50,000 units |
| Finished Goods Beginning Inventory |
4,000 units |
| Finished Goods Ending Inventory |
8,000 units |
The selling price is $40 per unit. Each unit requires 4 pounds of material which costs $6 per pound. The beginning inventory of raw materials is 12,000 pounds. The company wants to have 3,000 pounds of material in inventory at the end of March.
Determine the budgeted material purchases (in $) for March?
| $1,206,000 |
| $1,296,000 |
| $1,350,000 |
| $1,242,000 |
Question 10. Gastone Inc. has estimated the following forecasted sales for a 3-month period:
| Month |
Estimated sales $
|
| August |
33,000 |
| September |
29,000 |
| October |
30,000 |
On average, 60% of sales are collected in the month of sale, 39% in the following month, and the remaining 1% is never collected.
Determine the budgeted cash receipts for September?
| $29,100 |
| $29,000 |
| $31,110 |
| $30,270 |
Question 11. Polar Fans has prepared all the necessary budgets and is attempting to prepare their forecasted income statement. The budgeted total manufacturing cost is $600,000, the budgeted beginning and ending WIP balances are $120,000 and $170,000 respectively, the budgeted costs of goods manufactured is $550,000, and the budgeted beginning and ending FG inventories are $60,000 and $78,000 respectively.
Determine the budgeted cost of goods sold for Polar Fans?
| $532,000 |
| $568,000 |
| $500,000 |
| $482,000 |
Question 12. The following information was reported for Lake Co.:
| Beginning cash balance |
$24,000 |
| Cash payments |
$42,000 |
| Cash receipts |
$29,000 |
| Cash balance required |
$22,000 |
How much cash will Lake Co. have to borrow to meet its cash balance requirements?
| $11,000 |
| $ 9,000 |
| $ 0 |
| $13,550 |
Question 13
Garth Inc. has determined the following monthly budget numbers based on a budgeted production level of 2,000 units:
| Direct Materials |
$30,000 |
| Factory property taxes |
$10,000 |
| Factory utilities |
$3,000 |
The actual production level during February was 3,000 units. Based on the information provided, determine the direct material & factory property taxes, respectively, for February.
| $30,000 and $10,000 |
| $45,000 and $10,000 |
| $30,000 and $15,000 |
| $45,000 and $15,000 |
Question 14
Excel Co. has collected the following data for April:
Budgeted direct labor: 3 hours per unit at $6 per hour
Direct labor efficiency variance: $1,200 (U)
Actual direct labor cost: $28,900
Units produced: 1,600
Determine the actual number of direct labor hours worked in April?
Question 15
What type of direct material variances for quantity and price will arise if the actual number of pounds of material used exceeds budgeted pounds but actual cost per pound is less than budgeted cost per pound?
| Quantity-Unfavorable, Price-Favorable |
| Quantity-Favorable, Price-Favorable |
| Quantity-Favorable, Price-Unfavorable |
| Quantity-Unfavorable, Price-Unfavorable |
Question 16
Use the following information to answer Questions 16-20
The budgeted and actual costs at Goodyear Company is as follows:
| Budgeted costs |
Actual costs |
| Materials (per tire): 12 lbs @ $1.80/lb |
Total materials purchased: 840,000lbs |
| Labor (per tire): 4 hrs. @ $14/hr |
Total cost of purchase: $1,554,000 |
| Factory O/H (per tire): 3 hrs. @ $8/hr |
Total material used: 849,600 lbs |
| |
Labor (per tire): 4.1 hrs @ $13/hr |
| |
Factory O/H (per tire): 2.8 hrs @ $8.50/hr |
| During October, Goodyear produced 72,000 tires. |
The budgeted cost and actual cost, respectively, of producing one tire is (to the nearest $)
| $102 and $98 |
| $102 and $95 |
| $102 and $99 |
| $78 and $98 |
Question 17. Use the following information to answer Questions 16-20
The budgeted and actual costs at Goodyear Company is as follows:
| Budgeted costs |
Actual costs |
| Materials (per tire): 12 lbs @ $1.80/lb |
Total materials purchased: 840,000lbs |
| Labor (per tire): 4 hrs. @ $14/hr |
Total cost of purchase: $1,554,000 |
| Factory O/H (per tire): 3 hrs. @ $8/hr |
Total material used: 849,600 lbs |
| |
Labor (per tire): 4.1 hrs @ $13/hr |
| |
Factory O/H (per tire): 2.8 hrs @ $8.50/hr |
| During October, Goodyear produced 72,000 tires. |
The direct labor efficiency variance is:
| $100,800 (U) |
| $100,800 (F) |
| $72,000 (F) |
| $72,000 (U) |
Question 18. Use the following information to answer Questions 16-20
The budgeted and actual costs at Goodyear Company is as follows:
| Budgeted costs |
Actual costs |
| Materials (per tire): 12 lbs @ $1.80/lb |
Total materials purchased: 840,000lbs |
| Labor (per tire): 4 hrs. @ $14/hr |
Total cost of purchase: $1,554,000 |
| Factory O/H (per tire): 3 hrs. @ $8/hr |
Total material used: 849,600 lbs |
| |
Labor (per tire): 4.1 hrs @ $13/hr |
| |
Factory O/H (per tire): 2.8 hrs @ $8.50/hr |
| During October, Goodyear produced 72,000 tires. |
The direct materials quantity variance is:
| $25,920 (F) |
| $44,400 (U) |
| $44,400 (F) |
| $25,920 (U) |
Question 19. Use the following information to answer Questions 16-20
The budgeted and actual costs at Goodyear Company is as follows:
| Budgeted costs |
Actual costs |
| Materials (per tire): 12 lbs @ $1.80/lb |
Total materials purchased: 840,000lbs |
| Labor (per tire): 4 hrs. @ $14/hr |
Total cost of purchase: $1,554,000 |
| Factory O/H (per tire): 3 hrs. @ $8/hr |
Total material used: 849,600 lbs |
| |
Labor (per tire): 4.1 hrs @ $13/hr |
| |
Factory O/H (per tire): 2.8 hrs @ $8.50/hr |
| During October, Goodyear produced 72,000 tires. |
The direct materials price variance is:
| $42,480 (U) |
| $42,000 (U) |
| $42,000 (F) |
| $42,480 (F) |
Question 20. Use the following information to answer Questions 16-20
The budgeted and actual costs at Goodyear Company is as follows:
| Budgeted costs |
Actual costs |
| Materials (per tire): 12 lbs @ $1.80/lb |
Total materials purchased: 840,000lbs |
| Labor (per tire): 4 hrs. @ $14/hr |
Total cost of purchase: $1,554,000 |
| Factory O/H (per tire): 3 hrs. @ $8/hr |
Total material used: 849,600 lbs |
| |
Labor (per tire): 4.1 hrs @ $13/hr |
| |
Factory O/H (per tire): 2.8 hrs @ $8.50/hr |
| During October, Goodyear produced 72,000 tires. |
The direct labor rate variance is:
|
$288,000 (U)
|
|
$288,000 (F)
|
|
$295,200 (U)
|
|
$295,200 (F)
|