Cost Accounting, 14e (Horngren/Datar/Rajan) Chapter 3 Cost .
Test Bank for Cost Accounting 14th Edition by HorngrenFull Download: unting-14th-edition-by-horngren/Cost Accounting, 14e (Horngren/Datar/Rajan)Chapter 3 Cost-Volume-Profit AnalysisObjective 3.11) Cost-volume-profit analysis is used primarily by management:A) as a planning toolB) for control purposesC) to prepare external financial statementsD) to attain accurate financial resultsAnswer: ADiff: 1Terms: cost-volume-profit (CVP)Objective: 1AACSB: Communication2) One of the first steps to take when using CVP analysis to help make decisions is:A) finding out where the total costs line intersects with the total revenues line on a graph.B) identifying which costs are variable and which costs are fixed.C) calculation of the degree of operating leverage for the company.D) estimating how many products will have to be sold to make a decent profit.Answer: BDiff: 1Terms: cost-volume-profit (CVP) analysisObjective: 1AACSB: Reflective thinking3) Cost-volume-profit analysis assumes all of the following EXCEPT:A) all costs are variable or fixedB) units manufactured equal units soldC) total variable costs remain the same over the relevant rangeD) total fixed costs remain the same over the relevant rangeAnswer: CDiff: 2Terms: cost-volume-profit (CVP)Objective: 1AACSB: Reflective thinking1Copyright 2012 Pearson Education, Inc.Full download all chapters instantly please go to Solutions Manual, Test Bank site: TestBankLive.com
4) Which of the following items is NOT an assumption of CVP analysis?A) Total costs can be divided into a fixed component and a component that is variable with respect tothe level of output.B) When graphed, total costs curve upward.C) The unit-selling price is known and constant.D) All revenues and costs can be added and compared without taking into account the time value ofmoney.Answer: BDiff: 3Terms: cost-volume-profit (CVP)Objective: 1AACSB: Reflective thinking5) Which of the following items is NOT an assumption of CVP analysis?A) Costs may be separated into separate fixed and variable components.B) Total revenues and total costs are linear in relation to output units.C) Unit selling price, unit variable costs, and unit fixed costs are known and remain constant.D) Proportion of different products will remain constant when multiple products are sold.Answer: CDiff: 3Terms: cost-volume-profit (CVP)Objective: 1AACSB: Reflective thinking6) A revenue driver is defined as:A) any factor that affects costs and revenuesB) any factor that affects revenuesC) only factors that can influence a change in selling priceD) only factors that can influence a change in demandAnswer: BDiff: 1Terms: revenue driverObjective: 1AACSB: Reflective thinking7) Operating income calculations use:A) net incomeB) income tax expenseC) cost of goods sold and operating costsD) nonoperating revenues and nonoperating expensesAnswer: CDiff: 2Terms: revenue driverObjective: 1AACSB: Reflective thinking2Copyright 2012 Pearson Education, Inc.
8) Which of the following statements about net income (NI) is true?A) NI operating income plus nonoperating revenue.B) NI operating income plus operating costs.C) NI operating income less income taxes.D) NI operating income less cost of goods sold.Answer: CDiff: 1Terms: net incomeObjective: 1AACSB: Reflective thinking9) Which of the following is true about the assumptions underlying basic CVP analysis?A) Only selling price is known and constant.B) Only selling price and variable cost per unit are known and constant.C) Only selling price, variable cost per unit, and total fixed costs are known and constant.D) Selling price, variable cost per unit, fixed cost per unit, and total fixed costs are known and constant.Answer: CDiff: 2Terms: cost-volume-profit (CVP)Objective: 1AACSB: Reflective thinking10) The contribution income statement:A) reports gross marginB) is allowed for external reporting to shareholdersC) categorizes costs as either direct or indirectD) can be used to predict future profits at different levels of activityAnswer: DDiff: 1Terms: contribution income statementObjective: 1AACSB: Reflective thinking11) Contribution margin equals:A) revenues minus period costsB) revenues minus product costsC) revenues minus variable costsD) revenues minus fixed costsAnswer: CDiff: 1Terms: contribution marginObjective: 1AACSB: Reflective thinking3Copyright 2012 Pearson Education, Inc.
Answer the following questions using the information below:Sherry's Custom Jewelry sells a single product. 700 units were sold resulting in 7,000 of sales revenue, 2,800 of variable costs, and 1,200 of fixed costs.12) Contribution margin per unit is:A) 4.00B) 4.29C) 6.00D) None of these answers are correct.Answer: CExplanation: C) ( 7,000 - 2,800) / 700 units 6 per unitDiff: 2Terms: contribution margin per unitObjective: 1AACSB: Analytical skills13) If sales increase by 25,000, operating income will increase by:A) 10,000B) 15,000C) 22,200D) None of these answers are correct.Answer: BExplanation: B) [( 7,000 - 2,800) / 7,000] 25,000 15,000Diff: 2Terms: cost-volume-profit (CVP) analysisObjective: 1AACSB: Analytical skillsAnswer the following questions using the information below:Holly's Ham, Inc. sells hams during the major holiday seasons. During the current year 11,000 hamswere sold resulting in 220,000 of sales revenue, 55,000 of variable costs, and 24,000 of fixed costs.14) Contribution margin per ham is:A) 5.00B) 15.00C) 20.00D) None of these answers are correct.Answer: BExplanation: B) ( 220,000 - 55,000) / 11,000 hams 15 per hamDiff: 2Terms: contribution margin per unitObjective: 1AACSB: Analytical skills4Copyright 2012 Pearson Education, Inc.
15) If sales increase by 40,000, operating income will increase by:A) 10,000B) 20,000C) 30,000D) None of these answers are correct.Answer: CExplanation: C) Price 220,000/11,000 20.00Sales in hams 40,000/ 20.00 2,000 hamsOperating Income increase 2,000 hams x 15.00 per 30,000Diff: 2Terms: cost-volume-profit (CVP) analysisObjective: 1AACSB: Analytical skills16) Kenefic Company sells its only product for 9 per unit, variable production costs are 3 per unit, andselling and administrative costs are 1.50 per unit. Fixed costs for 10,000 units are 5,000. Thecontribution margin is:A) 6 per unitB) 4.50 per unitC) 5.50 per unitD) 4 per unitAnswer: BExplanation: B) 9 - 3 - 1.60 4.50Diff: 2Terms: cost-volume-profit (CVP) analysisObjective: 1AACSB: Analytical skills17) The contribution income statement highlights:A) gross marginB) products costs and period costsC) different product linesD) variable and fixed costsAnswer: DDiff: 2Terms: contribution income statementObjective: 1AACSB: Communication5Copyright 2012 Pearson Education, Inc.
18) Fixed costs equal 12,000, unit contribution margin equals 20, and the number of units sold equal1,600. Operating income is:A) 12,000B) 20,000C) 32,000D) 40,000Answer: BExplanation: B) (1,600 20) - 12,000 20,000Diff: 3Terms: cost-volume-profit (CVP) analysisObjective: 1AACSB: Analytical skills19) If selling price per unit is 30, variable costs per unit are 20, total fixed costs are 10,000, the taxrate is 30%, and the company sells 5,000 units, net income is:A) 12,000B) 14,000C) 28,000D) 40,000Answer: CExplanation: C) [(( 30 - 20) 5,000) - 10,000] (1.0 - .3) 28,000Diff: 2Terms: cost-volume-profit (CVP) analysisObjective: 1AACSB: Analytical skills6Copyright 2012 Pearson Education, Inc.
Answer the following questions using the information below:Northenscold Company sells several products. Information of average revenue and costs is as follows:Selling price per unit 20.00Variable costs per unit:Direct material 4.00Direct manufacturing labor 1.60Manufacturing overhead 0.40Selling costs 2.00Annual fixed costs 96,00020) The contribution margin per unit is:A) 6B) 8C) 12D) 14Answer: CExplanation: C) 20 - 4 - 1.60 - 0.40 - 2 12Diff: 2Terms: contribution margin per unitObjective: 1AACSB: Analytical skills21) All of the following are assumed in the above analysis EXCEPT:A) a constant product mixB) fixed costs increase when activity increasesC) cost and revenue relationships are reflected accuratelyD) all costs can be classified as either fixed or variableAnswer: BDiff: 2Terms: cost-volume-profit (CVP) analysisObjective: 1AACSB: Reflective thinking7Copyright 2012 Pearson Education, Inc.
Answer the following questions using the information below:Franscioso Company sells several products. Information of average revenue and costs is as follows:Selling price per unit 28.50Variable costs per unit:Direct material 5.25Direct manufacturing labor 1.15Manufacturing overhead 0.25Selling costs 1.85Annual fixed costs 110,00022) The contribution margin per unit is:A) 15B) 20C) 22D) 125Answer: BExplanation: B) 28.50 - 5.25 - 1.15 - 0.25 - 1.85Diff: 2Terms: contribution margin per unitObjective: 1AACSB: Analytical skills23) All of the following are assumed in the above analysis EXCEPT:A) a constant product mixB) all costs can be classified as either fixed or variableC) cost and revenue relationships are reflected accuratelyD) per unit variable costs increase when activity increasesAnswer: DDiff: 2Terms: cost-volume-profit (CVP) analysisObjective: 1AACSB: Analytical skills8Copyright 2012 Pearson Education, Inc.
Answer the following questions using the information below:Dr. Charles Hunter, MD, performs a certain outpatient procedure for 1,000. His fixed costs are 20,000, while his variable costs are 500 per procedure. Dr. Hunter currently plans to perform 200procedures this month.24) What is the budgeted revenue for the month assuming that Dr. Hunter plans to perform thisprocedure 200 times?A) 100,000B) 200,000C) 300,000D) 400,000Answer: BExplanation: B) 200 1,000 200,000Diff: 1Terms: cost-volume-profit (CVP) analysisObjective: 1AACSB: Analytical skills25) What is the budgeted operating income for the month assuming that Dr. Hunter plans to perform theprocedure 200 times?A) 200,000B) 100,000C) 80,000D) 40,000Answer: CExplanation: C) 200,000 - [(200 500) 20,000]; 200,000 - 120,000 80,000Diff: 1Terms: cost-volume-profit (CVP) analysisObjective: 1AACSB: Analytical skillsAnswer the following questions using the information below:Nancy's Niche sells a single product. 8,000 units were sold resulting in 80,000 of sales revenue, 20,000 of variable costs, and 10,000 of fixed costs.26) The contribution margin percentage is:A) 12.5%B) 25.0%C) 37.5%D) 75.0%Answer: DExplanation: D) ( 80,000 - 20,000) / 80,000 75%Diff: 2Terms: contribution margin percentageObjective: 1AACSB: Analytical skills9Copyright 2012 Pearson Education, Inc.
27) To achieve 100,000 in operating income, sales must total:A) 440,000B) 160,000C) 130,000D) None of these answers are correct.Answer: DExplanation: D) ( 100,000 10,000) / 75% 146,667 in salesDiff: 2Terms: cost-volume-profit (CVP) analysisObjective: 1AACSB: Analytical skills28) Gross margin is:A) sales revenue less variable costsB) sales revenue less cost of goods soldC) contribution margin less fixed costsD) contribution margin less variable costsAnswer: BDiff: 1Terms: gross margin percentageObjective: 1AACSB: Reflective thinking29) In the merchandising sector:A) only variable costs are subtracted to determine gross marginB) fixed overhead costs are subtracted to determine gross marginC) fixed overhead costs are subtracted to determine contribution marginD) all operating costs are subtracted to determine contribution marginAnswer: ADiff: 2Terms: gross margin percentageObjective: 1AACSB: Reflective thinking30) In the manufacturing sector:A) only variable costs are subtracted to determine gross marginB) fixed overhead costs are subtracted to determine gross marginC) fixed overhead costs are subtracted to determine contribution marginD) all operating costs are subtracted to determine contribution marginAnswer: BDiff: 2Terms: gross margin percentageObjective: 1AACSB: Reflective thinking10Copyright 2012 Pearson Education, Inc.
31) To determine contribution margin use:A) only variable manufacturing costsB) only fixed manufacturing costsC) both variable and fixed manufacturing costsD) both variable manufacturing costs and variable nonmanufacturing costsAnswer: DDiff: 2Terms: contribution marginObjective: 1AACSB: Reflective thinking32) To perform cost-volume-profit analysis, a company must be able to separate costs into fixed andvariable components.Answer: TRUEDiff: 1Terms: cost-volume-profit (CVP) analysisObjective: 1AACSB: Analytical skills33) Contribution margin Contribution margin percentage * Revenues (in dollars)Answer: TRUEDiff: 1Terms: contribution marginObjective: 1AACSB: Analytical skills34) It is assumed in CVP analysis that the unit selling price, unit variable costs, and unit fixed costs areknown and constant.Answer: FALSEExplanation: It is assumed in CVP analysis that the unit selling price, unit variable costs, and total fixedcosts are known and constant.Diff: 2Terms: cost-volume-profit (CVP) analysisObjective: 1AACSB: Analytical skills35) In CVP analysis, the number of output units is the only revenue driver.Answer: TRUEDiff: 2Terms: cost-volume-profit (CVP) analysis, revenue driverObjective: 1AACSB: Reflective thinking36) Many companies find even the simplest CVP analysis helps with strategic and long-range planning.Answer: TRUEDiff: 1Terms: cost-volume-profit (CVP) analysisObjective: 1AACSB: Analytical skills11Copyright 2012 Pearson Education, Inc.
37) The difference between total revenues and total variable costs is called contribution margin.Answer: TRUEDiff: 2Terms: contribution marginObjective: 1AACSB: Reflective thinking38) In CVP analysis, variable costs include direct variable costs, but do NOT include indirect variablecosts.Answer: FALSEExplanation: In CVP analysis variable costs include direct variable costs and indirect variable costs.Diff: 2Terms: cost-volume-profit (CVP) analysisObjective: 1AACSB: Reflective thinking39) In CVP analysis, an assumption is made that the total revenues are linear with respect to outputunits, but that total costs are non-linear with respect to output units.Answer: FALSEExplanation: In CVP analysis, an assumption is made that the total revenues and the total costs are nonlinear with respect to output units.Diff: 2Terms: cost-volume-profit (CVP) analysisObjective: 1AACSB: Reflective thinking40) A revenue driver is defined as a variable that causes changes in prices.Answer: FALSEExplanation: A revenue driver is defined as a variable that causes changes in revenues.Diff: 2Terms: revenue driverObjective: 1AACSB: Reflective thinking41) If the selling price per unit is 50 and the contribution margin percentage is 40%, then the variablecost per unit must be 20.Answer: FALSEExplanation: Then the variable cost per unit must be 30, [ 50 - (.40 50)] 30.Diff: 2Terms: contribution marginObjective: 1AACSB: Analytical skills42) Total revenues less total fixed costs equal the contribution margin.Answer: FALSEExplanation: Total revenues less total variable costs equal the contribution margin.Diff: 1Terms: contribution marginObjective: 1AACSB: Reflective thinking12Copyright 2012 Pearson Education, Inc.
43) Gross margin is reported on the contribution income statement.Answer: FALSEExplanation: Gross margin is reported on the absorption costing income statement.Diff: 1Terms: contribution income statementObjective: 1AACSB: Analytical skills44) If the selling price per unit of a product is 30, variable costs per unit are 20, and total fixed costsare 10,000 and a company sells 5,000 units, operating income would be 40,000.Answer: TRUEDiff: 2Terms: contribution income statementObjective: 1AACSB: Analytical skills45) Service sector companies will never report gross margin on an income statement.Answer: TRUEDiff: 2Terms: gross margin percentageObjective: 1AACSB: Communication46) For merchandising firms, contribution margin will always be a lesser amount than gross margin.Answer: TRUEExplanation: True, because all variable costs are subtracted to compute contribution margin, but onlyCOGS is subtracted to compute gross margin.Diff: 3Terms: contribution marginObjective: 1AACSB: Analytical skills47) Contribution margin and gross margin are terms that can be used interchangeably.Answer: FALSEExplanation: Contribution margin and gross margin refer to different amounts.Revenues - all variable costs contribution margin; Revenues - COGS gross marginDiff: 1Terms: contribution marginObjective: 1AACSB: Communication48) Gross Margin will always be greater than contribution margin.Answer: FALSEExplanation: If variable costs are low and/or manufacturing fixed costs are high, then contributionmargin can easily be greater than gross margin.Revenues - all variable costs contribution margin; Revenues - COGS gross marginDiff: 1Terms: contribution marginObjective: 1AACSB: Reflective thinking13Copyright 2012 Pearson Education, Inc.
49) Jacob's Manufacturing sales is equal to production. If Jacob's Manufacturing presented a FinancialAccounting Income Statement emphasizing gross margin showing operating income of 180,000, aContribution Income Statement emphasizing contribution margin would show a different operatingincome.Answer: FALSEExplanation: If Jacob's Manufacturing presented a Financial Accounting Income Statementemphasizing gross margin showing operating income of 180,000, a Contribution Income Statementemphasizing contribution margin would show the same operating income.Diff: 2Terms: contribution income statementObjective: 1AACSB: Communication50) Jennifer's Stuffed Animals reported the following:RevenuesVariable manufacturing costsVariable nonmanufacturing costsFixed manufacturing costsFixed nonmanufacturing costs 2,000 400 460 300 280Required:a. Compute contribution margin.b. Compute gross margin.c. Compute operating income.Answer:a. Contribution margin 2,000 - 400 - 460 1,140b. Gross margin 2,000 - 400 - 300 1,300c. Operating income 2000 - 400 - 460 - 300 - 280 560Diff: 2Terms: contribution marginObjective: 1AACSB: Analytical skills14Copyright 2012 Pearson Education, Inc.
51) Arthur's Plumbing reported the following:RevenuesVariable manufacturing costsVariable nonmanufacturing costsFixed manufacturing costsFixed nonmanufacturing costs 4,500 900 810 630 545Required:a. Compute contribution margin.b. Compute contribution margin percentage.c. Compute gross margin.d. Compute gross margin percentage.e. Compute operating income.Answer:a. Contribution margin 4,500 - 900 - 810 2,790b. Contribution margin percentage ( 2,790/ 4,500) x 100 62%c. Gross margin 4,500 - 900 - 630 2,970d. Gross margin percentage ( 2,970/ 4,500) x 100 66%e. Operating income 4,500 - 900 - 810 - 630 - 545 1,615Diff: 2Terms: contribution margin percentage, gross margin percentageObjective: 1AACSB: Analytical skillsObjective 3.21) The selling price per unit less the variable cost per unit is the:A) fixed cost per unitB) gross marginC) margin of safetyD) contribution margin per unitAnswer: DDiff: 1Terms: contribution marginObjective: 2AACSB: Reflective thinkingAnswer the following questions using the information below:Sherry's Custom Jewelry sells a single product. 700 units were sold resulting in 7,000 of sales revenue, 2,800 of variable costs, and 1,200 of fixed costs.15Copyright 2012 Pearson Education, Inc.
2) Breakeven point in units is:A) 200 unitsB) 300 unitsC) 500 unitsD) None of these answers are correct.Answer: AExplanation: A) ( 7,000 - 2,800)/700 6 Contribution Margin Per Unit. 1,200/ 6 200 unitsDiff: 2Terms: breakeven point (BEP)Objective: 2AACSB: Analytical skills3) The number of units that must be sold to achieve 6,000 of operating income is:A) 1,000 unitsB) 1,166 unitsC) 1,200 unitsD) None of these answers are correct.Answer: CExplanation: C) ( 7,000 - 2,800)/700 6. ( 1,200 6,000)/ 6 1,200 unitsDiff: 2Terms: cost-volume-profit (CVP) analysisObjective: 2AACSB: Analytical skillsAnswer the following questions using the information below:Holly's Ham, Inc. sells hams during the major holiday seasons. During the current year 11,000 hamswere sold resulting in 220,000 of sales revenue, 55,000 of variable costs, and 24,000 of fixed costs.4) Breakeven point in units is:A) 1,000 hamsB) 1,200 hamsC) 1,600 hamsD) None of these answers are correct.Answer: CDiff: 2Terms: breakeven point (BEP)Objective: 2AACSB: Analytical skills16Copyright 2012 Pearson Education, Inc.
5) The number of hams that must be sold to achieve 75,000 of operating income is:A) 6,600 hamsB) 7,500 hamsC) 8,400 hamsD) None of these answers are correct.Answer: AExplanation: A) 20X -5X - 24,000 75,000; X 6,600 hamsDiff: 2Terms: cost-volume-profit (CVP) analysisObjective: 2AACSB: Analytical skills6) At the breakeven point of 2,000 units, variable costs total 4,000 and fixed costs total 6,000. The2,001st unit sold will contribute to profits.A) 1B) 2C) 3D) 5Answer: CExplanation: C) Fixed costs of 6,000/2,000 units Contribution Margin of 3 per unit.Diff: 3Terms: contribution marginObjective: 2AACSB: Analytical skills7) The breakeven point is the activity level where:A) revenues equal fixed costsB) revenues equal variable costsC) contribution margin equals variable costsD) revenues equal the sum of variable and fixed costsAnswer: DDiff: 3Terms: breakeven point (BEP)Objective: 2AACSB: Reflective thinking8) Breakeven point is:A) total costs divided by variable costs per unitB) contribution margin per unit divided by revenue per unitC) fixed costs divided by contribution margin per unitD) the sum of fixed and variable costs divided by contribution margin per unitAnswer: CDiff: 2Terms: breakeven point (BEP)Objective: 2AACSB: Reflective thinking17Copyright 2012 Pearson Education, Inc.
9) Sales total 200,000 when variable costs total 150,000 and fixed costs total 30,000. The breakevenpoint in sales dollars is:A) 200,000B) 120,000C) 40,000D) 30,000Answer: BExplanation: B) ( 200,000 - 150,000) / 200,000 25% CM%; 30,000 / 0.25 120,000 BE salesDiff: 3Terms: breakeven point (BEP)Objective: 2AACSB: Analytical skills10) The breakeven point in CVP analysis is defined as:A) when fixed costs equal total revenuesB) fixed costs divided by the contribution margin per unitC) revenues less variable costs equal operating incomeD) when the contribution margin percentage equals total revenues divided by variable costsAnswer: BDiff: 2Terms: breakeven point (BEP)Objective: 2AACSB: Reflective thinking11) Which of the following statements about determining the breakeven point is FALSE?A) Operating income is equal to zero.B) Contribution margin - fixed costs is equal to zero.C) Revenues equal fixed costs plus variable costs.D) Breakeven revenues equal fixed costs divided by the variable cost per unit.Answer: DDiff: 3Terms: breakeven point (BEP)Objective: 2AACSB: Reflective thinking12) What is the breakeven point in units, assuming a product's selling price is 100, fixed costs are 8,000, unit variable costs are 20, and operating income is 3,200?A) 100 unitsB) 300 unitsC) 400 unitsD) 500 unitsAnswer: AExplanation: A) Unit Selling Price of 100 - Unit Variable Cost 20 Unit Contribution Margin of 80. Fixed Costs of 8,000 / 80 100 unitsDiff: 2Terms: breakeven point (BEP)Objective: 2AACSB: Analytical skills18Copyright 2012 Pearson Education, Inc.
13) If unit outputs exceed the breakeven point:A) there is a lossB) total sales revenue exceeds total costsC) there is a profitD) Both total sales revenue exceeds total costs and there is a profit.Answer: DDiff: 2Terms: breakeven point (BEP)Objective: 2AACSB: Reflective thinking14) How many units would have to be sold to yield a target operating income of 22,000, assumingvariable costs are 15 per unit, total fixed costs are 2,000, and the unit selling price is 20?A) 4,800 unitsB) 4,400 unitsC) 4,000 unitsD) 3,600 unitsAnswer: AExplanation: A) ( 2,000 22,000) / ( 20 - 15) 4,800 unitsDiff: 3Terms: cost-volume-profit (CVP) analysisObjective: 2AACSB: Analytical skills15) If the breakeven point is 1,000 units and each unit sells for 50, then:A) selling 1,250 units will result in a profitB) sales of 40,000 will result in a lossC) sales of 50,000 will result in zero profitD) All of these answers are correct.Answer: DExplanation: D) 1,000 50 - 50,000 of BE salesDiff: 2Terms: breakeven point (BEP)Objective: 2AACSB: Analytical skills16) If breakeven point is 1,000 units, each unit sells for 30, and fixed costs are 10,000, then on agraph the:A) total revenue line and the total cost line will intersect at 30,000 of revenueB) total cost line will be zero at zero units soldC) revenue line will start at 10,000D) All of these answers are correct.Answer: ADiff: 2Terms: breakeven point (BEP)Objective: 2AACSB: Analytical skills19Copyright 2012 Pearson Education, Inc.
17) When fixed costs are 40,000 and variable costs are 20% of the selling price, then breakeven salesare:A) 40,000B) 50,000C) 200,000D) indeterminableAnswer: BExplanation: B) 40,000 / (1- 0.20) 50,000 in BE salesDiff: 2Terms: breakeven point (BEP)Objective: 2AACSB: Analytical skillsAnswer the following questions using the information below:Ruben intends to sell his customers a special round-trip airline ticket package. He is able to purchase thepackage from the airline carrier for 150 each. The round-trip tickets will be sold for 200 each and theairline intends to reimburse Ruben for any unsold ticket packages. Fixed costs include 5,000 inadvertising costs.18) What is the contribution margin per ticket package?A) 50B) 100C) 150D) 200Answer: AExplanation: A) 200 - 150 50Diff: 1Terms: contribution margin per unitObjective: 2AACSB: Analytical skills19) How many ticket packages will Ruben need to sell to break even?A) 34 packagesB) 50 packagesC) 100 packagesD) 150 packagesAnswer: CExplanation: C) 200X - 150X - 5,000 0; X 100Diff: 2Terms: breakeven point (BEP)Objective: 2AACSB: Analytical skills20Copyright 2012 Pearson Education, Inc.
20) How many ticket packages will Ruben need to sell in order to achieve 60,000 of operating income?A) 367 packagesB) 434 packagesC) 1,100 packagesD) 1,300 packagesAnswer: DExplanation: D) 200X - 150X - 5,000 60,000; X 1,300Diff: 2Terms: cost-volume-profit (CVP) analysisObjective: 2AACSB: Analytical skills21) For every 25,000 of ticket packages sold, operating income will increase by:A) 6,250B) 12,500C) 18,750D) an indeterminable amountAnswer: AExplanation: A) 25,000 [( 200 - 150 / 200)] 6,250Diff: 3Terms: cost-volume-profit (CVP) analysisObjective: 2AACSB: Analytical skillsAnswer the following questions using the information below:Northenscold Company sells several products. Information of average revenue and costs is as follows:Selling price per unit 20.00Variable costs per unit:Direct material 4.00Direct manufacturing labor 1.60Manufacturing overhead 0.40Selling costs 2.00Annual fixed costs 96,00022) The number of units that Northenscold's must sell each year to break even is:A) 8,000 unitsB) 12,000 unitsC) 16,000 unitsD) indeterminableAnswer: AExplanation: A) 20X - 8X - 96,000 0; X 8,000 unitsDiff: 2Terms: breakeven point (BEP)Objective: 2AACSB: Analytical skills21Copyright 2012 Pearson Education, Inc.
23) The number of units that Northenscold's must sell annually to make a profit of 144,000 is:A) 12,000 unitsB) 18,000 unitsC) 20,000 unitsD) 30,000 unitsAnswer: CExplanation: C) 20X - 8X - 96,000 144,000; X 20,000 unitsDiff: 2Terms: cost-volume-profit (CVP) analysisObjective: 2AACSB: Analytical skillsAnswer the following questions using the information below:Franscioso Company sells several products. Information of average revenue and costs is as follows:Selling price per unit 28.50Variable costs per unit:Direct material 5.25Direct manufacturing labor 1.15Manufacturing overhead 0.25Selling costs 1.85Annual fixed costs 110,00024) The number of units that Franscioso must sell each year to break even is:A) 1,000 unitsB) 4,000 unitsC) 5,500 unitsD) indeterminableAnswer: CExplanation: C) 28.5 X - 8.5 X - 110,000 0; X 5,500 unitsDiff: 2Terms: breakeven point (BEP)Objective: 2AACSB: Analytical skills25) The number of units that Franscioso must sell annually to make a profit of 90,000 is:A) 10,000 unitsB) 12,000 unitsC) 15,000 unitsD) 20,000 unitsAnswer: AExplanation: A) 28.5 X - 8.5 X - 90,000 0; X 10,000 unitsDiff: 2Terms: cost-volume-profit (CVP) analysisObjective: 2AACSB: Analytical skills22Copyright 2012 Pearson Education, Inc.
Answer the following questions using the information below:The following information is for Nichols Company:Selling priceVariable costsTotal fixed costs 50 per unit 30 per unit 100,00026) The number of units that Nichols Company must sell to reach targeted operating income of 30,000is:A) 5,000 unitsB) 6,500 unitsC) 3,334 unitsD) 4,334 unitsAnswer: BExplanation: B) ( 100,000 30,000)/( 50 - 30) 6,500 unitsDiff: 2Terms: cost-volume-profit (CVP) analysisObjective: 2AACSB: Analytical skills27) If targeted operating income is 40,000, then targeted sales revenue is:A) 350,000B) 233,333C) 166,667D) 250,000Answer: AExplanation: A) ( 100,000 40,000) / [( 50 - 30) / 50] 350,000Diff: 2Terms: cost-volume-profit (CVP) analysisObjective: 2AACSB: Analytical skillsAnswer the following questions using the information below:Stephanie's Bridal Shoppe sells wedding dresses. The average selling price of each dress is 1,000,variable costs are 400, and fixed costs are 90,000.28) What is the Bridal Shoppe's operating income when 200 dresses are sold?A) 30,000B) 80,000C) 200,000D) 100,000Answer: AExplanation: A) 200( 1,000) - 200( 400) - 90,000
10) The contribution income statement: A) reports gross margin B) is allowed for external reporting to shareholders C) categorizes costs as either direct or indirect D) can be used to predict future profits at different levels of activity Answer: D Diff: 1 Terms: contribution income s
Cost Accounting, 14e (Horngren/Datar/Rajan) Chapter 8 Flexible Budgets, Overhead Cost Variances, and Management Control Objective 8.1 1) Overhead costs have been increasing due to all of the following EXCEPT: A) increased automation B) more complexity in distribution processes C) traci
35) Describe management accounting and financial accounting. Answer: Management accounting provides information to internal decision makers of the business such as top executives, managers, sales representatives, and production supervisors. Its purpose is to help managers predict and evaluate future results.
Horngren, Datar & Rajan. Cost Accounting: A Managerial Emphasis, 14th Ed. 2012 Reference Books Garison. Noreen and Brewer, Managerial Accounting, 13th Ed. 2010 Gray and Ricketts; “Cost and Managerial Accounting” Heltger and Matulich; “Managerial Accounting” Moore - Jaedicke- Anderson; “Managerial Accounting”
Pearson Education France 47 bis, rue des Vinaigriers 75010 Paris Tél. : 01 72 74 90 00 Fax : 01 42 05 22 17 www.pearson.fr ISBN : 978-2-7440-7954-2 7954 0909 Contrôle de gestion et gestion budgétaire - 4 e édition C. Horngren, A. Bhimani, S. Datar, G. Foster CORRIGÉS 4e édition Charles Horngren, Alnoor Bhimani, Srikant Datar, George .
Cost Accounting 1.2 Objectives and Functions of Cost Accounting 1.3 Cost Accounting and Financial Accounting — Comparison 1.3 Application of Cost Accounting 1.5 Advantages of Cost Accounting 1.6 Limitations or Objections Against cost Accounting 1.7 Installation of a costing system 1.7 Concept of Cost 1.9 Cost Centre 1.10 Cost Unit 1.11 Cost .File Size: 1MB
C) A direct cost of one cost object can be an indirect cost of another cost object. D) All fixed costs are direct costs. Answer: C Diff: 1 Objective: 2 AACSB: Application of knowledge 16) A cost may be direct for one cost object and indirect for another cost object. Answer: TRUE Diff: 1 Objective: 2 AACSB: Application of knowledge
Suggested Books Ronald W. Hilton, and David E. Platt Managerial Accounting, MCgraw Hill, Irwin. Charles T. Horngren, Srikant M. Datar and George foster, Cost Accounting , A managerial Emphasis, Pearson Education Colin Drury, Management and Cost Accounting, ELBS with Chapman and HallJerry J. Weygandt, Jawah
Araling Panlipunan . ang ikalawang sangay ng heograpiya – ang heograpiyang pantao na tumutukoy sa pag-aaral ng wika, lahi, relihiyon, at pangkat-etnolingguwistiko sa iba’t ibang bahagi ng daigdig. Ang mga paksa na nakapaloob sa modyul na ito ay sistematikong inayos upang mas madaling maunawaan ang daloy ng iyong pag-aaral. May mga angkop na gawaing inihanda para sa iyo upang maging .
