1.   Whether a cost behaves as a fixed cost or as a variable cost depends upon the

activity base used.

presence of mixed costs.

industry.

company.

 2.   Assuming a company's inventory increased during the period, which of the following misclassifications increases net income?

A) recording administrative salaries as a product cost

B) recording depreciation on production equipment as an expense

C) expensing raw material costs instead of including them in inventory

D) B and C

3.   The excess of a product's selling price over its variable costs is referred to as

contribution margin.

gross margin.

gross profit.

manufacturing margin.

4.   The Bryan Company reported the following income for 2010:

   

What is the company's net margin?

18%

13%

73%

27%

5.   Susan Mason is the manager of one department in a large store. In this capacity, which of the following kinds of information would she be interested in?

A) Information that is local, relevant, and timely

B) Information that is global and pertains to the business as a whole

C) Information that meets cost/benefit criteria

D) Both A and C

6.   Working capital is defined as

current assets less current liabilities.

current assets divided by current liabilities.

current liabilities divided by long-term liabilities.

total assets minus total liabilities.

7.   Pandori Company collected $500 from an account receivable. What impact will this transaction have on the firm's current ratio?

Not enough information is provided to answer the question.

No impact

Increase it

Decrease it

 8.   Which of the following types of labor costs will not initially flow through the balance sheet?

Assembly labor

Salaries for sales staff

Plant supervision

Material handling

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 9.   Mitchell Company has total current assets of $65,000 including inventory of $10,000, and current liabilities of $25,000. The company's current ratio is

3.1

3.6

1.9

2.6

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 10.   The Haas Company paid total cash dividends of $44,000 on 25,000 outstanding common shares. On the most recent trading day, the common shares sold at $80. What is this company's dividend yield?

3.2%

2.2%

5%

14.1%

11.   Identify the true statement regarding how product costs in a manufacturing company differ from product costs in a service company.

Service companies are less competitive than manufacturing companies.

Manufacturing companies accumulate product costs in inventory accounts, while services companies do not.

Manufacturing companies incur costs for supplies but service companies do not.

Service companies generally incur less labor costs than manufacturing companies.

12.   As a Certified Management Accountant, Donna is bound by the standards of ethical conduct issued by the Institute of Management Accountants. Her company currently produces a component used in manufacturing several of the firm's products. In a report evaluating the desirability of buying the component instead, Donna compared the expected purchase price of the component to the cost of materials contained in the component. Select the correct statement from the following.

Donna may have violated the competence standard because her report was incomplete in that it failed to consider the other costs required to manufacture the component in-house.

All of these are correct.

Donna may have violated the objectivity standard because she failed to disclose fully all relevant information that could influence this outsourcing decision.

Donna may have violated the confidentiality standard if she provided any confidential information about the firm's costs to outside vendors.

13.   Which of the following should be recorded as an asset?

Paid for a new advertising campaign

Paid rent on the warehouse used to store finished goods

Paid salary for the vice president of marketing

Paid for raw materials to be used in production

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 14.   Why do accountants normally calculate cost per unit as an average?

All of these are justifications for computing average unit costs.

Some manufacturing-related costs cannot be accurately traced to specific units of product.

Determining the exact cost of a product is virtually impossible.

Even when producing multiple units of the same product, normal variations occur in the amount of materials and labor used.

 15.   Pakeham Company has cash of $10,000, accounts receivable of $34,000, inventory of $26,000, and, equipment of $50,000. Assuming current liabilities of $24,000, this company's working capital is

$72,000.

$22,000.

$46,000.

$ 6,000.

 16.   Which of the following equations can be used to compute a firm's magnitude of operating leverage?

net income / sales

fixed costs / contribution margin

contribution margin / net income

net income / gross margin

 The following balance sheet information was provided by Paino Company:

   

 17.   Assuming net credit sales totaled $145,000 what is the company's accounts receivable turnover for 2009?

29 times

12 times

24 times

21 times

 18.   Assuming net credit sales totaled $120,000, what was the company's average number of days to collect receivables?

18.3 days

52.1 days

21.5 days

36.5 days

 19.   Assuming cost of goods sold is $110,000, what is the company's inventory turnover?

18.3 times

5.4 times

none of these

5.1 times

 20.   Assuming cost of goods sold is $165,000, what is the company's average number of days to sell inventory?

none of these

17.8 days

47.4 days

45.3 days

21.   Select the incorrect statement regarding the relevant range of volume.

Total cost per unit is expected to remain constant within the relevant range.

Total fixed costs are expected to remain constant within the relevant range.

Variable cost per unit is expected to remain constant within the relevant range.

Total variable costs are expected to vary in direct proportion with changes in volume within the relevant range.

22.   The following income statement is provided for Fornes Company in 2009:

   

What amount was the company's contribution margin?

$30,000

$11,000

$25,000

$26,000

23.   Which of the following is a product cost for a construction company?

All of these

Selling costs

Wages paid to the company's office manager

Cost of transporting raw materials to the job site

24.   Barker Company's break-even point is 10,000 units. Its product sells for $25 and has a $10 variable cost per unit. What is the company's total fixed cost amount?

Fixed costs cannot be computed with the information provided.

$250,000

$100,000

$150,000

                

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 25.   The following partial balance sheet is provided for Templeton Company:

   

What is the company's debt to assets ratio?

15%

67%

33%

50%

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 26.   The following information is provided for Steinfeld Company:

   

What is this company's contribution margin?

$90,000

$60,000

$35,000

$135,000

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 27.   Romo Corporation normally produces between 150,000 and 175,000 units each year. Producing more than 175,000 units alters the company's cost structure. For example, fixed costs increase because more space must be rented, and additional supervisors must be hired. The production range between 150,000 and 175,000 is called the

opportunity range.

relevant range.

differential range.

leverage range.

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 28.   DeHoag Corporation provided the following information from its financial records:

   

What is the amount of the company's earnings per share?

$3.20

$0.80

$0.72

$0.76

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 29.   Select from the following the incorrect statement regarding contribution margin.

At the breakeven point (where the company has neither profit nor loss), total fixed costs = total contribution margin

An increase in the amount of variable cost per unit will decrease contribution margin and profit, assuming that nothing else changes.

Sales - variable manufacturing costs = contribution margin

Net income + total fixed costs = contribution margin

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 30.   Berkut Company would break even at $600,000 in total sales. Assuming the company sells its product for $50 per unit, what is its margin of safety in units if sales total $800,000?

12,000 units

1,000 units

16,000 units

4,000 units

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 31.   Parshall Company paid $1,200 in rent expense. What impact will this transaction have on the company's working capital?

Not enough information is provided to answer the question.

No impact

Decrease it

Increase it

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 32.   The following income statement is provided for Flint, Inc.

    

What is this company's magnitude of operating leverage?

9.1

4.1

5.00

1.8

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During its first year of operations, Martin Company paid $4,000 for direct materials and $8,500 for production workers' wages. Lease payments and utilities on the production facilities amounted to $7,500 while general, selling, and administrative expenses totaled $3,000. The company produced 5,000 units and sold 4,000 units at a price of $7.50 a unit.

 33.   What is the amount of gross margin for the first year?

$14,000

$12,000

$7,500

$20,000

 34.   What is the amount of finished goods inventory for the first year?

$5,000

$4,000

$16,000

$2,500

 35.   What was Martin's net income for the first year in operation?

$11,000

$7,000

$14,000

$20,000

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 36.   At its $25 selling price, Paciolli Company has sales of $10,000, variable manufacturing costs of $4,000, fixed manufacturing costs of $1,000, variable selling and administrative costs of $2,000 and fixed selling and administrative costs of $1,000. What is the company's contribution margin per unit?

$0.60

$10

$0.40

$15

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    Wall Company incurred $30,000 of fixed cost and $40,000 of variable cost when 1,000 units of product were made and sold.

 37.   If the company's volume doubles, the cost per unit will

stay the same.

double as well.

increase but will not double.

decrease.

 38.  

 If the company's volume increases to 1,500 units, the cost per unit will be

$70.

$65.

$60.

$55.

 39.   If the company's volume doubles, the company's total cost will

decrease.

stay the same.

increase but will not double.

double as well.

 40.   If the company's volume increases to 1,500 units, the company's total costs will be

$87,500.

$80,000.

$90,000.

$105,000.