1.Whether a cost behaves as a fixed cost or as a variable cost
depends upon the activity base used. presence of mixed costs.
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
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
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
Time remaining: 1:13:30
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
Time remaining: 1:12:58
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
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
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
Time remaining: 1:11:03
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
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
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
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
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
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
Time remaining: 1:02:49
25.The following partial balance sheet is provided for Templeton
What is the company's debt to assets ratio? 15% 67% 33% 50%
Time remaining: 1:02:16
26.The following information is provided for Steinfeld
What is this company's contribution margin? $90,000 $60,000
Time remaining: 1:01:33
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.
Time remaining: 1:01:00
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
Time remaining: 1:00:17
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
Time remaining: 0:59:45
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
Time remaining: 0:59:13
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
Time remaining: 0:58:32
32.The following income statement is provided for Flint,
What is this company's magnitude of operating leverage? 9.1 4.1
Time remaining: 0:57:42
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.
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
Time remaining: 0:56:53
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
Time remaining: 0:56:07
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.
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
40.If the company's volume increases to 1,500 units, the
company's total costs will be $87,500. $80,000. $90,000.