Use this practice exarm to prepare for your Final here. MULTIPLE CHOICE. Choose
ID: 2409663 • Letter: U
Question
Use this practice exarm to prepare for your Final here. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question 1) Wu Company incurred $40,000 of fixed cost and $50,000 of variable cost when 4,000 units of product were made and sold to 5,000 units, the company's total costs will be: )$80,000 If the company's volume A) $90,000 D) $100,000 2) What information does the sales budget provide for pro forma financial statements? A) The ending balance in accounts payable which appears on the pro forma balance sheet BTotal budgeted sales to be used on the pro forma income statement Q) Cash collections from customers to be used on the pro forma balance sheet D) All of these answers are correct. 3) The following information relates to Minimart's 2012 accounting period: $17,000 33,000 25,000 3.000 4,000 5,000 Raw materials used Direct labor wages and salaries Sales salaries a Depreciation on manufacturing equipment Rent on manufacturing facilities Administrative supp Sales revenue lies and utilities 105,000 Units of products produced 4.000 4.000 Units of products sold Based on this information, Minimart's total manufacturing costs for 2012 equal: $57,000 B) $75,000 C) $87,000 D) $50,000 9) Wu Company incurred $40,000 of fixed cost and $50,000 of variable cost when 4,000 units of product were made and sold. If the company's volume doubles, the total cost per unit will: A) double as well. C) increase but will not double. B) stay the same. D)decreaseExplanation / Answer
1.
Fixed Cost
$ 40,000
Variable cost
$ 50,000
Variable cost per unit ($ 50,000/4,000)
$ 12.50
x No. of units produced
5,000
Total variable cost for 5,000 units
$ 62,500
Add: Fixed cost
$ 40,000
Total cost for 5,000 units
$ 102,500
Hence option “B. $ 102,500” is correct answer.
2.
Sales budget forecasts the expected sales for the incoming period and reveals the total budgeted sales by multiplying number of budgeted units and estimated unit price. This total budgeted sale is used as a base figure in pro forma income statement.
Hence option “B. Total budgeted sales to be used on the pro forma income statement” is correct answer.
3.
Manufacturing cost = Direct material + direct labor + Factory overhead
Raw material used
$ 17,000
Direct labor, Wages and salaries
$ 33,000
Depreciation on manufacturing equipment
$ 3,000
Rent on manufacturing facilities
$ 4,000
Total manufacturing cost
$ 57,000
Hence option “A. $ 57,000” is correct answer.
4.
For 4,000 units
For 8,000 units
Fixed Cost
$ 40,000
$ 40,000
Add: Variable cost
$ 50,000
$ 100,000
Total cost for 4,000 units
$ 90,000
$ 140,000
÷No. of units produced
4,000
8,000
Cost per unit
$ 22.50
$ 17.50
Variable cost per unit = Total variable cost/No. of units produced
= $ 50,000/4,000 = $ 12.50
Total variable cost for 8,000 units = $ 12.50 x 8,000 = $ 100,000
Hence option “D. decreases” is correct answer.
Fixed Cost
$ 40,000
Variable cost
$ 50,000
Variable cost per unit ($ 50,000/4,000)
$ 12.50
x No. of units produced
5,000
Total variable cost for 5,000 units
$ 62,500
Add: Fixed cost
$ 40,000
Total cost for 5,000 units
$ 102,500
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