1. Commissions Expense would likely be classified in which cost behavior categor
ID: 2428127 • Letter: 1
Question
1. Commissions Expense would likely be classified in which cost behavior category?
A. Fixed
B. Mixed
C. Variable
2. The expense of operating a shipping department would likely be classified in which cost behavior category?
A. Fixed
B. Mixed
C. Variable
3. Property tax on an office building would likely be classified in which cost behavior category?
A. Fixed
B. Mixed
C. Variable
4. Inventoriable costs eventually appear as expenses on an income statement as part of:
A. the cost of goods sold
B. selling expenses
C. administrative expenses
5. Which of the following would one be able to find on a job cost sheet in a typical job cost system?
Actual direct material cost Actual manufacturing overhead cost
A. Yes Yes
B. Yes No
C. No Yes
D. No No
6. Which of the following enterprises would be more likely to use process costing rather than job-order costing?
A. A manufacturer of yachts
B. A small appliance repair shop
C. A tire manufacturer
7. A predetermined overhead rate is based on direct labor-hours to apply manufacturing overhead to jobs. For a particular month, manufacturing overhead cost was estimated to be $30,000; direct labor-hours were estimated to be based 10,000. Actual overhead was $32,500; actual direct labor-hours were 11,000. By how much was overhead overapplied or underapplied?
A. $2,500 overaplied
B. $2,500 underapplied
C. $500 overapplied
D. $500 underapplied
8. In job order costing, the different between total manufacturing costs and the cost of goods manufactured is:
A. the change in work-in-process inventory over the related period
B. work-in-process inventory at the end of the related period
C. Zero as total manufacturing costs and the cost of goods manufactured are the same thing
9. In process costing, a separate work in process account is kept for each:
A. processing department
B. individual order
C. equivalent unit
10. Which of the following is part of manufacturing overhead?
A. Direct labor cost
B. Indirect labor cost
C. Office depreciation
11. The salary of the president of a manufacturer is part of manufacturing overhead.
A. True
B. False
12. Depreciation on machines used in manufacturing is considered to be:
A. a direct manufacturing cost
B. an indirect manufacturing cost
C. an operating cost of the period
13. The salary of a manager for a warehouse used to store a computer manufacturers finished computers is:
A. a direct manufacturing cost
B. an indirect manufacturing cost
C. an operating cost of the period
14. The cost of shipping memory chips to a computer manufacturer is:
A. a direct manufacturing cost
B. an indirect manufacturing cost
C. an operating cost of the period
Use this info to answer questions 15 through 17:
Selling Price per unit $17
Fixed Expenses
Selling and Administrative $130,000
Interest Expense $10,000
Variable Expenses
Cost of Goods Sold $4
Selling and Administrative $3
15. What is the companys contribution margin?
A. $10
B. $13
C. $14
16. What is the break-even point in units?
A. 10,000
B. 14,000
C. 20,000
17. If the company wants to earn a profit of $42,000, what is the number units the company must sell?
A. 14,000
B. 18,200
C. 26,000
Use this info to answer questions 18 through 20:
Fixed Expenses
Rent $24,000
Salaries $40,000
Depreciation $13,000
Variable Expenses
Cost of Goods Sold 58% of sales
Supplies 7% of sales
Sales Commissions 5% of sales
18. What is the company's contribution margin ratio?
A. 30%
B. 70%
C. Cannot be determined
19. What is the break-even point in dollars?
A. $77,000
B. $110,000
C. $256,667
20. If the company wants to earn a profit of $35,000, what is the amount of sales the company must achieve?
A. $112,000
B. $145,000
C. $373,333
21. Decreasing a company's fixed expenses will reduce the break-even point.
A. True
B. False
22. Increasing a company's sales will reduce the break-even point.
A. True
B. False
23. Decreasing a company's variable expenses will reduce the break-even point.
A. True
B. False
24. A product with a high gross profit could still be an unprofitable product.
A. True
B. False
25. Fixed expenses are best described as expenses that remain the same
A. in total even when activity triples
B. in total within a reasonable change in activity
C. on a per unit basis as activity changes
26. Under variable costing, producing more units than the number of units sold in a period will:
A. cause net operating income for the period to decrease
B. cause net operating income for the period to increase
C. have no effect on net operating income for the period
27. Which costs are the most relevant in deciding between two alternatives?
A. Future costs that differ
B. Future costs that do not differ
C. Historical costs
28. In decision making, it is probably safe to say that costs which are based as "allocated" are:
A. Irrilevant
B. Relevant
C. Sunk
29. The heading of the statement of cash flows should specify:
A. a period of time
B. a point in time
C. neither a peiod nor a point in time
Explanation / Answer
1. B 2. C 3. A 4. A 5. D 6. A 7. D 8. B 9. A 10. B 11. A 12. C 13. B 14. A 15. A 16. A 17. B 18. B 19. C 20. C 21. A 22. B 23. A 24. B 25. B 26. A 27. A 28. B 29. A 30. C
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