MC questions ( 5 points) 1) Which of the following is a major consideration when

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MC questions ( 5 points) 1) Which of the following is a major consideration when analyzing a special pricing decision? A) The sales price must be high enough to cover any differential costs to fill the order B) The company must have a good stock turnover ratio. G The profit margin ratio of the special sale must be higher than the regular sales. D) The sunk costs of the decision must not exceed the irrelevant costs. 2) Which of the following is considered a period cost under variable costing but not under absorption costing? A) fixed selling and administrative costs B) variable manufacturing costs C) fixed manufacturing overhead D) variable selling and administrative costs 3) Gross profit is calculated by deductingfrom sales revenue. A) total fixed costs B) cost of goods sold C) total variable costs D) selling and administrative costs 4) Which of the following statements is true of the budgeting process? A) If a company carefully plans for its future, there will be no need to make modifications during the budget period. B) It is a continuous process that encourages communication. C) It shows the actual performance of the business. D) Managers and employees are motivated to accept the budget's goals because they enjoy having their work monitored and evaluated. 5) Which of the following describes the production budget? A) It aids in planning to ensure the company has adequate inventory and cash on hand. B) It provides the quantity of finished goods to be produced during a budget period. C) It depicts the breakdown of sales on the basis of terms and conditions of collection of sales revenue. D) It helps in planning to ensure the business has adequate cash. S2018 ACCT 205 Exam # 3 Chaps 21, 22 & 25 Early Exam 4-11-2018

Explanation / Answer

1) A) The sales price must be high enough to cover any differential costs to fill the order       (all costs to fulfill the order must cover in price) 2) C) fixed manufacturing overhead 3) B) cost of goods sold    (the cost part of the goods sold out) 4) B) It is a continuous process that encourages communication. 5) B) It provides the quantity of finished goods to be produced during a buget period. (how much to produce to cater the projected sales)

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