MC evestions(Spoin ) Whichofthe following ts a makrowsileration when analyzing a
ID: 2517953 • Letter: M
Question
MC evestions(Spoin ) Whichofthe following ts a makrowsileration when analyzing aapwcal A) The sales prie must be high wnough to over any differential costs to fll he 8) The O The paofite margin ratio of the special sale must be higher than the rogular sales ) The sunk sts of the decision must not escoed the irrelevant costs pricing onde 2) Which of thelwing is considered a period cost under variable costing but not under A) Rvud selting and administrative costs R) variable manufaxcturing costs O Rved manufacturing overhead D) variable selling and administrative costs from sales revenue. 3) Goss proit is cakulated by deducting A) total ived costs 8) 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 & 2S Early Exam 4-11-2018Explanation / Answer
1) Which of the following is a major consideration when analysing a special pricing decision?
Answer: Option A: The sales price must be high enough to cover any differential costs to fill the order.
Explanation: Consideration when analysing a special pricing decision
2) Which of the following is considered a period cost under variable costing but not under absorption costing?
Answer: Option C: Fixed manufacturing overhead
Explanation: Under absorption costing system, the product cost consists of all variable as well as all fixed manufacturing costs i.e., direct materials, direct labor and factory overhead (FOH). But when variable costing system is used, the fixed cost (both manufacturing and non-manufacturing) is treated as a period or capacity cost and is, therefore, not included in the product cost.
3) Gross profit is calculated by deducting …….. from sales revenue?
Answer: Option B : Cost of goods sold
Gross profit is the profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services. Gross profit will appear on a company's income statement, and can be calculated with this formula:
Gross profit = Revenue - Cost of Goods Sold
4) Which of the following statements is true of the budgeting process?
Answer: Option A : it is a continuous process that encourages communication.
5) Which of the following describes the production budget?
Answer: Option B It provides the quantity of finished goods to be produced during a budget period.
Explanation: Production budget is a schedule showing planned production in units which must be made by a manufacturer during a specific period to meet the expected demand for sales and the planned finished goods inventory.
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