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##### (Solved) (Latest ver. Aug 2020) - Multiple choice accounting

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Question:

1. Total fixed costs for product A are \$23,400 per month; the variable cost per unit is determined to be \$32; the selling price is \$45. A firm must sell ____ units to generate \$12,000 per month in profits.
a. 876
b. 1,800
c. 1,853
d. 2,723

2. A firm generates \$81,000 in revenue from selling so many units of product B; total contribution margin is \$27,000 and profit is \$9,000; fixed costs per unit are \$4.00. The firm sold ______ units.
a.9,000
b.4,500
c.2,250

3. Variable cost per unit of product B in question above is:
a. \$12 b.\$6 c.\$8 d.not calculable without additional data.

The cost schedule of a refrigerator manufacturer included the following: monthly insurance premiums on the plant - \$4,500; cooling unit cost - \$65; monthly machine rental charge -\$12,000; weekly payroll cost (salaried employees) - \$82,000; weekly payroll cost (direct labor) - \$112,000; solenoid switch - \$18. Monthly depreciation on equipment is \$13,000. The firm produces 880 units per month.

4. The firm's variable costs total:
a.\$ 73,040
a.\$112,083
b.\$185,040
c.\$128,583
d. \$210,583

5. The variable cost per unit is:
a. \$ 83.00
b. \$127.37
c. \$210.27
d. \$239.30

A firm expects to sell 5,000 units of its product. Each unit requires 2 liters of materials @ \$6 per liter and 2 labor hours @ 6.50 per direct labor hour. The overhead rate is \$12 per direct labor hour. Beginning inventories are: direct materials, 1,000 liters; finished goods, 1,500 units. The planned ending inventories are: direct materials, 1,500 liters; finished goods, 1,000 units.

6. Planned production for the period is:
a. 4,500 units
b. 5,500 units
c. 6,000 units
d. 3,500 units

7. Planned materials purchase is:
a. \$36,000
b. \$54,000
c. \$57,000
d. \$69,000

8. Planned labor costs for the period are:
a. \$45,500
b. \$39,000
c. \$35,750
d. \$58,500

9. Assume that budgeted cost of goods sold is \$325,000; general and administrative costs and selling expenses are expected to be \$112,000; selling price per unit is \$ 120, and the firm is taxed at a 35% rate. Budgeted net income is:
a. \$ 32,825
b. \$ 57,200
c. \$ 66,950
d. \$105,950

The following table represents actual data for December and budgeted data for January, February and March for the Holloway Company.

Sales
Purchases
Expenses

December (actual)
\$120,000
\$70,000
\$31,000

January (budgeted)
\$84,000
\$60,000
\$27,000

February (budgeted)
\$100,000
\$64,000
\$28,000

March (budgeted)
\$108,000
\$58,000
\$30,000

All of the firm's sales are on credit. On average, 60% of sales are collected in the first month, and the remaining sales the following month. The firm offers a 3% sales discount on all collections in the month of sale. The firm pays 75% of purchases during the first month and the balance in the following month, and receives a 4% discount on payments made in the month of purchase.

10. Cash receipts in February for sales in January are expected to be:
a. \$32,592
b. \$33,600
c. \$56,454
d. \$58,200

11. Cash receipts in February for February sales are expected to be:
a. \$32,592
b. \$56,454
c. \$58,200
d. \$91,800

12. Total cash disbursements in March for purchases are expected to be:
a. \$41,760
b. \$57,760
c. \$87,760
d. \$102,856

13. The firm expects a positive cash inflow for.
a. January, February and March
b. January and February Only.
c. January and March only
d. February and March only.
e. none of the budgeted three months.

14. A direct labor rate variance could occur if:

a. the materials used in production are more expensive than anticipated.
b. a production employee takes longer to produce one unit than was originally expected.
c. a production worker performs a task that is higher than his assigned level.
d. fixed and variable overhead are separated in the calculation of standard costs

15. The difference between actual hours worked and standard hours allowed multiplied by the standard labor rate is called:
a. efficiency variance.
b. rate variance.
c. quantity variance.
d. total direct labor cost variance

The controller for Owen Manufacturing developed cost and usage data for the coming year: fixed standard overhead = \$22.00 per labor hour; variable standard overhead = \$15.00 per labor hour; materials quantity standard = 1.75 Ibs per product; labor hour standard = 6.0 hours per product; materials price standard = \$48 per pound; labor rate standard = \$15.00 per hour.

16. The standard unit cost for materials is:
a. \$ 48.00
b. \$ 58.50
c. \$ 84.00
d. \$288.00

17. The standard unit cost for overhead is:
a.\$ 8.80
b.\$ 85.00
c.\$132.00
d.\$222.00

18. The total standard unit cost is:
a. \$280.50
b. \$306.00
c. \$360.00
d. \$396.00

19. Which of the following is an example of a performance measurement?
a. product quality
b. customer satisfaction
c. number of customer complaints
d. all of the above

20. A unit whose manager is responsible only for costs incurred by that unit is known as a(n):
a.profit center.
b.investment center.
c.revenue center.
d.cost center.

21. The primary difference between a profit center and an investment center is:
a. an investment center does not generate profits internally, but decides how to invest profits generated by the firm.
b. a profit center does not make final decisions on the quantity and quality of assets that the firm uses.
c. an investment center manager need not account for the internal costs of his department.
d. a profit center holds assets not directly used in operations on its books.

22. Given the following information, determine the ROI for 10/2001 for an investment center:
Assets at 9/30/2001 \$50,000,000
Assets at 10/31/2001 \$54,000,000

Operating income for month ended 10/31/2001-\$4,160,000

a. 7.70%
b. 8.00%
c. 8.32%
d. 15.41%

23. Calculate the August 2001 EVA for an investment center providing the following information:

Pre-tax operating income for 08/01 \$2,000,000
Income tax expense for 08/01 \$ 560,000
Assets at 08/31/01 \$8,000,000
Current liabilities at 08/31/01 \$5,000,000
Long-term liabilities at 08/31/01 \$3,000,000
Minimum desired rate of return 25%

a. \$ 190,000
b. \$ 690,000
c. \$1,250,000
d. \$1,440,000

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