Acc Week 2 Test

1. Which of the following is true regarding the contribution margin ratio of a single product company? (Points : 2)

As fixed expenses decrease, the contribution margin ratio increases.
The contribution margin ratio multiplied by the selling price per unit equals the contribution margin per unit.
The contribution margin ratio will decline as unit sales decline.
The contribution margin ratio equals the selling price per unit less the variable expense ratio.

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2. If a company is operating at the break-even point: (Points : 2)

its contribution margin will be equal to its variable expenses.
its margin of safety will be equal to zero.
its fixed expenses will be equal to its variable expenses.
its selling price will be equal to its variable expense per unit.

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3. Target profit analysis is used to answer which of the following questions? (Points : 2)

What sales volume is needed to cover all expenses?
What sales volume is needed to cover fixed expenses?
What sales volume is needed to earn a specific amount of net operating income?
What sales volume is needed to avoid a loss?

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4. The margin of safety can be calculated by: (Points : 2)

Sales (Fixed expenses/Contribution margin ratio).
Sales
(Fixed expenses/Variable expense per unit).
Sales
(Fixed expenses + Variable expenses).
Sales
Net operating income.

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5. Sorin Inc., a company that produces and sells a single product, has provided its contribution format income statement for January.



If the company sells 4,600 units, its total contribution margin should be closest to: (Points : 2)

$54,600
$59,800
$69,400
$13,362

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6. Decaprio Inc. produces and sells a single product. The company has provided its contribution format income statement for June.



If the company sells 9,200 units, its net operating income should be closest to: (Points : 2)

$27,077
$49,900
$36,700
$25,900

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7. The margin of safety in the Flaherty Company is $24,000. If the company's sales are $120,000 and its variable expenses are $80,000, its fixed expenses must be: (Points : 2)

$8,000
$32,000
$24,000
$16,000

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8. Jilk Inc.'s contribution margin ratio is 58% and its fixed monthly expenses are $36,000. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $103,000? (Points : 2)

$23,740
$59,740
$67,000
$7,260

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9. Borich Corporation produces and sells a single product. Data concerning that product appear below:



The break-even in monthly unit sales is closest to: (Points : 2)

2,055
4,030
4,194
3,426

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10. Data concerning Follick Corporation's single product appear below:



The break-even in monthly dollar sales is closest to: (Points : 2)

$1,148,400
$638,851
$321,552
$446,600

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11. Hettrick International Corporation's only product sells for $120.00 per unit and its variable expense is $52.80. The company's monthly fixed expense is $396,480 per month. The unit sales to attain the company's monthly target profit of $13,000 is closest to: (Points : 2)

7,755
6,093
5,753
3,412

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12. The costing method that treats all fixed costs as period costs is: (Points : 2)

absorption costing.
job-order costing.
variable costing.
process costing.

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13. Under the variable costing method, which of the following is always expensed in its entirety in the period in which it is incurred? (Points : 2)

fixed manufacturing overhead cost
fixed selling and administrative expense
variable selling and administrative expense
All of these

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14. Net operating income under variable and absorption costing will generally: (Points : 2)

always be equal.
never be equal.
be equal only when production and sales are equal.
be equal only when production exceeds sales.

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15. Fleet Corporation produces a single product. The company manufactured 700 units last year. The ending inventory consisted of 100 units. There was no beginning inventory. Variable manufacturing costs were $6.00 per unit and fixed manufacturing costs were $2.00 per unit. What would be the change in the dollar amount of ending inventory if variable costing was used instead of absorption costing? (Points : 2)

$800 decrease
$200 decrease
$0
$200 increase

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16. A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:



What is the total period cost for the month under the absorption costing approach? (Points : 2)

$56,700
$65,500
$8,800
$37,800

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17. A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:



What is the unit product cost for the month under variable costing? (Points : 2)

$118
$94
$111
$87

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18. A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:



What is the net operating income for the month under variable costing? (Points : 2)

$12,700
$5,600
$1,700
$14,400

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19. The following data pertain to last year's operations at Clarkson, Incorporated, a company that produces a single product:



What was the absorption costing net operating income last year? (Points : 2)

$44,000
$48,000
$50,000
$49,000

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20. Beamish Inc., which produces a single product, has provided the following data for its most recent month of operations:



There were no beginning or ending inventories. The unit product cost under absorption costing was: (Points : 2)

$93
$97
$136
$194

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