29 Jun Question 1. Use the following information to determine the gr
Question
1. Use the following information to determine the gross margin for Pacific States Manufacturing for the year just ended (all amounts are in thousands ($000) of dollars:
Sales $31,800
Purchases of direct materials 7,000
Direct labor 5,000
Work in process inventory, 1/1 800
Work in process inventory, 12/31 3,000
Finished goods inventory, 1/1 4,000
Finished goods inventory, 12/31 5,300
Accounts payable, 1/1 1,700
Accounts payable, 12/31 1,500
Direct materials inventory, 1/1 6,000
Direct materials inventory, 12/31 1,000
Indirect labor 600
Indirect materials used 500
Utilities expense, factory 1,900
Depreciation on factory equipment 3,500
Gross Margin _________________
2. Which costs will change with a decrease in activity within the relevant range?
A) Total fixed costs and total variable cost.
B) Unit fixed costs and total variable cost.
C) Unit variable cost and unit fixed cost.
D) Unit fixed cost and total fixed cost.
3. An increase in the activity level within the relevant range results in:
A) an increase in fixed cost per unit.
B) a proportionate increase in total fixed costs.
C) an unchanged fixed cost per unit.
D) a decrease in fixed cost per unit.
Use the following
to answer questions 4-5:
The following information has been provided by the Evans Retail Stores, Inc., for the first quarter of the year:
Sales $350,000
Variable selling expense 35,000
Fixed selling expenses 25,000
Cost of goods sold (variable) 160,000
Fixed administrative expenses 55,000
Variable administrative expenses 15,000
4. The gross margin of Evans Retail Stores, Inc. for the first quarter is:
A) $210,000.
B) $140,000.
C) $220,000.
D) $190,000.
5. The contribution margin of Evans Retail Stores, Inc. for the first quarter is:
A) $300,000.
B) $140,000.
C) $210,000.
D) $190,000.
6. The total contribution margin decreases if sales volume remains the same and:
A) fixed expenses increase.
B) fixed expenses decrease.
C) variable expense per unit increases.
D) variable expense per unit decreases.
7. A company has provided the following data:
Sales 3,000 units
Sales price $70 per unit
Variable cost $50 per unit
Fixed cost $25,000
If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and all other factors remain the same, net income will:
A) decrease by $31,875.
B) decrease by $15,000.
C) increase by $20,625.
D) decrease by $3,125.
8. Wallace, Inc., prepared the following budgeted data based on a sales forecast of $6,000,000:
Variable Fixed
Direct materials $1,600,000
Direct labor 1,400,000
Factory overhead 600,000 $ 900,000
Selling expenses 240,000 360,000
Administrative expenses 60,000 140,000
Total $3,900,000 $1,400,000
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What would be the amount of sales dollars at the break-even point?
A) $2,250,000
B) $3,500,000
C) $4,000,000
D) $5,300,000
9. The following information pertains to Rica Company:
Sales (50,000 units) $1,000,000
Manufacturing costs:
Variable 340,000
Fixed 70,000
Selling and admin. expenses:
Variable 10,000
Fixed 60,000
How much is Rica’s break-even point in number of units?
A) 9,848
B) 10,000
C) 18,571
D) 26,000
Use the following to answer questions 10-11:
Dorian Company produces and sells a single product. The product sells for $60 per unit and has a contribution margin ratio of 40%. The company’s monthly fixed expenses are $28,800.
10. The variable expense per unit is:
A) $31.20.
B) $24.00.
C) $36.00.
D) $28.80.
11. The break-even point in sales dollars is:
A) $48,000.
B) $72,000.
C) $28,800.
D) $0.
12. An allocated portion of fixed manufacturing overhead is included in product costs under:
Absorption Variable
Costing costing
A) No No
B) No Yes
C) Yes No
D) Yes Yes
Use the following to answer questions 13-16:
Farron Company, which has only one
product, has provided the following data concerning its most recent month of operations:
Selling price $92
Units in beginning inventory 0
Units produced 8,700
Units sold 8,300
Units in ending inventory 400
Variable costs per unit:
Direct materials $13
Direct labor 55
Variable manufacturing overhead 1
Variable selling and administrative 5
Fixed costs:
Fixed manufacturing overhead $130,500
Fixed selling and administrative 8,300
13. What is the unit product cost for the month under variable costing?
A) $69
B) $84
C) $89
D) $74
14. What is the unit product cost for the month under absorption costing?
A) $74
B) $89
C) $69
D) $84
15. What is the net income for the month under variable costing?
A) $10,600
B) ($17,000)
C) $16,600
D) $6,000
16. What is the net income for the month under absorption costing?
A) ($17,000)
B) $16,600
C) $6,000
D) $10,600
17. Orion Corporation is preparing a cash budget for the six months beginning January 1. Shown below are the company’s expected collection pattern and the budgeted sales for the period.
Expected collection pattern:
65% collected in the month of sale
20% collected in the month after sale
10% collected in the second month after sale
4% collected in the third month after sale
1% uncollectible
Budgeted sales:
January $160,000
February 185,000
March
190,000
April 170,000
May 200,000
June 180,000
The estimated total cash collections during April from sales and accounts receivables would be:
A) $155,900.
B) $167,000.
C) $171,666.
D) $173,400.
18. Avril Company makes collections on sales according to the following schedule:
30% in the month of sale
60% in the month following sale
8% in the second month following sale
The following sales are expected:
Expected Sales
January $100,000
February 120,000
March 110,000
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