multiple
2.5 Points |
A manager should always reject a special order if:
A. the special order price is less than the variable costs of the order. |
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B. there is available excess capacity. |
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C. the special order price is less than the regular sales price. |
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D. the special order will require variable nonmanufacturing expenses. |
Question 2 of 40 |
2.5 Points |
The effect of a plant closing on employee morale is an example of which of the following?
A. A qualitative factor |
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B. A quantitative factor |
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C. A sunk cost |
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D. A variable cost |
Question 3 of 40 |
2.5 Points |
Corny and Sweet grows and sells sweet corn at its roadside produce stand. The selling price per dozen is $3.75, variable costs are $1.25 per dozen, and total fixed costs are $750.00. What are breakeven sales in dollars?
A. $563 |
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B. $300 |
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C. $375 |
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D. $1,125 |
Question 4 of 40 |
2.5 Points |
Which of the following best describes a “sunk cost”?
A. Costs that were incurred in the past and cannot be changed |
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B. Benefits foregone by choosing a particular alternative course of action |
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C. A factor that restricts the production or sale of a product |
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D. Expected future data that differ among alternatives |
Question 5 of 40 |
2.5 Points |
Pluto Incorporated provided the following information regarding its single product:
Direct materials used |
$240,000 |
Direct labor incurred |
$420,000 |
Variable manufacturing overhead |
$160,000 |
Fixed manufacturing overhead |
$100,000 |
Variable selling and administrative expenses |
$60,000 |
Fixed selling and administrative expenses |
$20,000 |
The regular selling price for the product is $80. The annual quantity of units produced and sold is 40,000 units (the costs above relate to the 40,000 units production level). The company has excess capacity and regular sales will not be affected by this special order. There was no beginning inventory. What would be the effect on operating income of accepting a special order for 3,500 units at a sale price of $55 per product?
A. Increase by $115,500 |
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B. Increase by $269,500 |
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C. Decrease by $115,500 |
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D. Decrease by $269,500 |
Question 6 of 40 |
2.5 Points |
A product is sold at $60.00 per unit, the variable expense per unit is $30, and total fixed expenses are $200,000, what are the breakeven sales in dollars?
A. $3,333 |
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B. $100,000 |
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C. $133,333 |
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D. $400,000 |
Question 7 of 40 |
2.5 Points |
“Contribution margin per unit” is best described by which of the following?
A. Sales price per unit minus fixed cost per unit |
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B. Sales price per unit minus variable cost unit |
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C. Sales price per unit minus fixed and variable costs per unit |
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D. Units sold time contribution margin ratio |
Question 8 of 40 |
2.5 Points |
If total fixed costs are $455,000, the contribution margin per unit is $25.00, and targeted operating income is $25,000, how many units must be sold to breakeven?
A. 11,375,000 |
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B. 19,200 |
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C. 18,200 |
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D. 625,000 |
Question 9 of 40 |
2.5 Points |
The horizontal line intersecting the vertical y-axis at the level of total cost on a CVP graph represents:
A. total costs. |
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B. total variable costs. |
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C. total fixed costs. |
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D. breakeven point. |
Question 10 of 40 |
2.5 Points |
To find the breakeven point using the shortcut formulas, you use:
A. zero for the contribution margin per unit. |
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B. zero for the fixed expenses. |
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C. zero for the contribution margin ratio. |
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D. zero for the operating income. |
Question 11 of 40 |
2.5 Points |
In a special sales order decision, incremental fixed costs that will be incurred if the special order is accepted are considered to be:
A. opportunity costs. |
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B. irrelevant to the decision. |
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C. relevant to the decision. |
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D. sunk costs. |
Question 12 of 40 |
2.5 Points |
Assume the following amounts:
Total fixed costs |
$24,000 |
Selling price per unit |
$20 |
Variable costs per unit |
$15 |
If sales revenue per unit increases to $22 and 12,000 units are sold, what is the operating income?
A. $264,000 |
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B. $60,000 |
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C. $108,000 |
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D. $84,000 |
Question 13 of 40 |
2.5 Points |
Samson Incorporated provided the following information regarding its only product:
Sale price per unit |
$50.00 |
Direct materials used |
$160,000 |
Direct labor incurred |
$185,000 |
Variable manufacturing overhead |
$120,000 |
Variable selling and administrative expenses |
$70,000 |
Fixed manufacturing overhead |
$65,000 |
Fixed selling and administrative expenses |
$12,000 |
Units produced and sold |
20,000 |
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Assume no beginning inventory |
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Assuming there is excess capacity, what would be the effect on operating income of accepting a special order for 1,200 units at a sale price of $47 per product? The 1,200 units would not require any variable selling and administrative expenses. (NOTE: Assume regular sales are not affected by the special order.)
A. Increase by $84,300 |
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B. Decrease by $28,500 |
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C. Increase by $24,300 |
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D. Increase by $28,500 |
Question 14 of 40 |
2.5 Points |
The Muffin House produces and sells a variety of muffins. The selling price per dozen is $15, variable costs are $9 per dozen, and total fixed costs are $4,200. How many dozen muffins must The Muffin House sell to breakeven?
A. 10,500 |
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B. 700 |
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C. 280 |
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D. 175 |
Question 15 of 40 |
2.5 Points |
Sky High Seats manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but is currently producing and selling 75,000 seats per year. The following information relates to current production:
Sale price per unit |
$400 |
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Variable costs per unit: |
$220 |
Manufacturing |
$50 |
Marketing and administrative |
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Total fixed costs: |
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Manufacturing |
$750,000 |
Marketing and administrative |
$200,000 |
If a special sales order is accepted for 3,000 seats at a price of $300 per unit, and fixed costs increase by $10,000, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)
A. Decrease by $80,000 |
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B. Increase by $230,000 |
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C. Increase by $90,000 |
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D. Increase by $80,000 |
Question 16 of 40 |
2.5 Points |
The breakeven point may be defined as the number of units a company must sell to do which of the following?
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