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.

 

  

B. there is available excess capacity.

 

  

C. the special order price is less than the regular sales price.

 

  

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

 

  

B. A quantitative factor

 

  

C. A sunk cost

 

  

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

 

  

B. $300

 

  

C. $375

 

  

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

 

  

B. Benefits foregone by choosing a particular alternative course of action

 

  

C. A factor that restricts the production or sale of a product

 

  

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

 

  

B. Increase by $269,500

 

  

C. Decrease by $115,500

 

  

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

 

  

B. $100,000

 

  

C. $133,333

 

  

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

 

  

B. Sales price per unit minus variable cost unit

 

  

C. Sales price per unit minus fixed and variable costs per unit

 

  

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

 

  

B. 19,200

 

  

C. 18,200

 

  

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.

 

  

B. total variable costs.

 

  

C. total fixed costs.

 

  

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.

 

  

B. zero for the fixed expenses.

 

  

C. zero for the contribution margin ratio.

 

  

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.

 

  

B. irrelevant to the decision.

 

  

C. relevant to the decision.

 

  

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

 

  

B. $60,000

 

  

C. $108,000

 

  

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

 

 

Assume no beginning inventory

 


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

 

  

B. Decrease by $28,500

 

  

C. Increase by $24,300

 

  

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

 

  

B. 700

 

  

C. 280

 

  

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

 

 

Variable costs per unit:

$220

     Manufacturing

$50

     Marketing and administrative

 

 

 

Total fixed costs:

 

     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

 

  

B. Increase by $230,000

 

  

C. Increase by $90,000

 

  

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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