managerial accounting part v

Question 1

The equation which reflects a CVP income statement is

A) Sales = Cost of goods sold + Operating expenses + Net income.
B) Sales + Fixed costs = Variable costs + Net income.
C) Sales – Variable costs + Fixed costs = Net income.
D) Sales – Variable costs – Fixed costs = Net income.

Answer 1

D) Sales – Variable costs – Fixed costs = Net income.

Question 2

A variable cost is a cost that

A) varies per unit at every level of activity.
B) occurs at various times during the year.
C) varies in total in proportion to changes in the level of activity.
D) may or may not be incurred, depending on management’s discretion.

Answer 2

C) varies in total in proportion to changes in the level of activity.

Question 3

The labor costs that have been identified as indirect labor should be charged to

a. manufacturing overhead
b. direct labor.
c. the individual jobs worked on.
d. salary expense

Answer 3

a. manufacturing overhead

Question 4

What is work in process inventory generally described as?

a. Costs applicable to units that have been started in production but are only partially
completed
b. Costs associated with the end stage of manufacturing that are almost always complete
and ready for customers
c. Costs strictly associated with direct labor
d. Beginning stage production costs associated with labor costs dealing with bringing in
raw materials from the shipping docks

Answer 4

a. Costs applicable to units that have been started in production but are only partially
completed

Question 5

A process cost accounting system is most appropriate when

a. a variety of different products are produced, each one requiring different types of
materials, labor, and overhead.
b. the focus of attention is on a particular job or order.
c. similar products are mass-produced.
d. individual products are custom made to the specification of customers.

Answer 5

c. similar products are mass-produced.

Question 6

Weatherspoon Company has a product with a selling price per unit of $200, the unit
variable cost is $110, and the total monthly fixed costs are $300,000. How much is
Weatherspoon’s contribution margin ratio?

A) 45%
B) 55%
C) 150%
D) 182%

Answer 6

A) 45%

contribution margin=Sales-Variable costs

=(200-110)=$90

contribution margin ratio=contribution margin/Sales

(90/200)

=45%

Question 7

Which of the following is NOT a batch-level activity?

a. Purchase ordering
b. Equipment setups
c. Inspection
d. Assembling

Answer 7

d. Assembling