CHAPTER 1 – COST VOLUME PROFIT- MULTIPLE CHOICE QUESTIONS 1. CVP analysis can be used to study the effect of: A. changes in selling prices on a company ’s profitability. B. changes in variable costs on a company ’s profitability. C. changes in fixed costs on a company ’s profitability. D. changes in product sales mix on a company ’s profitability. E. All of these. 2. The break-even point is that level of activity where: A. total revenue equals total cost. B. variable cost equals fixed cost. C. total
Premium Variable cost Costs Contribution margin
$18‚000 at the end of an accounting period. The job cost sheets of the two uncompleted jobs show charges of $6‚000 and $3‚000 for materials‚ and charges of $4‚000 and $2‚000 for direct labor. From this information‚ it appears that the company is using a predetermined overhead rate‚ as a percentage of direct labor costs‚ of: A. 50% B. 200% C. 300% D. 20% 2. Job 607 was recently completed. The following data have been recorded on its job cost sheet: The company applies manufacturing overhead
Premium Variable cost Costs Management accounting
Variable costing vs Absorption costing Variable and Absorption costing are two different methods and ways that many organizations use to determine and calculate product cost. The income statements formats of both methods include period and product costs. However‚ each one has a different cost classification definition. Both have the same direct material and direct labor allocation‚ the differences is how they report the income‚ product‚ and pricing One of the main differences between
Premium Price Income statement Inventory
to add that cost behavior is also identifying the key resources that are performed‚ resources used in performing these activities‚ costs of the resources‚ and what the cost is driven from. 2-2. Two rules of thumb when analyzing cost behavior are to manage what the company manufactures‚ sells‚ and to give advice as to where costs can be reduced. 2-3. Three examples of a variable cost are a 12% increase in the production of dresses‚ which will cause a 12% increase in variable costs. A 10% increase
Premium Variable cost Costs Contribution margin
1. Cost of goods manufactured will usually include: A. only direct labor and direct materials costs. B. some costs incurred during the prior period as well as costs incurred during the current period. C. only costs incurred during the current period. D. some period costs as well as some product costs. 2. During the month of August‚ direct labor cost totaled $13‚000 and direct labor cost was 20% of prime cost. If total manufacturing costs during August were $88‚000‚ the manufacturing overhead
Premium Variable cost Costs Management accounting
Jump to Navigation Frame Your location: Assessments › View All Submissions › View Attempt View Attempt 1 of 2 Title: | Exam 2 (Chapters 10-18) | Started: | July 7‚ 2011 12:16 AM | Submitted: | July 7‚ 2011 2:11 AM | Time spent: | 01:54:47 | Total score: | 94/200 = 47% Total score adjusted by 0.0 Maximum possible score: 200 | 1. | Chapter 10 #265 | | Use this information for questions that refer to the World Tennis Ball (WTB) Company case. World Tennis Ball Co. (WTB) makes
Premium Variable cost Sales Fixed cost
1. Which of the following would increase the likelihood that a company would increase its debt ratio in its capital structure? a. An increase in costs incurred when filing for bankruptcy. b. An increase in the corporate tax rate. c. An increase in the personal tax rate. d. None of the statements above is correct. ANSWER: B An increase in the corporate tax rate would mean that firms would get larger tax breaks for interest payments. Therefore‚ firms have an incentive to increase interest payments
Premium Variable cost Costs Total cost
retail outlets. Trucks are used to transport the goods from two plants to the warehouses‚ and then from the warehouses to the three retail outlets. Using the units of full truckloads‚ the following table shows each plant’s monthly output‚ its shipping cost per truckload sent to each warehouses‚ and the
Premium Variable cost Costs Marginal cost
Question4: What closing time should Citywide Spirits Shoppe choose to maximize profits? Through the Attachment: (Evening time) Contribution Margin = average purchase revenue-average purchase cost = $30.52-$23.25 = $7.27 per customer per purchase Average numbers of customer: (Attachment 2) close time averge customers Time Total customer 10pm 10.18 10pm~11pm 12 11pm 10.16 10pm~12pm 21 12pm 10.08 10pm~1am 27 1am 9.71 10pm~2am 32 2am 9.4 10pm~3am 36 3am 9.06 10pm~4am
Premium Variable cost Mathematics Economics
change of RELEVANT items ONLY. The company’s calculation is WRONG‚ as it takes into concern of irrelevant fixed cost. By double-counting depreciation‚ other Mfg. overheads‚ SG&A in Sunday’s cost; it distorts the P&L sheet. To correctly show cost structure for decision making‚ there are two different approaches‚ yet each should reach same conclusion. Approach 1: Differential Cost Approach As suggested in case‚ by producing 4 unites on Sunday‚ total depreciation‚ total Mfg. overhead and SG&A
Premium Variable cost Mathematics Management accounting