Management Accounting

Chapter 1

End-of-Chapter 1 Quiz

Which of the following best describes the function of managerial accounting within an organization?

Question 1 options:

It focuses on the organization as a whole, rather than on the organization's segments.

It places more emphasis on precision of data than financial accounting does.

It has its primary emphasis on the future. CORRECT

It is required by regulatory bodies such as the Ontario Securities Commission.

Which of the following is the stakeholder group whose interests are to be directly and formally protected
by effective corporate social responsibility?

Question 2 options:

All Stakeholders CORRECT

Creditors

Suppliers

Customers

Which of the following is NOT a topic relating to managing and improving business processes?

Question 3 options:

Lean Production.

Enterprise Systems.

Risk Management.

Corporate Governance. CORRECT

Which of the following would be an example of a performance report?

Question 4 options:

An income statement showing the amounts budgeted for the past month.

A balance sheet showing the actual financial position at the end of the past month.

A production report showing budgeted and actual production for the past month. CORRECT

An income statement reporting actual results for the past month.

Budgeting is part of which of the following activities managers perform in organizations?

Question 5 options:

Planning. CORRECT

Motivating.

Controlling.

Directing.

Obtaining feedback is generally identified most directly with which of these functions of management?

Question 6 options:

Decision making.

Planning.

Directing and motivating.

Controlling. CORRECT

Which one of the following is NOT an example of corporate social responsibility provided to customers?

Question 7 options:

Full disclosure of product related risks.

Safe, high-quality products that are fairly priced.

Opportunities for training, promotion and personal development. CORRECT

Easy to use information systems for shopping and tracking orders.

Which of the following groups should be the focal point of a company's strategy?

Question 8 options:
Shareholders

Target customers CORRECT

Board of directors

Employees

Which of the following is NOT one of the three major customer value propositions discussed in the text?

Question 9 options:

Operational excellence

Product leadership

Customer intimacy

Discount pricing CORRECT

Which of the following should companies provide customers with?

Question 10 options:

Only those product risks that don't harm the reputation of the company.

Products that have a limited life and are unsafe.

Easy-to-use information systems for shopping and tracking orders. CORRECT

Delivery systems that are convenient to the company not to the customer.
Chapter 2

End-of-Chapter 2 Quiz

What would be the classification of the transportation costs incurred by a manufacturing company to
ship its product to its customers?

Question 1 options:

Product cost.

Period cost.

Administrative cost.

Manufacturing overhead. CORRECT

The following data (in thousands of dollars) have been taken from the accounting records of Karling
Corporation for the year just ended.

Sales $990

Raw materials inventory, beginning $40

Raw materials inventory, ending $70

Purchases of raw materials $120

Direct labour $200

Manufacturing overhead $230

Administrative expenses $150

Selling expenses $140

Work-in-process inventory, beginning $70

Work-in-process inventory, ending $50

Finished goods inventory, beginning $120

Finished goods inventory, ending $160

What was the cost of goods sold (in thousands of dollars) for the year?

Question 2 options:
$500. CORRECT

$660.

$700.

$580.

The Target store in your home town is one of many Target department stores across the province.
Some of the costs associated with the store in your home town last month appear below:

Shoe Department Cost of Sales $80,000

Other Department Salaries 62,000

Store Managers Salary 14,000

Shoe Department Sales Commissions 8,000

Store Utilities 13,000

Shoe Department Manager's Salary 9,000

Store Lease Cost 11,000

Store Janitorial Costs 11,000

Other Store Costs 98,000

The Shoe Department is one of many departments in the home town store. The direct costs of the Shoe
Department total:

Question 3 options:

$97,000 CORRECT

$88,000

$80,000

$108,000
Green Company's costs for the month of August are as follows:

Direct materials used $27,000

Direct labour $34,000

Sales salaries $14,000

Indirect labour $10,000

Indirect materials $15,000

General corporate administrative cost $12,000

Taxes on manufacturing facility $2,000

Rent on factory $17,000

The beginning work-in-process inventory is $16,000 and the ending work-in-process inventory is $9,000.
What is the cost of goods manufactured for the month?

Question 4 options:

$138,000.

$112,000. CORRECT

$105,000.

$132,000.

What would be the classification of corporate controller's salary?

Question 5 options:

Manufacturing cost.

Product cost.

Selling cost.

Administrative cost. CORRECT

The following data (in thousands of dollars) have been taken from the accounting records of Karling
Corporation for the year just ended.

Sales $990

Raw materials inventory, beginning $40

Raw materials inventory, ending $70

Purchases of raw materials $120

Direct labour $200

Manufacturing overhead $230

Administrative expenses $150

Selling expenses $140

Work-in-process inventory, beginning $70

Work-in-process inventory, ending $50

Finished goods inventory, beginning $120

Finished goods inventory, ending $160

What was the cost (in thousands of dollars) of the raw materials used in production during the year?

Question 6 options:

$160.

$190.

$150.

$90. CORRECT

You have the following data:

Cost of goods sold $70

Direct labour $20

Direct materials $15

Cost of goods manufactured $80

Work-in-process ending $10

Finished goods ending $15

Manufacturing overhead $30

Which of the following represents the beginning work-in-process inventory?

Question 7 options:

$20.

$55.

$25. CORRECT

$15.

The following data (in thousands of dollars) have been taken from the accounting records of Karling
Corporation for the year just ended.

Sales $990

Raw materials inventory, beginning $40

Raw materials inventory, ending $70

Purchases of raw materials $120

Direct labour $200

Manufacturing overhead $230

Administrative expenses $150

Selling expenses $140

Work-in-process inventory, beginning $70

Work-in-process inventory, ending $50

Finished goods inventory, beginning $120

Finished goods inventory, ending $160

What was the cost of goods manufactured (finished) for the year (in thousands of dollars)?

Question 8 options:

$500.
$570.

$540. CORRECT

$590.

During the month of May, Bennett Manufacturing Company purchases $43,000 of raw materials. The
manufacturing overhead totals $27,000 and the total manufacturing costs are $106,000. Assuming a
beginning inventory of raw materials of $8,000 and an ending inventory of raw materials of $6,000, what
must be the total for direct labour?

Question 9 options:

$34,000. CORRECT

$38,000.

$36,000.

$45,000.

Which one of the following costs should NOT be considered an indirect cost of serving a particular
customer at a Dairy Queen fast food outlet?

Question 10 options:

The cost of heating and lighting the kitchen.

The cost of the hamburger patty in the burger the customer ordered. CORRECT

The wages of the employee who takes the customer's order.

The salary of the outlet's manager.

Chapter 3

End-of-Chapter 3 Quiz

An income statement for Crandall's Bookstore for the first quarter of the current year is presented
below:

CRANDALL's BOOKSTORE

Income Statement for the First Quarter of the Current Year

Sales $800,000

Less: Cost of Goods Sold - all variable 560,000

Gross Margin 240,000

Less: Operating Expenses:

Selling $98,000

Administrative 98,000 196,000

Operating Income $44,000

On average, a book sells for $50. Variable selling expenses are $5.50 per book, with the remaining selling
expenses being fixed. The variable administrative expenses are 3% of sales, with the remainder being
fixed.

What is the contribution margin for Crandall's Bookstore for the first quarter?

Question 1 options:

$688,000.

$152,000.

$240,000.

$128,000. OPTION
What are committed fixed costs?

Question 2 options:

They are made up of plant, equipment, and basic organizational costs.

They have a long-term planning horizon, generally encompassing several years. OPTION

They vary directly and proportionately with the level of activity.

They can be reduced in the short run with minimal damage to the long-run organizational objectives.

Which of the following statements about contribution format income statement is incorrect?

Question 3 options:

It emphasizes the function of production, administration and sales with no distinguish between fixed and
variable costs OPTION

It is used as an internal planning and decision making tool

It facilitates cost volume profit analysis

It separates costs into fixed and variable first deducting variable expenses from sale to obtain
contribution margin

Gargymal Company would like to estimate the variable and fixed components of its electrical costs and
has compiled the following data for the last five months of operations:

Machine Hours Electrical Cost

August 1,000 $1,620

September 900 1,510

October 1,500 1,870

November 2,000 1,950

December 1,300 1,730

Using the high-low method, the estimated variable cost per machine hour for electricity is closest to
which of the following?

Question 4 options:

$0.98 per hour.

$0.40 per hour. OPTION

$1.68 per hour.

$2.50 per hour.

Wilson Company's activity for the first six months of the current year is as follows:

Machine Hours Electrical Cost

January 2,000 $1,560

February 3,000 2,200

March 2,400 1,750

April 1,900 1,520

May 1,800 1,480

June 2,100 1,600

Using the high-low method, what is the fixed portion of the electrical cost each month?

Question 5 options:

$760.

$280.

$190.

$400. OPTION

What is an activity base

Question 6 options

It is a measure of whatever causes a variable cost to be incurred OPTION

It is a fixed cost that cannot be avoided.

It is the largest single category of cost in a company.

It is an indirect cost that is essential to the business.

Which of the following best describes the contribution approach to the income statement?

Question 7 options:

It organizes costs on a functional basis.

It can be used only by manufacturing companies.

It shows a contribution margin rather than an operating income figure at the bottom of the statement.

It shows data based on the cost behavior aspect of fixed and variable. OPTION

At a sales level of $300,000, James Company's gross margin is $15,000 less than its contribution margin,
its operating income is $50,000, and its total selling and administrative expenses are $120,000. At this
sales level, what is the company's contribution margin?

Question 8 options:

$170,000. OPTION

$155,000.

$250,000.

$185,000.

Gasson Company is a merchandising firm. Next month, the company expects to sell 800 units. The
following data describe the company's revenue and cost structure:

Selling price per unit $40

Sales commission 5%

Purchase price (cost) per unit $18

Advertising expense $4,000 per month

Administrative expense $4,500 per month plus 15% of sales

What is the expected contribution margin next month?

Question 9 options:

$17,600.
$16,000. OPTION

$11,200.

$14,400.

Gasson Company is a merchandising firm. Next month, the company expects to sell 800 units. The
following data describe the company's revenue and cost structure:

Selling price per unit $40

Sales commission 5%

Purchase price (cost) per unit $18

Advertising expense $4,000 per month

Administrative expense $4,500 per month plus 15% of sales

What is the expected gross margin next month?

Question 10 options:

$17,600. OPTION

$11,200.

$14,400.

$16,400.
Multi-Chapter (1-3) Quiz 1

100%

Given the cost formula Y = $12,000 + $6X, what is the total cost at an activity level of 8,000 units?

Question 1 options:

$60,000.

$48,000.

$20,000.

$12,000.

Both financial and managerial accounting rely on the same underlying financial data but there are major
differences. Managerial Accounting:

Question 2 options:

emphasizes precision.

emphasizes relevance.

emphasizes financial consequences of past activities.

must follow GAAP.

Which of the following is NOT an example of a business risk?

Question 3 options:
 A website malfunctioning.

A customer value proposition.

Products harming customers.

An employee accessing unauthorized information.

At an activity level of 10,000 units, total variable costs were $35,000 while total fixed costs were
$20,800. If 16,000 units are produced and this activity is within the relevant range, which of the
following statements is correct?

Question 4 options:

Total costs would equal $89,280.

Fixed cost per unit would equal $5.58.

Total costs would equal $55,800.

Total unit cost would equal $4.80.

An analysis of past fixed maintenance costs indicates that maintenance cost is an average of $0.20 per
machine hour at an activity level of 10,000 machine hours and $0.25 per machine hour at an activity
level of 8,000 machine hours. Assuming that this activity is within the relevant range, what is the total
expected maintenance cost if the activity level is 8,700 machine hours?

Question 5 options:

$1,740.

$400.

$2,000.

$2,250.
The following information has been provided by the Evans Retail Stores, Inc., for the first quarter of the
year:

Sales $350,000

Variable Selling Expenses $35,000

Fixed Selling Expenses $25,000

Cost of Goods Sold $160,000

Fixed Administrative Expenses $55,000

Variable Administrative Expenses $15,000

What is the contribution margin of Evans Retail Stores, Inc., (in #9 above) for the first quarter?

Question 6 options:

$210,000.

$190,000.

$140,000.

$300,000.

Green Company's costs for the month of August are as follows:

Direct materials used $27,000

Direct labour $34,000

Sales salaries $14,000

Indirect labour $10,000

Indirect materials $15,000

General corporate administrative cost $12,000

Taxes on manufacturing facility $2,000

Rent on factory $17,000

The beginning work-in-process inventory is $16,000 and the ending work-in-process inventory is $9,000.
What is the cost of goods manufactured for the month?

Question 7 options:
 $105,000.

$132,000.

$112,000.

$138,000.

What does conversion cost consist of?

Question 8 options:

Direct materials and direct labour cost.

Direct labour and manufacturing overhead cost.

Direct labour cost.

Manufacturing overhead cost.

The following data pertain to activity and costs for two months:

October November

Activity level in units 5,000 10,000

Variable costs $10,000 ?

Fixed costs 30,000 ?

Mixed costs 20,000 ?

Total costs $60,000 $75,000

Assuming that these activity levels are within the relevant range, what were the mixed costs for
November?

Question 9 options:

$25,000.

$40,000.
 $20,000.

$35,000.

How would the cost of rent for a manufacturing plant generally be classified?

Question 10 options:

Both a prime cost and product cost.

A prime cost but not a product cost.

Neither a product nor prime Cost.

A product cost but not a prime cost.

The following information has been provided by the Evans Retail Stores, Inc., for the first quarter of the
year:

Sales $350,000

Variable Selling Expenses $35,000

Fixed Selling Expenses $25,000

Cost of Goods Sold $160,000

Fixed Administrative Expenses $55,000

Variable Administrative Expenses $15,000

What is the gross margin (Gross Profit) of Evans Retail Stores, Inc., for the first quarter?

Question 11 options:

$140,000.

$190,000.

$210,000.

$220,000.
Budgeting is part of which of the following activities managers perform in organizations?

Question 12 options:

Directing.

Controlling.

Planning.

Motivating.

For a manufacturing company, which of the following is an example of a period cost rather than a
product cost?

Question 13 options:

Insurance on factory equipment.

Wages of machine operators.

Wages of salespersons.

Depreciation of factory equipment.

When a decision is made among a number of alternatives, the benefit that is lost by choosing one
alternative over another is called what?

Question 14 options:

Accrued cost.

Opportunity cost.

Conversion cost.

Realized cost.
Last month, a manufacturing company had the following operating results:

Beginning finished goods inventory $74,000

Ending finished goods inventory $73,000

Sales $464,000

Gross margin $52,000

What was the cost of goods manufactured for the month?

Question 15 options:

$412,000

$411,000

$413,000

$463,000

Delta Merchandising, Inc., has provided the following information for the year just ended:

Net sales $128,500

Beginning inventory $24,000

Purchases $80,000

Gross margin $38,550

What was the ending inventory for the company at year-end?

Question 16 options:

$24,500.

$65,450.

$14,050.

$9,950.

How would the wages of factory maintenance personnel usually be classified?

Question 17 options:

Indirect labour and period cost

Direct labour and period cost.

Indirect labour and manufacturing overhead.

Direct labour and manufacturing overhead.

Gargymal Company would like to estimate the variable and fixed components of its electrical costs and
has compiled the following data for the last five months of operations:

Machine Hours Electrical Cost

August 1,000 $1,620

September 900 $1,510

October 1,500 $1,870

November 2,000 $1,950

December 1,300 $1,730

Using the high-low method, the estimated variable cost per machine hour for electricity is closest to
which of the following?

Question 18 options:

$0.98 per hour.

$0.40 per hour.

$1.68 per hour.

$2.50 per hour.

Which costs will change with a decrease in activity within the relevant range?

Question 19 options:
 Unit fixed cost and total variable costs.

Unit variable cost and unit fixed cost.

Total fixed costs and total variable costs.

Unit fixed cost and total fixed costs.

Which of the following would be an example of a performance report?

Question 20 options:

An income statement reporting actual results for the past month.

An income statement showing the amounts budgeted for the past month.

A production report showing budgeted and actual production for the past month.

A balance sheet showing the actual financial position at the end of the past month.

Chapter 4

End-of-Chapter 4 Quiz 70%

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, what will the outcome be for operating income?
Question 1 options:
Increase by $20,625.
Decrease by $31,875.
Decrease by $3,125.
 Decrease by $15,000.

Dodero Company produces a single product that sells for $100 per unit. Fixed expenses total
$12,000 per month, and variable expenses are $60 per unit. The company's sales average 500
units per month. Which of the following statements is correct?
Question 2 options:
The fixed expenses remain constant at $24 per unit for any activity level within the relevant range.
The company's contribution margin ratio is 40%.
Responses A, B, and C are all correct.
The company's break-even point is $12,000 per month.

Gerber Company is planning to sell 200,000 units for $2.00 a unit and will just break even at
this level of sales. The contribution margin ratio is 25%. What are the company's fixed
expenses?
Question 3 options:
$200,000.
$100,000.
$300,000.
$160,000.

Wallace, Inc., prepared the following budgeted data based on a sales forecast of $6,000,000:

Variable Fixed
Direct materials $1,600,000
Direct labour 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
What would be the amount of sales dollars at the break-even point?
Question 4 options:
$5,300,000.
$4,000,000.
 $2,250,000.
$3,500,000.

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
What is Rica's break-even point in units?
Question 5 options:
18,571 units.
9,848 units.
10,000 units.
26,000 units.

The following is last month's contribution format income statement:

Sales (15,000 units) $1,500,000

Less: variable expenses 900,000
Contribution margin 600,000
Less: fixed expenses 500,000
Operating income $100,000
What is the company's margin of safety in dollars?
Question 6 options:
$600,000.
$250,000.
$100,000.
 $1,500,000.

Kern Company prepared the following tentative budget for next year:

Sales $500,000
Selling price $5 per unit
Variable expenses $300,000
Fixed expenses $150,000
The sales manager argues that the unit selling price could be increased by 20%, with an
expected volume decrease of only 10%. If Kern incorporates these changes in its budget, what
should be the budgeted operating income?
Question 7 options:
$90,000.
$145,000.
$66,000.
$120,000.

The following is Addison Corporation's contribution format income statement for last month:

Sales $1,000,000
Less: variable expenses 700,000
Contribution margin 300,000
Less: fixed expenses 180,000
Operating income $120,000
The company has no beginning or ending inventories. A total of 20,000 units were produced
and sold last month.

What is the company's degree of operating leverage?

Question 8 options:
0.4.
 0.12.
2.5.
3.3.

Arthur Company had the following data for the year just ended:

Sales 4,000 units

Sales price $60 per unit
Variable cost $18 per unit
Fixed costs $42,000
If the company's sales volume increases by 30% next year, all other factors remaining the
same, by how much will its operating income increase?
Question 9 options:
$50,400.
$72,000.
$92,400.
$37,800.

Marston Enterprises sells three chemicals: petrol, septine, and tridol. Petrol's unit contribution
margin is higher than septine's, which is higher than tridol's. Which one of the following
events is most likely to increase the company's overall break-even point?
Question 10 options:
A change in the relative market demand for the products, with the increase favouring petrol relative to
septine and tridol.
A decrease in tridol's selling price.
An increase in the overall market demand for septine.
The installation of new computer-controlled equipment and subsequent lay-off of assembly-line workers.
TESTE

The following monthly budgeted data is available for the Baxter Company:

Sales (70,000 units x $75)

Variable Costs (70,000 x $41.25)
Total Fixed costs $1,687,500
Calculate the break-even units and sales for the month.
Question 1 options:
70,000 units and $2,362,500 Sales
50,000 units and $3,750,000 Sales
40,909 units and $5,250,000 Sales
26,500 units and $1,987,500

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
What is Rica's break-even point in units?
Question 2 options:
10,000 units.
9,848 units.
 18,571 units.
26,000 units.

The following data have been taken from the accounting records of Larner Corporation for the
year just completed:

Sales $12,000,000
Purchases of raw materials $ 5,150,000
Direct labour $1,679,000
Manufacturing overhead $3,340,000
Administrative expenses $1,790,000
Selling expenses $2,500,000
Raw materials inventory, beginning $370,000
Raw materials inventory, ending $524,000
Work-in-process inventory, beginning $456,000
Work-in-process inventory, ending $373,000
Finished goods inventory, beginning $598,000
Finished goods inventory, ending $637,000

Using the information above, what is the correct cost of goods manufactured.
Question 3 options:
$10,015,000
$4,996,000
$10,471,000
$10,098,000

When a decision is made among a number of alternatives, the benefit that is lost by choosing
one alternative over another is called what?
Question 4 options:
Conversion cost.
Opportunity cost.
Realized cost.
Accrued cost.

At a sales level of $300,000, James Company's gross margin is $15,000 less than its
contribution margin, its operating income is $50,000, and its total selling and administrative
expenses are $120,000. At this sales level, what is the company's contribution margin?
Question 5 options:
$250,000.
$170,000.
$185,000.
$155,000.

Which one of the following is NOT an example of corporate social responsibility provided to
customers?
Question 6 options:
Safe, high- quality products that are fairly priced.
Opportunities for training, promotion and personal development.
Easy to use information systems for shopping and tracking orders.
Full disclosure of product related risks.

Which of the following would not be considered as a business risk to a manufacturing

company that sells computers to retail stores?
Question 7 options:
Products not working as described on the packaging.
An end user suing for poor and misleading customer service.
Customers not providing the company accurate and complete information.
Employees not abiding by the company's code of ethics.
Which of the following is the stakeholder group whose interests are to be directly and
formally protected by effective corporate social responsibility?
Question 8 options:
Creditors
Suppliers
Customers
All Stakeholders

Which of the following is an example of a cost that is variable with respect to the number of
units produced and sold?
Question 9 options:
Insurance on the headquarters building.
Supervisory salaries.
Amortization of factory facilities.
Power to run production equipment.

Lake Company recorded the following data for the month of January 20xx:

Property Taxes, office 33,000

Net Sales Revenue 1,715,000
Direct Labour Costs 70,000
Indirect Labour Costs 85,000
Administrative Expenses 48,000
Utilities, (70% factory, 30% office) 90,000
Insurance, Administration 15,000
Direct Materials 290,000
Sales Commissions 65,000
Depreciation, factory 70,000
Depreciation, office 37,000
Factory Maintenance and Supplies 18,000
General Office Salaries 32,000
What is the total Manufacturing Overhead costs for the month of January.
Question 10 options:
 $263,000
$236,000
$188,000
$596,000

The following monthly budgeted data is available for the Baxter Company:

Sales (70,000 units x $75)

Variable Costs (70,000 x $41.25)
Total Fixed costs $1,687,500
Management feels that the company has enough capacity to generate a profit $911,250, how
many units would it need to sell to generate this level of profit?
Question 11 options:
27,000
97,000
77,000
50,000

Which of the following is NOT an example of a business risk?

Question 12 options:
A customer value proposition.
A website malfunctioning.
An employee accessing unauthorized information.
Products harming customers.

The following is last month's contribution format income statement:

Sales (15,000 Units) $375,000

Less: Variable Expenses $225,000
Contribution Margin $150,000
Less: Fixed Expenses $100,000
Operating Income $ 50,000
Using the degree of operating leverage concept, if the company's sales increase next year by
8%, by what percentage can its operating income expect to increase (within the relevant
range)?
Question 13 options:
60%
36%
12%
24%
The management of Company "A" feels that if the price of Product X is decreased from $40
per unit to $36 per unit, unit sales will increase from the current level of 13,000 per year to
20,000 units per year. The variable cost of Product X will decrease from $24 per unit to $20
per unit due to additional discounts offered by suppliers. Unfortunately though, the fixed costs
will increase from the current $100,000 to $170,000, if the sales volume increases.

Management has asked you to analyze this information, (keeping in mind the CVP
relationships) and determine the following;

a. How much additional variable cost will be created?

b. How much additional profit will be created?

Question 14 options:
a. $88,000 and b. $42,000
a. $312,000 and b. $150,000
a. $70,000 and $88,000
a. $400,000 and b. $108,000

The XYZ Manufacturing Company produces industrial lamps for office buildings. The
company is relatively new and management is seeking information regarding its cost
structure. The following information has been gathered since the inception of the business in
January of the current year:

Month Lamps Produced Manufacturing Costs

January 75,000 $813,000
February 50,000 744,000
March 110,000 1,182,500
April 140,000 1,540,500
May 120,000 1,230,000
June 60,000 820,000

Using the high-low method, estimate the variable cost per lamp and the total fixed cost per
month.
Question 15 options:
 $17.12 per lamp and $573,000 fixed cost
$8.85 per lamp and $301,500 fixed cost
$8.85 per lamp and $856,300 fixed cost
$17.12 per lamp and $856,300 fixed cost

Geneva Steel Corporation produces large sheets of heavy gauge steel. The company showed
the following amounts relating to its production for the year just completed:

Direct materials used in production $110,000

Direct labour cost for the year $55,000
Work in process, beginning $22,000
Finished goods, beginning $45,000
Cost of goods available for sale $288,000
Cost of goods sold $238,000
Work in process, ending $16,000
What was the balance of the finished goods inventory at the end of the year?
Question 16 options:
$45,000.
$50,000.
$95,000.
$193,000.

Obtaining feedback is generally identified most directly with which of these functions of
management?
Question 17 options:
Directing and motivating.
Planning.
Decision making.
Controlling.

The following data pertain to activity and costs for two months:

June July
Activity level in units 10,000 20,000
Variable costs $20,000 ?
Fixed costs 15,000 ?
Mixed costs 10,000 ?
Total costs $45,000 $70,000
Assuming that these activity levels are within the relevant range, what were the mixed costs
for July?
Question 18 options:
$10,000.
$40,000.
$15,000.
$35,000.

The following monthly data are available for the Eager Company and its only product:

Unit Sales Price $130

Unit Variable Expenses $ 65
Total Fixed Expenses $900,000
Actual Sales for the Month of May 20,000 units
What was the margin of safety for the company for May?
Question 19 options:
$800,000
$1,300,000
$2,600,000
$1,800,000

Find the difference in profit between these two products (in dollars).

Product 1 Product 2
Selling Price $65 $115
Fixed Costs $750,000 $1,650,000
Variable Cost/unit $26 $69
Units Sold 25,000 45,000
Question 20 options:
$225,000
$420,000
$195,000
$1,000,000
The management of Company "A" feels that if the price of Product X is decreased from $40
per unit to $36 per unit, unit sales will increase from the current level of 13,000 per year to
20,000 units per year. The variable cost of Product X will decrease from $24 per unit to $20
per unit due to additional discounts offered by suppliers. Unfortunately though, the fixed costs
will increase from the current $100,000 to $170,000, if the sales volume increases.

Management has asked you to analyze this information, (keeping in mind the CVP
relationships) and determine the following;

a. How much total additional contribution margin will be created?

b. Will the changes cause the contribution margin ratio to increase or decrease?

Question 21 options:
a. $208,000 and b. increase
a. $112,000 and b. increase
a. $320,000 and b. decrease
a. $42,000 and b. increase

When a decision is made among a number of alternatives, the benefit that is lost by choosing
one alternative over another is called what?
Question 22 options:
Opportunity cost.
Conversion cost.
Realized cost.
Accrued cost.

The following is last month's contribution format income statement:

Sales (15,000 Units) $375,000

Less: Variable Expenses $225,000
Contribution Margin $150,000
Less: Fixed Expenses $100,000
Operating Income $ 50,000
What is the company's degree of operating leverage?
Question 23 options:
1.5 times
 4.5 times
3 times
7.5 times

The linear equation Y = a + bX is often used to express cost formulas. Which of the following
representations in this equation is correct?
Question 24 options:
The a term represents variable cost in total.
The b term represents variable cost per unit of activity.
The Y term represents total fixed costs.
The X term represents total costs.

You have the following data:

Cost of goods sold $70

Direct labour $20
Direct materials $15
Cost of goods manufactured $80
Work-in-process ending $10
Finished goods ending $15
Manufacturing overhead $30
Which of the following represents the beginning work-in-process inventory?
Question 25 options:
$25.
$20.
$15.
$55.

The following data have been taken from the accounting records of Larner Corporation for the
year just completed:

Raw materials inventory, beginning $70,000

Sales $3,000,000
Purchases of raw materials $1,500,000
Finished goods inventory, beginning $98,000
Direct labour $679,000
Administrative expenses $790,000
Raw materials inventory, ending $24,000
Work-in-process inventory, beginning $56,000
Manufacturing overhead $340,000
Work-in-process inventory, ending $73,000
Selling expenses $500,000
Finished goods inventory, ending $37,000
What are the conversion and prime costs, respectively?
Question 26 options:
$1,019,000 and $2,225,000
$2,336,000 and $1,561,000
$1,823,000 and $1,886,000
$1,019,000 and $1,546,000

Upon which of the following does managerial accounting place considerable weight?
Question 27 options:
The financial history of the entity.
Ensuring that all transactions are properly recorded.
Detailed segment reports about departments, products, and customers.
Generally accepted accounting principles.

For internal uses, managers are more concerned with receiving information that achieves
which of the following standards?
Question 28 options:
Completely objective and verifiable.
Completely accurate and precise.
Relevant, flexible, and timely.
Relevant, completely accurate, and precise.

The following monthly budgeted data is available for the Baxter Company:

(130,000 units x
Sales
$60)
Variable Costs (130,000 x $36)
Total Fixed costs $3,000,000
Calculate the contribution margin and contribution margin ratio, respectively.
Question 29 options:
CM= $24 and CM Ratio= 40%
CM= $23.08 and CM Ratio= 38.5%
CM= $36 and CM Ratio= 60%
CM= $36 and CM Ratio= 36%