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# \$10.00Accounting Midterm 2

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Multiple Choice         Answer on the Scantron provided ONLY.

1. Which of the graphs in Figure 20-1 illustrates the behavior of a total fixed cost?

2. Which of the following describes the behavior of the fixed cost per unit?

3. For purposes of analysis, mixed costs are generally:

4. Which of the following statements is true regarding fixed and variable costs?

5. Contribution margin is:

6.   If sales are \$820,000, variable costs are 58% of sales, and operating income is \$260,000, what is the contribution margin ratio?

7.   Variable costs as a percentage of sales for Lemon Inc. are 80%, current sales are \$600,000, and fixed costs are \$130,000. How much will operating income change if sales increase by \$40,000?

8.   If the contribution margin ratio for France Company is 45%, sales were \$425,000. and fixed costs were \$100,000, what was the income from operations?

9.   If fixed costs are \$250,000, the unit selling price is \$125, and the unit variable costs are \$73, what is the break-even sales (units)?

10.   If fixed costs are \$750,000 and variable costs are 80% of sales, what is the break-even point in sales dollars?

11.   If fixed costs are \$1,400,000, the unit selling price is \$240, and the unit variable costs are \$110, what is the amount of sales required to realize an operating income of \$200,000?

(for #12) Safari Co. sells two products, Orks and Zins. Last year Safari sold 21,000 units of Orks and 14,000 units of Zins. Related data are:

 Product Unit Selling Price Unit Variable Cost Unit Contribution Margin Orks \$120 \$80 \$40 Zins 80 60 20

12.   What was Safari Co.'s sales mix last year?

13.   If a business had a capacity of \$8,000,000 of sales, actual sales of \$5,000,000, break-even sales of \$3,500,000, fixed costs of \$1,400,000, and variable costs of 60% of sales, what is the margin of safety expressed as a percentage of sales?

14.   Selling price = \$80 per unit

Variable cost = \$30 per unit

Units = 20,000

Fixed costs = \$240,000

This company is considering a 20% drop in selling price that they believe will raise units sold by 20%.   All other costs stay the same.  How much will income go up or down if they make this change?

15.   Another name for variable costing is:

16.   Under variable costing, which of the following costs would be included in finished goods inventory?

17.   On the variable costing income statement, the figure representing the difference between manufacturing margin and contribution margin is the:

(for #18) A business operated at 100% of capacity during its first month, with the following results:

18.   What is the amount of the income from operations that would be reported on the absorption costing income statement?

19.   Which of the following budgets allow for adjustments in activity levels?

20.   Scott Manufacturing Co.'s static budget at 10,000 units of production includes \$40,000 for direct labor and \$4,000 for electric power. Total fixed costs are \$23,000. At 12,000 units of production, a flexible budget would show:

21.   At the beginning of the period, the Assembly Department budgeted direct labor of \$110,000, direct material of \$170,000 and fixed factory overhead of \$28,000 for 8,000 hours of production. The department actually completed 10,000 hours of production. What is the appropriate total budget for the department, assuming it uses flexible budgeting?

22.   The production budgets are used to prepare which of the following budgets?

23.   Motorcycle Manufacturers, Inc. projected sales of 76,000 machines for 2010. The estimated January 1, 2010, inventory is 6,500 units, and the desired December 31, 2010, inventory is 7,000 units. What is the budgeted production (in units) for 2010?

24.   Production and sales estimates for April are as follows:

The budgeted total sales for April are:

The Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months were: January - 200,000 units; February - 180,000 units; March - 210,000 units; and April - 230,000 units. The Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following months sales.

25.   What should the budgeted production be for January?

26.   Woodpecker Co. has \$296,000 in accounts receivable on January 1. Budgeted sales for January are \$860,000. Woodpecker Co. expects to sell 20% of its merchandise for cash. Of the remaining credit sales, 75% are expected to be collected in the month of sale, and 25% collected the following month.

The January cash collections are:

Nuthatch Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are \$260,000, \$350,000, and \$400,000, respectively, for September, October, and November. The company expects to sell 30% of its merchandise for cash. Of sales on account, 80% are expected to be collected in the month of the sale, and 20% in the month following the sale.

27.   The cash collections in September from accounts receivable are:

28.   The cash collections in October from accounts receivable are:

29.   As of January 1 of the current year, the Grackle Company had accounts receivables of \$50,000. The sales for January, February, and March of 2009 were as follows: \$120,000, \$140,000 and \$150,000. 20% of each month’s sales are for cash.  Of the remaining sales (on account), 60% are collected in the month of sale, with remaining 40% collected in the following month.

What is the cash collected (both from accounts receivable and for cash sales) in the month of January?

30.   As of January 1 of the current year, the Grackle Company had accounts receivables of \$50,000. The sales for January, February, and March were as follows: \$120,000, \$140,000 and \$150,000. 20% of each month’s sales are for cash. Of the remaining sales (on account), 60% are collected in the month of sale, with remaining 40% collected in the following month.

What is the total cash collected (both from accounts receivable and for cash sales) in the month of February?

31.   Standards that represent levels of operation that can be attained with reasonable effort are called:

32.   A favorable cost variance occurs when

The following data relate to direct materials costs for November:

33.   What is the direct materials price variance?

34.   What is the direct materials quantity variance?

35.   If the wage rate paid per hour differs from the standard wage rate per hour for direct labor, the variance is termed (do not over think this question):

36.   The following data relate to direct labor costs for the current period:

What is the direct labor time variance?

37.   Calculate the Direct Labor Variance using the above information

38.   Calculate the Direct Labor Rate Variance using the above information

Rusty Co. sells two products, X and Y. Last year Rusty sold 5,000 units of X’s and 35,000 units of Y’s. Related data are:

39.   Assuming fixed costs totaled \$675,000. What was Rusty Co.’s break-even point (in units)?

40.   When units manufactured exceed units sold:

41.   The amount of income under absorption costing will be less than the amount of income under variable costing when units manufactured:

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Accounting Midterm 2
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