Accounting For Managers

Question-1

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-2

Blue Technologies manufactures and sells DVD players. Great Products Company has offered Blue Technologies $22 per DVD player for 10,000 DVD players. Blue Technologies’ normal selling price is $30 per DVD player. The total manufacturing cost per DVD player is $18 and consists of variable costs of $14 per DVD player and fixed overhead costs of $4 per DVD player. (NOTE: Assume excess capacity and no effect on regular sales.)

How much are the expected increase (decrease) in revenues and expenses from the special sales order?

    

A. Expected increase in revenues $220,000; expected increase in expenses $140,000 

B. Expected increase in revenues $220,000; expected increase in expenses $40,000 

C. Expected increase in revenues $300,000; expected increase in expenses $140,000 

D. Expected increase in revenues $220,000; expected increase in expenses $120,000

Question-3

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-4

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-5

To find the number of units that need to be sold in order to breakeven or generate a target profit, the formula used is:

    

A. (fixed expenses + operating income) ÷ contribution margin per unit. 

B. (fixed expenses + operating income) ÷ contribution margin ratio. 

C. (fixed expenses – operating income) ÷ contribution margin ratio. 

D. (fixed expenses – operating income) ÷ contribution margin per unit.

Question-6

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-7

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