Ac505 Practice Final

Topics: Variable cost, Net present value, Costs Pages: 15 (2659 words) Published: October 20, 2011
INSTRUCTIONS: Please fill in the blank for question 1 and select the appropriate response to questions 2 through 45.

1.Use the following information to determine the gross margin for Pacific States Manufacturing for the year just ended (all amounts are in thousands ($000) of dollars:

Sales $31,800
Purchases of direct materials 7,000
Direct labor 5,000
Work in process inventory, 1/1 800
Work in process inventory, 12/31 3,000
Finished goods inventory, 1/1 4,000
Finished goods inventory, 12/31 5,300
Accounts payable, 1/1 1,700
Accounts payable, 12/31 1,500
Direct materials inventory, 1/1 6,000
Direct materials inventory, 12/31 1,000
Indirect labor 600
Indirect materials used 500
Utilities expense, factory 1,900
Depreciation on factory equipment 3,500

Gross Margin _________________

2.Which costs will change with a decrease in activity within the relevant range? A)Total fixed costs and total variable cost.
B)Unit fixed costs and total variable cost.
C)Unit variable cost and unit fixed cost.
D)Unit fixed cost and total fixed cost.

3.An increase in the activity level within the relevant range results in: A)an increase in fixed cost per unit.
B)a proportionate increase in total fixed costs.
C)an unchanged fixed cost per unit.
D)a decrease in fixed cost per unit.

Use the following to answer questions 4-5:

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

Variable selling expense35,000
Fixed selling expenses25,000
Cost of goods sold (variable)160,000
Fixed administrative expenses55,000
Variable administrative expenses15,000

4.The gross margin of Evans Retail Stores, Inc. for the first quarter is: A)$210,000.

5.The contribution margin of Evans Retail Stores, Inc. for the first quarter is: A)$300,000.

6.The total contribution margin decreases if sales volume remains the same and: A)fixed expenses increase.
B)fixed expenses decrease.
C)variable expense per unit increases.
D)variable expense per unit decreases.

7.A company has provided the following data:
Sales3,000 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, net income will: A)decrease by $31,875.
B)decrease by $15,000.
C)increase by $20,625.
D)decrease by $3,125.

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

Direct materials $1,600,000
Direct labor 1,400,000
Factory overhead 600,000$ 900,000
Selling expenses 240,000360,000
Administrative expenses 60,000 140,000
What would be the amount of sales dollars at the break-even point? A)$2,250,000

9.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

How much is Rica's break-even point in number of units? A)9,848
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