economics
Unless specified otherwise, all questions are worth 4 points. For multiple-choice questions, circle the best answer.
1. On April 15 a distraught employee, Bob Heavyfoot, backed his truck into your main plant and destroyed the plant and all of its contents. Fortunately, certain accounting records were kept in another building. Therefore, you know the following for the period January 1 to April 15, 2004:
Revenues $500,000 GM (% of revenues) 25% Direct materials purchased $170,800 Direct Materials, 1/1/2004 $21,000 Work-in-Process, 1/1/2004 $17,000 Finished Goods, 1/1/2004 $7,000 Conversion Costs $244,200 Cost of Goods Avail. for sale $386,000 Conversion costs equal 60% of total mfg. cost during the period.
What was the cost of Finished Goods inventory destroyed?
What was the cost of Work-in-Process inventory destroyed?
How much Direct Materials inventory was destroyed?
2. All of the following are true EXCEPT that indirect costs A. may be included in prime costs. B. are not easily traced to products or services. C. vary with the selection of the cost object. D. may be included in manufacturing overhead.
3. At a breakeven point of 200 units, variable costs total $400 and fixed costs total $600. The 201st unit sold will contribute how much to profits? (6 pts)
4. What is the correct journal entry if $57,000 of direct materials and $4,000 of indirect materials are sent to the factory floor?
5. How many units would have to be sold to yield a target operating income of $22,000, assuming variable costs are $15 per unit, total fixed costs are $2,000 and the unit selling price is $20?
6. The breakeven point decreases if A. variable cost per unit increases. B. total fixed costs decrease. C. contribution margin per unit decreases. D. selling price per unit decreases.
7. How is the “margin of safety” defined in the textbook?
1. On April 15 a distraught employee, Bob Heavyfoot, backed his truck into your main plant and destroyed the plant and all of its contents. Fortunately, certain accounting records were kept in another building. Therefore, you know the following for the period January 1 to April 15, 2004:
Revenues $500,000 GM (% of revenues) 25% Direct materials purchased $170,800 Direct Materials, 1/1/2004 $21,000 Work-in-Process, 1/1/2004 $17,000 Finished Goods, 1/1/2004 $7,000 Conversion Costs $244,200 Cost of Goods Avail. for sale $386,000 Conversion costs equal 60% of total mfg. cost during the period.
What was the cost of Finished Goods inventory destroyed?
What was the cost of Work-in-Process inventory destroyed?
How much Direct Materials inventory was destroyed?
2. All of the following are true EXCEPT that indirect costs A. may be included in prime costs. B. are not easily traced to products or services. C. vary with the selection of the cost object. D. may be included in manufacturing overhead.
3. At a breakeven point of 200 units, variable costs total $400 and fixed costs total $600. The 201st unit sold will contribute how much to profits? (6 pts)
4. What is the correct journal entry if $57,000 of direct materials and $4,000 of indirect materials are sent to the factory floor?
5. How many units would have to be sold to yield a target operating income of $22,000, assuming variable costs are $15 per unit, total fixed costs are $2,000 and the unit selling price is $20?
6. The breakeven point decreases if A. variable cost per unit increases. B. total fixed costs decrease. C. contribution margin per unit decreases. D. selling price per unit decreases.
7. How is the “margin of safety” defined in the textbook?