Question

QUESTION 7

Black Company computes its predetermined overhead rate on the basis of machine hours. Estimated machine hours at the beginning of the year are 8,000 and actual machine hours at the end of the year are 8,500. Estimated total manufacturing overhead costs at the beginning of the year are $78,000 and actual total manufacturing overhead costs at the end of the year are $86,000. The predetermined overhead rate for Black Company would be:

		$10.12 per machine hour
		$9.75 per machine hour
		$9.18 per machine hour
		$10.75 per machine hour

3 points   

QUESTION 8

Josh Company uses a predetermined overhead rate of $6 per direct labor hour. Estimated direct labor hours at the beginning of the year were 10,000 and actual direct labor hours at the end of the year were 9,800. Estimated total manufacturing overhead costs at the beginning of the year are $60,000 and actual total manufacturing overhead costs at the end of the year are $59,000. What is the amount of manufacturing overhead that would have been applied to all jobs during the year?

		$59,000
		$58,800
		$57,820
		$60,204

3 points   

QUESTION 9

The purpose of cost-volume-profit analysis is to estimate how profits are affected by five factors. What are the five factors?

		Selling prices, sales volume, unit variable costs, total fixed costs, and mix of products sold.
		Selling prices, sales volume, total mixed costs, total variable costs, and total fixed costs.
		Unit fixed costs, total variable costs, mix of products sold, selling prices, and cost of goods sold.
		Mix of products sold, mix of discount prices, volume of inventory, unit variable costs, and total mixed costs.

3 points   

QUESTION 10

Which of the following statements is true with regard to the contribution margin ratio?

		The contribution margin ratio shows how the contribution margin will be affected by a change in total sales.
		The products with the lowest contribution margin should be emphasized.
		The contribution margin ratio is calculated by dividing sales minus cost of goods sold by sales.
		The contribution margin ratio is calculated by dividing sales by contribution margin.

3 points   

QUESTION 11

If the contribution margin ratio is 45% for XYZ Company, what would be the impact on net operating income if the firm is able to increase sales by $25,000 and fixed costs of $3,000 remain unchanged?

		$13,750 increase
		$8,250 increase
		$11,250 increase
		$25,000 increase

3 points   

QUESTION 12

Which of the following equations describe the break-even point?

		Quantity = Fixed expenses + Profit
		Break-even point = Contribution margin + Fixed costs.
		Break-even point = (Target profit + Fixed expenses)/Unit Contribution margin
		Total sales = Total variable costs + Total fixed costs

3 points   

QUESTION 13

Last year Von's Baskets sold 30,000 units, total sales were $600,000, total variable expenses were $180,000 and total fixed expenses were $150,000. What is the contribution margin ratio for Von's Baskets?

		55%
		30%
		45%
		70%

Answer 1

7
Predetermined overhead rate = 78000/8000= $9.75 per machine hour
8
Manufacturing overhead applied = 6*9800= $58800
9
Selling prices, sales volume, unit variable costs, total fixed costs, and mix of products sold.
10
The contribution margin ratio shows how the contribution margin will be affected by a change in total sales.
11
Net operating income increase = 25000*45%= 11250
12
Break-even point = (Target profit + Fixed expenses)/Unit Contribution margin
13
Contribution margin ratio=(600000-180000)/600000 = 70%