Question

1:

An income statement for Sam's Bookstore for the first quarter of the year is presented below:

Sam's Bookstore
Income Statement
For Quarter Ended March 31
Sales		$ 840,000
Cost of goods sold		545,000
Gross margin		295,000
Selling and administrative expenses
Selling	$ 116,000
Administrative	136,000	252,000
Net operating income		$ 43,000

On average, a book sells for $60. Variable selling expenses are $4 per book with the remaining selling expenses being fixed. The variable administrative expenses are 3% of sales with the remainder being fixed.

The contribution margin for Sam's Bookstore for the first quarter is:

Garrison 17e Rechecks 2020-09-09

Multiple Choice

• $758,800

• $239,000

• $626,200

• $213,800

_______________________

2:

At an activity level of 8,400 units in a month, Braughton Corporation’s total variable maintenance and repair cost is $697,284 and its total fixed maintenance and repair cost is $464,100. What would be the total maintenance and repair cost, both fixed and variable, at an activity level of 8,500 units in a month? Assume that this level of activity is within the relevant range. (Round intermediate calculations to 2 decimal places.)

Multiple Choice

• $1,169,685

• $1,168,297

• $1,161,384

• $1,175,210

______________________________-

3:

Carroll Corporation has two products, Q and P. During June, the company's net operating income was $21,500, and the common fixed expenses were $47,000. The contribution margin ratio for Product Q was 40%, its sales were $132,000, and its segment margin was $39,000. If the contribution margin for Product P was $37,000, the segment margin for Product P was:

Multiple Choice

• $29,500

• $68,500

• $39,000

• $8,000

________________________________

4:

Gabuat Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price	$ 138
Units in beginning inventory	0
Units produced	2,600
Units sold	2,310
Units in ending inventory	290

Variable costs per unit:
Direct materials	$ 49
Direct labor	$ 27
Variable manufacturing overhead	$ 6
Variable selling and administrative expense	$ 6
Fixed costs:
Fixed manufacturing overhead	$36,400
Fixed selling and administrative expense	$13,860

The total gross margin for the month under the absorption costing approach is:

Multiple Choice

• $97,020

• $83,160

• $166,320

• $83,160

________________________

5:

Dake Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows:

	Average Cost per Unit
Direct materials	$ 7.05
Direct labor	$ 3.20
Variable manufacturing overhead	$ 1.80
Fixed manufacturing overhead	$ 3.30
Fixed selling expense	$ 1.10
Fixed administrative expense	$ 0.80
Sales commissions	$ 0.90
Variable administrative expense	$ 0.80

If 4,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

Multiple Choice

• $41,000

• $52,200

• $61,400

• $48,200

_________________________

6:

Krepps Corporation produces a single product. Last year, Krepps manufactured 33,930 units and sold 28,300 units. Production costs for the year were as follows:

Direct materials	$288,405
Direct labor	$145,899
Variable manufacturing overhead	$288,405
Fixed manufacturing overhead	$542,880

Sales totaled $1,287,650 for the year, variable selling and administrative expenses totaled $164,140, and fixed selling and administrative expenses totaled $206,973. There was no beginning inventory. Assume that direct labor is a variable cost.

Under absorption costing, the ending inventory for the year would be valued at:

Multiple Choice

• $271,499

• $209,999

• $279,999

• $237,499

Answer 1

1...

Total Contribution Margin      
Sales revenue 840000  
Less: variable cost          
Cost of good sold 545000  
Selling expenses (14000*4) 56000  
Admin expenses (840000*3%) 25200  
Contribution margin 213800  

Option 4 is correct
Note : Number of units sold = Total sales/ Selling pricce = 840000 /60 = 14000 unit

2...

Unit variable cost = 697284/8400= $83.01          
Total maintenance and repair cost=(8500*83.01)+464100= $1169685
Option 1 is correct

3...

Contribution = Operating profit + Fixed expense

= 21500 + 47000 = 68500

Contribution = Segment P + Segment Q

68500 = Segment P margin + 39000

Segment P margin = $29500
Option 1 is correct