Question

1. Cost of Goods Manufactured represents

A.The amount of cost charged to Work in Process during the period

B.The amount of cost transferred from Finished Goods to Cost of Goods Sold during the period

C.The amount of cost placed into production during the period.

D.The amount of cost of goods completed during the current year whether they were started before or during the current year.

2. Which of the following increase Work in Process Inventory?

A.    Direct Labor performed by employee

B.    Purchase of raw materials from supplier

C.    Receipt of sales order from customer

D.    Completion of finished goods

3. Break-even analysis assumes that:

A. total costs are constant.

B. the total fixed expense changes as the number of units increases/decreases.

C. the average variable expense per unit is constant.

D. variable expenses are not related to the number of units produced.

4. What is the gross margin for ABC Corporation, a merchandising company, with the following monthly results?

Sales                                                               $440,000

Cost of goods sold                                           $176,100

Total Variable Selling Expense                           $26,700

Total Fixed Selling Expense                               $19,700

Total Variable administrative expense                   $8,700

Total Fixed Administrative expense                     $37,300

A.    $383,000

B.    $263,900

C.    $228,500

D.    $171,500

5. A company with a higher degree of operating leverage

A. has a higher breakeven level of sales.

B. increases its income at a higher rate for a given increase in sales

C. increases its contribution margin at a higher rate for a given increase in sales

D. has a higher margin of safety

Answer 1

1
Cost of Goods Manufactured represents The amount of cost of goods completed during the current year whether they were started before or during the current year.
2
Direct Labor performed by employee increase Work in Process Inventory
3
Break-even analysis assumes that the average variable expense per unit is constant.
4
Gross margin = Sales-Cost of goods sold = 440000-176100= $263900
5
A company with a higher degree of operating leverage increases its income at a higher rate for a given increase in sales