Question

Alton Company produces metal belts. During the current month, the company incurred the following product costs:

Raw materials $80,000;

Direct labor $50,000;

Electricity used in the Factory $20,000;

Factory foreperson salary $2,500; and

Maintenance of factory machinery $1,800.

Alton Company's direct product costs totaled:

Multiple Choice

• $50,000.

• $22,500.

• $130,000.

• $24,300.

2. Accents Associates sells only one product, with a current selling price of $200 per unit. Variable costs are 20% of this selling price, and fixed costs are $50,000 per month. Management has decided to reduce the selling price to $195 per unit in an effort to increase sales. Assume that the cost of the product and fixed operating expenses are not changed by this reduction in selling price.

At the current selling price of $200 per unit, the contribution margin ratio is:

Multiple Choice

• 20%

• 80%

• 40%

• 160%

3. Accents Associates sells only one product, with a current selling price of $200 per unit. Variable costs are 20% of this selling price, and fixed costs are $50,000 per month. Management has decided to reduce the selling price to $195 per unit in an effort to increase sales. Assume that the cost of the product and fixed operating expenses are not changed by this reduction in selling price.

At the current selling price of $200 per unit, the dollar volume of sales per month necessary for Accents to break-even is:

Multiple Choice

• Some other amount.

• $62,500.

• $312,500.

• $50,000

4. During the current year, Jules Company incurred the following product costs:

Direct materials used in production $262,000

Direct labor $128,250

Manufacturing overhead $191,500

Jules Company's beginning Work in Process Inventory was $21,000 and its ending Work in Process Inventory amounted to $30,500. What is the company's cost of finished goods manufactured for the year?

Multiple Choice

• $602,750.

• $319,750.

• $591,250.

• $572,250.

Answer 1

1. $130,000 (Raw material + Direct labour)

2. 80%

[( Selling price per unit - Variable cost per unit)/Selling price per unit] *100

[(200-40)/200]*100

3. $62,500

[Fixed Cost/ (Selling price per unit - Variable cost per unit)] * selling price per unit

[50,000/(200-40)]*200

4. $572,250

Direct Materials + Direct Labour + Manufacturing overhead + beginning work in process inventory - ending work in process inventory

(262,000 + 128,250 + 191,500 + 21,000 - 30,500)