Acc206 Principles of Accounting: Week 4 Quiz (Version 2 – May 2012)

Acc206 Principles of Accounting
Week 4 Quiz (Version 2 – May 2012):

1. The first step in the activity-based costing system is to identify each activity and its total indirect cost.
True
False

2. Jurassic Manufacturers produces flooring material. Fixed costs are $5,000 per month. Sales price for one unit of product is $50, and the variable cost per unit is $30. If Jurassic wishes to earn an operating income of $5,000, how many units need to be sold? (Points : 1)
500
300
450
350

3. Two main benefits of activity-based costing are more accurate product cost information and more detailed information on costs of activities and the drivers of these costs. (Points : 1)
True
False

4. Peterson Company has both fixed and variable costs. If the volume doubles, the total fixed costs will double. (Points : 1)
True
False

5. Activity-based management refers to using activity-based cost information to make decisions that increase profits while satisfying customers' needs. (Points : 1)
True
False

6. Jurassic Manufacturers produces flooring material. Fixed costs are $5,000 per month. Sales price for one unit of product is $50, and the variable cost per unit is $30. If Jurassic wishes to earn an operating income of $2,000, how many units need to be sold? (Points : 1)
270
300
320
350

7. Total variable costs change in response to changes in the volume of production. (Points : 1)
True
False

8. Jenny was reviewing the water bill for her doggy day spa and determined that her highest bill, $1,700, occurred in July when she washed 800 dogs and her lowest bill, $900, occurred in November when she washed 400 dogs. What was the fixed cost associated with Jenny's water bill? (Points : 1)
$150
$300
$100
$200
None of these is correct

9. Kenney Company uses activity-based costing to account for its manufacturing process. Kenney Company produces tires, and each tire has $.50 of direct materials, includes 20 parts and requires 2 hours of machine time. There is no direct labor. Additional information follows:
Activity Allocation Base Cost Allocation Rate
Materials handling Number of parts $0.16
Machining Machine hours $14.40
Assembling Number of parts $.70
Packaging Number of finished units $5.40
What is the cost of machining per tire? (Points : 1)
$28.80
$26.40
$25.80
$29.50
None of these is correct

10. Which of the following statements is CORRECT with respect to variable cost per unit, within the relevant range? (Points : 1)
It will increase as production decreases.
It will decrease as production decreases.
It will remain the same as production levels change.
It will decrease as production increases.
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