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.