Acc206 Principles of Accounting: Week 4 Quiz (Version 5 - October 2012)

Acc206 Principles of Accounting
Week 4 Quiz (Version 5 - October 2012)

1. Dalian Company provides the following information:
Price per unit: $20
Variable cost per unit: $8
Fixed costs per month: $15,000
What is the breakeven point in terms of sales revenues? (Points : 1)
$18,500
$25,000
$37,500
$22,750

2. 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 $ .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

3. Equival Company wishes to sell truck axles to car manufacturers. The current market price of the axles is $400, and Equival knows it must accept the market price. Currently, it costs the company $330 to produce each axle. The company wishes to make a profit equal to 20% of the price. Which of the following strategies should Equival adopt to achieve its objective? (Points : 1)
Raise the price to $410.
Reduce its production costs by $10 per unit.
Increase the production costs by $20 per unit.
Use advertising to increase the volume of sales.

4. Chambers Company sells glass vases at a wholesale price of $2.50 per unit. Variable cost is $1.75 per unit. Chambers’ fixed costs are $6,500 per month. If Chambers wishes to make operating income of $2,500, how many units must be sold? (Points : 1)
11,500
11,750
12,000
12,500

5. A traditional costing system employs multiple allocation rates, but an activity-based costing system uses only one single allocation rate. (Points : 1)
True
False

6. JB Company has fixed costs of $300,000. Total costs, both fixed and variable, are $378,000 when 40,000 units are produced. How much is the variable cost per unit? (Please round to the nearest cent.) (Points : 1)
$9.45
$2.78
$7.50
$1.95
None of these is correct

7. Dalian Company provides the following information:
Price per unit: $20
Variable cost per unit: $8
Fixed costs per month: $15,000
What is the breakeven point in terms of units sold? (Points : 1)
1,150
1,200
1,875
1,250

8. Activity-based costing focuses on a single predetermined overhead rate for cost analysis. (Points : 1)
True
False

9. Dalian Company provides the following information:
Price per unit: $20
Variable cost per unit: $8
Fixed costs per month: $15,000
What is the breakeven point in terms of units sold? (Points : 1)
1,150
1,200
1,875
1,250

10. Dalian Company provides the following information:
Price per unit: $20
Variable cost per unit: $8
Fixed costs per month: $15,000
What is the breakeven point in terms of sales revenues? (Points : 1)
$18,500
$25,000
$37,500
$22,750
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