# 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