# 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

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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