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

Acc206 Principles of Accounting
Week 4 Quiz (Version 4 – 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. Activity-based costing focuses on a single predetermined overhead rate for cost analysis. (Points : 1)
True
False

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

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

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

6. 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.

7. 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

8. Activity-based costing creates more precise matching of indirect costs with products (Points : 1)
True
False

9. 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

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 units sold? (Points : 1)
1,150
1,200
1,875
1,250
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