Acc206 Principles of Accounting: Week 4 Quiz (Version 1 – November 2011)

Acc206 Principles of Accounting
Week 4 Quiz (Version 1 – November 2011):

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

3. 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

4. Activity-based costing systems combine many various elements of overhead into a single cost pool. (Points : 1)
True
False

5. 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 variable cost per dog associated with Jenny's water bill? (Points : 1)
$0.67
$1.00
$0.50
$2.00

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

7. Fixed costs per unit decrease as production levels decrease. (Points : 1)
True
False

8. 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.

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

10. Activity-based management refers to using activity-based cost information to make decisions that increase profits while satisfying customers' needs. (Points : 1)
True
False
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