Question :
21. A company’s planned activity level for next year expected : 1311573
21. A company’s planned activity level for next year is expected to be 8,000 machine hours. At this level of activity, the company budgeted the following manufacturing overhead costs:
Variable Fixed
Indirect materials$16,000Depreciation$7,000
Indirect labor8,000Taxes2,000
Factory supplies4,000Supervision9,000
A flexible budget prepared at the 9,200 machine hours level of activity would allow total manufacturing overhead costs of
a. $52,900
b. $32,200
c. $50,200
d. Some other answer
22.Wrangler Inc. sells towels with a contribution margin rate of 35% and a unit contribution margin of $7 per unit. Which statement is true?
a. Each dollar of sales revenue generates 35 cents to go towards covering operating costs and towards profit.
b. Each towel sold generates 35 cents to go towards covering fixed costs and towards profit.
c. Each towel sold generates $7 to go towards covering operating expenses and towards profit.
d. Each dollar of sales revenue generates 35 cents to go towards covering fixed costs and towards profit.
23. Which one of the following would most likely be allocated to products using ABC by McDonald’s?
a. Cost of employees who chop lettuce
b. Cost of tomatoes added to burgers
c. Cost of plastic gloves worn by the burger cooks
d. Costs of the paper in which an Egg McMuffin is wrapped
24. Company 3M and Company 4P have similar levels of production and sales. Company 4P has a larger proportion of fixed costs than those that are variable costs. Company 3M has a larger proportion of variable costs, than those that are fixed costs. Sales are expected to increase by 30% for both companies during 2014. During 2014, Company 4P will experience
a. a smaller increase in income than Company 3M.
b. a larger decrease in per unit variable costs than Company 3M.
c. a larger proportional fluctuation in income than Company 3M.
d. less operating leverage than Company 3M.
25. Under the time-and-material-pricing approach, the charges for any particular job include each of the following except the
a. labor charge.
b. charge for materials.
c. material loading charge.
d. overhead charge.
26. The transfer pricing approach that does not reflect the selling division’s true profit-ability is the
a. cost-based approach.
b. market-based approach.
c. negotiated price approach.
d. time-and-material-pricing approach.
Use the following information for questions 27 and 28.
Outdoor Play manufactures two products: Swing Along and Ride Away. The company’s overhead costs consist of setting up machines, $24,000; machining, $36,000; and inspecting, $18,000. During the year, 5,000 Swing Alongs were produced and 20,000 Ride Aways. Additional information on the two products is:
Swing AlongRide Away
Direct labor hours8,00012,000
Machine setups2040
Machine hours2,0006,000
Inspections2030
27. How much overhead will be applied to Swing Along using traditional costing using direct labor hours as the basis for allocation?
a. $31,200
b. $39,000
c. $24,200
d. $15,600
28. How much overhead was applied to Swing Along using activity-based costing?
a. $764.50
b. $24,200
c. $31,200
d. $39,000
29. An appropriate cost driver for an assembling cost pool is the number of
a. purchase orders.
b. setups.
c. parts.
d. direct labor hours.
30. Which of the following is included in cost of goods manufactured under absorption costing but not under variable costing?
a. Direct materials
b. Variable factory overhead
c. Fixed factory overhead
d. Direct labor
