# ACCT QUIZ 3

June 12, 2016

Question
Question 1 (1 point)
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Variable costs, as activity increases, will:

Question 1 options:

remain constant per unit.

increase in total and remain constant per unit.

increase per unit.

increase in total.

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Question 2 (1 point)
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A cost that increases in total, but not proportionately with increases in the activity level, is a(n):

Question 2 options:

variable cost with an unusual behavior pattern.

mixed cost.

fixed cost.

variable cost.

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Question 3 (1 point)
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The assumptions that underlie basic CVP analysis include all of the following except:

Question 3 options:

the behavior of both costs and revenues is linear throughout the relevant range.

all costs can be classified as variable or fixed with reasonable accuracy.

when more than one product is sold, total sales will be in a constant sales mix.

All of three of the other choices are assumptions.

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Question 4 (1 point)
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Jameson Company desires net income of \$1,100,000 when it has \$2,500,000 of fixed costs and variable costs of 60% of sales. Required sales equals:

Question 4 options:

\$6,000,000.

\$2,750,000.

\$6,250,000.

\$9,000,000.

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Question 5 (1 point)
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A company’s break-even point can be decreased by decreasing:

Question 5 options:

variable costs per unit.

the contribution margin.

the selling price.

the contribution margin ratio.

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Question 6 (1 point)
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Sutton Company produced 98,000 units in 46,000 direct labor hours. Production for the period was estimated at 100,000 units and 50,000 direct labor hours. A flexible budget would compare budgeted costs and actual costs, respectively, at:

Question 6 options:

50,000 hours and 46,000 hours.

49,000 hours and 46,000 hours.

46,000 hours and 46,000 hours.

49,000 hours and 50,000 hours.

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Question 7 (1 point)
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A flexible budget:

Question 7 options:

is, in essence, a series of static budgets at different levels of activity.

can be prepared for each of the types of budgets included in a master budget.

increases budget allowances both directly and proportionately for variable costs as production increases.

All three of the other choices are correct.

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Question 8 (1 point)
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The initial budget prepared in the master budget is the:

Question 8 options:

production budget.

budgeted balance sheet.

budgeted income statement.

sales budget.

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Question 9 (1 point)
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Which of the following is true with regard to budgeting vs. long-range planning?

Question 9 options:

They are the same in all significant aspects.

The maximum length for both usually is a year, with shorter periods of time also common.

Both tend to be very detailed.

Budgeting is oriented more toward short-term goals; long-range planning toward long-term goals.

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Question 10 (1 point)
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Which of the following is false with regard to budgetary planning?

Question 10 options:

The starting point for the budgets of a not-for-profit organization is generally receipts, rather than expenditures.

A merchandising company uses a purchases budget instead of a production budget.

Budgets may be used by manufacturing companies, merchandising companies, service enterprises, and not-for-profit organizations.

For a service enterprise, the critical factor in budgeting is coordinating professional staff needs with anticipated services.

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Question 11 (1 point)
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Which of the following is true with regard to budgetary planning?

Question 11 options:

The likelihood of a realistic budget is greater when the budget is developed from top management down to lower management.

Generally accepted accounting principles require the budgets be prepared at least annually.

The human behavior aspects of budgeting, while they should not be ignored, are generally of little real significance.

The cash budget is often considered to be the most important output in preparing financial budgets.

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Question 12 (1 point)
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A static budget is:

Question 12 options:

appropriate in evaluating a manager’s effectiveness in controlling variable costs.

applicable to cost budgets but not to a sales budget.

appropriate in evaluating a manager’s effectiveness in controlling fixed costs.

modified or adjusted for changes in activity during the year.

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Question 13 (1 point)
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The potential benefit that may be obtained by following an alternative course of action is termed a(n):

Question 13 options:

opportunity cost.

incremental cost.

sunk cost.

avoidable cost.

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Question 14 (1 point)
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An order at a special price that is accepted will increase income if the revenue received exceeds the:

Question 14 options:

variable manufacturing costs associated with the order.

incremental costs associated with the order.

variable manufacturing, selling, and administrative costs associated with the order.

fixed and variable costs associated with the order.

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Question 15 (1 point)
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Media Unlimited makes custom office desks. It can sell semi-finished desks for \$800. Costs incurred to this point total \$500. It can finish the desks at an additional cost of \$200 and increase the selling price to \$1,100. Media Unlimited should:

Question 15 options:

finish the desks since it will increase profits \$300 per desk.

finish the desks since it will increase profits \$100 per desk.

finish the desks since it will increase profits \$600 per desk.

sell the desks unfinished since finishing the desks will reduce profits.

Question 16 (1 point)
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Given the following costs for Harper Company, classify each cost as variable, fixed, or mixed.

Total cost at
4,000 units 6,000 units
Cost A \$12,300 \$16,650
Cost B 17,200 25,800
Cost C 13,000 13,000
Question 16 options:

Cost A and Cost B are variable; Cost C is fixed.

Cost A is variable; Cost B is mixed; Cost C is fixed.

Cost A and Cost B are mixed; Cost C is fixed.

Cost A is mixed; Cost B is variable; Cost C is fixed.

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Question 17 (1 point)
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Richmond Company manufactures a product that sells for \$50 per unit. Richmond incurs a variable cost per unit of \$35 and \$2,400,000 in total fixed costs to produce this product. They are currently selling 200,000 units. Contribution margin per unit is:

Question 17 options:

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Question 18 (1 point)
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Richmond Company manufactures a product that sells for \$50 per unit. Richmond incurs a variable cost per unit of \$35 and \$2,400,000 in total fixed costs to produce this product. They are currently selling 200,000 units. The breakeven point in dollars is:

Question 18 options:

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Question 19 (1 point)
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Richmond Company manufactures a product that sells for \$50 per unit. Richmond incurs a variable cost per unit of \$35 and \$2,400,000 in total fixed costs to produce this product. They are currently selling 200,000 units. The margin of safety in dollars is:

Question 19 options:

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Question 20 (1 point)
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Richmond Company manufactures a product that sells for \$50 per unit. Richmond incurs a variable cost per unit of \$35 and \$2,400,000 in total fixed costs to produce this product. They are currently selling 200,000 units. The number of units that must be sold in order to generate net income of \$300,000 is:

Question 20 options:

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