Download 1. Christina is considering leaving her current position to open a

1. Christina is considering leaving her current position to open a music store. Christina’s
current salary is $45,000. Annual music store revenue and costs are estimated at $250,000 and
$210,000, respectively. If Christina decides to open the music store, the change in her annual
income would be _____.
a. $85,000
b. ($5,000)
c. $250,000
d. $40,000
Answer:Given ,
Current salary = $ 45,000
Revenue = $250,000
Costs = $210,000
Change in annual income =($250,000 - $210,000) - $45,000 = $5,000
2. Deadwood Hospital has overall variable costs of 50% of total revenues and fixed costs of
$40 million per year. There are 40,000 patient-days estimated for next year. The break-even
point expressed in total revenue is _____.
a.
b.
c.
d.
$80 million
$40 million
$10 million
none of these answers is correct
Answer:Fixed costs = $ 40 million
Variable costs = 50 % of total revenue = 0.5
Break Even Point(B.E.P)
= Total Fixed cost/(selling price per unit– variable cost per unit)
=40 million / (1 - 0.50) = 10/0.5 =$80 million
3.
The following information is for Kinsner Corporation:
Total fixed costs
Variable costs per unit
Selling price per unit
$313,500
$99
$154
If management has a targeted net income of $46,200 (ignore income taxes), then the number
of units that must be sold is _____.
a.
b.
c.
d.
2,036 units
2,336 units
5,700 units
6,540 units
Answer:Target income sales(in units) =( Fixed costs + targert income)/ unit contribution
= (313,500 + 46,200) / (154 - 99) = 6,540 units
4. Illinois Company reported the following information about the production and sales of its
only product during its first month of operations:
Sales ($225 per unit) $405,000
Direct materials used
$176,000
Direct labor $100,000
Variable factory overhead $44,000
Fixed factory overhead $80,000
Variable selling and administrative expenses $20,000
Fixed selling and administrative expenses $10,000
Ending inventories:
Direct materials -0WIP
-0Finished goods 200 units
The cost of goods sold under variable costing is_____.
a.
$320,000
b.
c.
d.
$360,000
$288,000
$272,000
Answer:Variable cost per unit =$176,000 + $100,000 + $44,000 / 2,000 = $160 per unit;
Total units sold = total sales/cost per unit=$405,000 / $225 = 1,800 units
Total variable cost =1,800 units x $160 = $288,000
5.
Florida Company's overhead cost information is given below:
Standard applied overhead
$210,000
Budgeted overhead based on standard machine hours allowed
Budgeted overhead based on actual machine hours used
Actual overhead
$230,000
$215,000
$200,000
Required:
a.
b.
c.
Compute the total overhead variance.
Calculate the flexible budget variance
Determine the production volume variance.
Answer:a. .total overhead variance= actual overhead- standard applied overhead=$200,000 $210,000 = - $10,000 =>$10,000 favorable
b. flexible budget variance= actual overhead - Budgeted overhead based on standard
machine hours allowed =$200,000 - $230,000 = -$30,000 =>$30,000 favorable
c. production volume variance.= Budgeted overhead based on standard machine hours
allowed- Standard applied overhead= $230,000 - $210,000 = +$20,000 =>$20,000
unfavorable
6. Alabama Company's overhead cost information is given below:
Standard applied overhead
$322,000
Budgeted overhead based on standard machine hours allowed
Budgeted overhead based on actual machine hours used
Actual overhead
$332,000
$310,000
$346,000
Required:
a.
Compute the total overhead variance.
b.
Calculate the flexible budget variance.
c.
Determine the production volume variance.
Answer:a.total overhead = actual overhead- standard applied overhead=$346,000 - $322,000 =
$24,000 =>$24,000 unfavorable
b.flexible budget variance= actual overhead - Budgeted overhead based on standard
machine hours allowed =$346,000 - $332,000 = $14,000
=>$14,000 unfavorable
c. production volume variance.= Budgeted overhead based on standard machine hours
allowed- Standard applied overhead= $332,000 - $322,000 = $10,000
=>$10,000 unfavorable