Assignment

1. Reports used to evaluate the performance of managers and the operations they control are referred to as:

budget reports.
management reports.
feedback reports.
performance reports.

2. Which of the following is true about the differences between financial and managerial accounting?

Managerial accounting presents less non-monetary information than financial accounting.
Managerial accounting places more emphasis on the future.
Managerial accounting cannot deviate from generally accepted accounting principles.
Managerial accounting presents information in a highly summarized form.

3. Ceradyne projects its factory rent to be $6,000 in August when 8,600 units are expected to be produced. If rent is a fixed cost, and if production is expected to drop to 7,000 units in September, what is the expected cost of rent in September?

$4,900
$6,000
$4,884
The answer can not be determined with the information that is given.

4. Raron's Rockers is in the process of preparing a production cost budget for August. Actual costs in July for 120 rocking chairs were:
Materials cost $4,800
Labor cost 3,000
Rent 1,500
Depreciation 2,500
Other fixed costs 3,200
Total $15,000

Materials and labor are the only variable costs. The company has estimated that it can increase sales to 150 chairs in August if it changes the selling price of rockers to $145 instead of the current $160 per unit. What is expected to occur to the cost per unit given the expected changes?

Since production is increased, with fixed coat being static, Fixed cost per unit will reduce and thus reducing overall cost per unit.

It will increase because fixed costs do not increase with increases in volume.
It will decline, because fixed costs do not increase with increases in volume.
It will decline because selling price per unit declines.
It will increase because more units will be produced.

5. Rose Wilson is entering her senior year as an accounting major and has a number of options for her summer break. Her options for the 3 month break follow:

(1) Work full time at a local accounting firm making $2,200 per month.

(2) Take a summer class which will cost $800 and work half time making $1,100 per month.

(3) Take a class at a cost of $800 and not work at all during the summer.

Rose's incremental profit or loss if she chooses option 2 over option 1 would be

($2,500)
($1,500)
($1,100)
($4,100)

6. Breezes Curacao has 200 rooms. Each room rents at $130 per night and variable costs total $42 per room per night of occupancy. Fixed costs total $18,700 per month. If 70% of the rooms are occupied each of the 30 nights in June, how much will total variable costs be for June?

$369,600
$176,400
$252,000
$546,000

7. A cost is $3,600 at 1,000 units, $7,000 at 2,000 units, and $9,200 at 3,000 units. This cost is a

mixed cost.
step cost.
variable cost.
fixed cost.

8. Randall Sports has collected the following information over the last six months.

Using the high-low method, what is the variable cost per unit?

$0.22
$2.00
$0.25
$2.56

9. Jason Janitorial provided data concerning the costs incurred to clean hotel rooms for which hotel customers pay $150 per night. Data for the past 7 months are as follows:

10. Darnley Company's break-even point is 12,200 units. Each unit generates variable costs of $2.20 and is sold for $4.90. What are the total fixed costs?

$59,780
$32,940
$24,400
$26,840

11. Circle K Furniture has a contribution margin ratio of 16%. If fixed costs are $176,800, how many dollars of revenue must the company generate in order to reach the break-even point?

$208,476
$1,105,000
$282,880
$1060,800

12. Michael Vick has written a self improvement book that has the following cost characteristics:

How many units must be sold to break-even?

7,333
8,800
10,600
6,625

13. Michael Vick has written a self improvement book that has the following cost characteristics:

Assume the variable production cost and the price were both cut by $2.00 per unit. Which of the following would change?

Contribution margin per unit
Total fixed costs
Breakeven point in units
Contribution margin ratio.