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Exam2SPring2008 - Test 2 Spring 08 1 If a company is...

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Test 2 Spring 08 1. If a company is operating at the break-even point: A.its contribution margin will be equal to its variable expenses. B.its margin of safety will be equal to zero. C.its fixed expenses will be equal to its variable expenses. D.its selling price will be equal to its variable expense per unit. 2. Which of the following strategies could be used to reduce the break-even point? 3. If the degree of operating leverage is 4, then a one percent change in quantity sold should result in a four percent change in: 1
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4. Sorin Inc., a company that produces and sells a single product, has provided its contribution format income statement for January. If the company sells 4,600 units, its total contribution margin should be closest to: 5. Wilson Company prepared the following preliminary budget assuming no advertising expenditures: Based on a market study, the company estimated that it could increase the unit selling price by 15% and increase the unit sales volume by 10% if $100,000 were spent on advertising. Assuming that these changes are incorporated in its budget, what should be the budgeted net operating income? A.$175,000 B.$190,000 C.$205,000 D.$365,000 2
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Next year, Mudd Face Cosmetics, a single product company, expects to sell 9,000 jars of miracle glaze. Mudd Face is budgeting the following operating results for next year: 6. How many jars of glaze would Mudd Face have to sell next year in order to break-even? A.2,700 B.5,040 C.6,750 D.7,200 3
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7. Huelskamp Corporation has provided the following data concerning its overhead costs for the coming year: The activity rate for the Assembly activity cost pool is closest to: 4
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8. Houseal Corporation has provided the following data from its activity-based costing system: According to the activity-based costing system, the product margin for product W58B is: 5
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Dietz Company uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system: The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of costs to the activity cost pools.
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