ACCT 230 Sample Exam Chp 5-8

ACCT 230 Sample Exam Chp 5-8 - SAMPLE EXAM: Chapters 5-8...

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SAMPLE EXAM: Chapters 5-8 ***SOLUTION FOUND ON THE LAST PAGE*** USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT 2 QUESTIONS: (round calculations to TWO decimal places) MONTH HOURS USED POWER COST January 7,000 $15,000 February 19,000 $30,000 March 15,000 $28,000 April 11,000 $21,000 May 12,000 $24,000 June 20,000 $31,900 1. Determine the variable component using the high-low method. a. $ .19 b. $ .23 c. $0.77 d. $1.30 e. $2.14 2. Determine the fixed component using the high-low method. a. $3,000 b. $2,500 c. $7,500 d. $5,250 e. $5,900 3. As a firm begins to operate outside the relevant range, the accuracy of cost estimates for fixed and variable costs: a. increase b. decrease c. stay the same d. decrease for variable costs but accuracy of cost estimates for fixed costs do not change. 4. Blythe Corp. classifies fixed costs as either committed or discretionary for planning purposes. Fixed costs that Blythe Corp. consider to be committed fixed costs: a. can never be modified. b. cannot be modified in the short-run without impairing the firm’s ability to operate. c. include research and development costs. d. b and c above are true. e. none of the above statements are true.
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5. Assume that Thornton, Inc. has determined that maintenance cost has a fixed component of $1,000 per month and a variable component of $0.10 per machine hour. Activity is expected to be as follows for the next quarter: Machine Hours January 5,000 February 8,000 March 9,000 Estimate total maintenance cost for the next quarter for Thornton, Inc. a. $2,200 b. $2,300 c. $3,200 d. $4,200 e. $5,200 6. Conrad’s Ornamental Concrete manufactures ornamental concrete blocks. Each unit requires variable production costs of $20.00 per unit and variable selling costs are $5.00 per unit. Fixed overhead is expected to be $150,000 and fixed administrative expenses are expected to be $50,000. Each unit will sell for $50. Compute the sales in dollars necessary to earn income of $100,000 (before tax). a. $750,000 b. $600,000 c. $333,333 d. $250,000 e. $ 8,000 7. Dice Company has a budget that reports the following: Revenue ($20/unit) $200,000 Variable Costs 150,000 Contribution Margin $ 50,000 Fixed Costs 30,000 Expected Profit $ 20,000 At what level of sales (in dollars) does Dice Company expect to breakeven? a. $180,000 b. $135,000 c. $120,000 d. $ 80,000 e. cannot be determined based on information provided.
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8. Sales Volume 60,000 units Fixed Costs $40,000 Variable Costs $ 5 /unit Determine the lowest price the company must charge to earn a 20% profit on sales. (round your answer to two decimal places) a. $5.67 b. $5.87 c. $6.80 d. $7.08 9. Tiny Tots Toys has actual sales of $400,000 and a break-even point of $260,000. How
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This note was uploaded on 11/04/2009 for the course ACCT 230 taught by Professor Allen during the Spring '08 term at Texas A&M.

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ACCT 230 Sample Exam Chp 5-8 - SAMPLE EXAM: Chapters 5-8...

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