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Previous Test 2-1 - Accounting 203 Test 2...

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Unformatted text preview: Accounting 203 Test 2 Name__________________ 1. During March, Adams Company had sales of $5,000,000, variable expenses of $3,000,000, and fixed expenses of $1,500,000. Assume that cost behavior and unit selling price remain unchanged during Aril. In order for the company to realize net operating income of $300,000 for April, sales would have to be: A) $3,750,000. B) $4,050,000. C) $4,500,000. D) $4,800,000. 2. The cost of goods sold in a merchandising firm typically would be classified as a: A) fixed cost. B) variable cost. C) step-variable cost. D) mixed cost. 3. Contribution margin means: A) what remains from total sales after deducting fixed expenses. B) what remains after deducting cost of goods sold to cover fixed and variable expenses. C) the sum of cost of goods sold and variable expenses. D) what remains from total sales after deducting all variable expenses. 4. The contribution margin ratio is 25% for Grain Company and the break-even point in sales is $200,000. If Grain Company's target net operating income is $60,000, sales would have to be: A) $260,000. B) $440,000. C) $280,000. D) $240,000. Version 1 Page 1 Use the following to answer questions 5-8: Stewart Company is attempting to classify costs according to their cost behavior. Data concerning activity and costs are listed below: January February Sales in units.......... 1,200 1,400 Maintenance........... $ 600 $ 700 Supplies ................. 750 790 Insurance................ 800 800 Utilities .................. 888 1,036 Lubrication ............ 560 576 Advertising ............ 900 1,050 Total....................... $4,498 $4,952 5. The cost(s) that Stewart Company would classify as fixed would be: A) insurance. B) insurance and lubrication. C) supplies and lubrication. D) insurance and advertising. 6. The costs that Stewart Company would classify as variable would be: A) maintenance and supplies. B) maintenance, supplies, utilities, lubrication and advertising. C) supplies and advertising. D) maintenance, utilities and advertising. 7. The costs that Stewart Company would classify as mixed would be: A) lubrication and advertising. B) maintenance and insurance. C) supplies and lubrication. D) supplies and utilities. 8. If Stewart Company sells 1,150 units in March and this activity is within the relevant range, the expected total cost would most likely be closest to: A) $2,610.50. B) $1,774.00. C) $4,343.92. D) $4,384.50. Version 1 Page 2 Use the following to answer questions 9-11: The following data pertain to Epsom Corporation's operations: Sales 12,000 units Selling Price $25 per unit Contribution Margin Ratio 40% Fixed expenses $84,000 9. The break-even level in sales dollars is: A) $210,000....
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This note was uploaded on 07/20/2010 for the course ACCT 203 taught by Professor Nielson during the Spring '10 term at Harper.

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Previous Test 2-1 - Accounting 203 Test 2...

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