A.The total Contribution Margin changes from negative to positive.
B.Net Operating Income will increase by the Unit Contribution Margin for each additional item sold.
C.Variable Costs will remain constant in total.
D.The Contribution Margin ratio begins to decrease.
2.To find the Break Even Point in terms of Dollars of Sales, total Fixed Costs must be divided by which of the following?
A.Variable Cost per unit
B.Variable Cost per unit / Selling Price per unit
C.Fixed Cost per unit
D.(Selling Price per unit Variable Cost per unit) / Selling Price per unit
3.If sales increase from $80,000 to $120,000 per year, and the degree of Operating Leverage is 5, then Net Operating Income should increase by
4.The Production Budget (or in retail, the Purchases Budget):
A.Must provide for desired ending inventory as well as for sales
B.Is the beginning point in the budgeting process
C.Is accompanied by a schedule of expected cash collections
D.Is completed after the cash budget
5.Which of the following budgets are prepared before the Sales Budget?
Manufacturing Overhead BudgetCash Budget
1) Yes Yes
6.Keohane Companys sales are 30% Cash, and 70% credit. The Credit Sales are collected as follows: 60% in the month of the sale, 25% in the month after the sale, and 12% in the second month following the sale. The remainder are uncollectible. The following are the budgeted sales data. TOTAL Sales: January $60,000; February $70,000; March $50,000; and April $30,000. The total cash receipts planned to be collected in APRIL would be:
7.The variance that is most useful is assessing the performance of the Purchasing Manager is the:
A.Materials Quantity Variance
B.Materials Price Variance
C.Labor Rate Variance
D.Labor Efficiency Variance
8. Furnier-Cooper, Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 5,400 direct labor-hours will be required in January. The variable overhead rate is $4.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $77,220 per month, which includes depreciation of $9,720. All other fixed manufacturing overhead costs represent current cash flows. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:
9. An unfavorable Materials Quantity Variance indicates that:
A. actual usage of materials exceeds the standard material allowed for output
B. standard material allowed for output exceeds the actual usage of material
C. actual material price exceeds standard price
D. standard material price exceeds actual price
10. A favorable Labor Rate Variance indicates that:
A. actual hours exceed standard hours
B. standard hours exceed actual hours
C. the actual hourly payroll rate exceeds the standard rate
D. the standard hourly payroll rate exceeds the actual rate
11. You have to approve an expenditure for $255,000 today, for a project that your manufacturing manager says will generate $50,000 in net cash inflow for the next seven years. Your companys expected rate of return is 7%. The NET PRESENT VALUE of this proposal is:
SHORT ANSWER (The more explanation you give, the more it can help!)
1.The firm of Fortunato & Luchesi forecasts that theyll make the following unit sales in the first four months of 2010:
January 50,000 units
February 60,000 units
April 80,000 units
At the end of 2009 their Finished Goods inventory was 15,000 units. At the end of every month they intend to have 30% of the following months projected sales in their Ending Inventory of Finished Goods.
Given these facts, prepare in good form a Production Budget for the first quarter only, showing for each month how many units the company will be required to manufacture. Dollar calculations are unnecessary.
2.The firm of Moes & Martell (in their standard costing system, variable overhead is absorbed on the basis of direct labor hours) has the following overhead information for January 2010, during which 400 units were actually produced.
Standard: 2 feet at $1.50 per foot.$3.00
Actual: 2.1 feet at $1.60 per foot.$3.36
Standard: 1.5 hours at $6.00 per hour.$9.00
Actual: 1.4 hours at $6.50 per hour.$9.10
Standard: 1.5 DL hours at $3.40 per hour.$5.10
Actual: 1.4 DL hours at $3.10 per hour.$4.34
TOTAL UNIT COST$17.10$16.80
GOALS: From the provided information, compute the following variances, and show whether each is Favorable (F) or Unfavorable (U).
a)Materials price variance
b)Materials quantity variance
c)Direct labor rate variance
d)Direct labor efficiency variance
e)Variable overhead rate variance
f)Variable overhead efficiency variance
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