AMIS 212 EXAM 2 REVIEW 1. Montgomery Company has a variable selling cost.

If sales volume increases, how will the total variable cost and the variable cost per unit behave? ". #. C. %. &. Total Variable Cost Increase Increase Increase $emain constant %ecrease Variable Cost er !nit Increase $emain constant %ecrease %ecrease Increase

8. 5arac Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. r o d u c tio n v o lu m e ..................................... ' ,) ) ) u n its % ir e c t m a te r ia ls .......................................... + 8 ) 0 ,0 ) ) % ir e c t la b o r ................................................ + 1 1 - ,8 ) ) M a n u f a c tu r in g o v e r h e a d ............................ + ( 1 - ,8 ) ) . ,) ) ) u n its + 8 , 1 ,) ) ) + 1 ' - ,) ) ) + ( 8 - ,. ) )

The best estimate of the total cost to manufacture ',()) units is closest to* ". #. C. %. +,-.,/') +,(.,-/) +,..,0.. +,/',0-)

(. 1hat type of cost e2hibits the behavior that follows? Manufacturing Volume 3!nits4 .),))) 0),))) ". #. C. %. &. Variable cost. 5i2ed cost. 6emivariable cost. 6tep7variable cost. Mi2ed cost. Cost er !nit +(.))) 1.0/.

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" review of 9landon Corporation:s accounting records found that at a volume of 0),))) units, the variable and fi2ed cost per unit amounted to +/ and +., respectively. ;n the basis of this information, what amount of total cost would 9landon anticipate at a volume of -),))) units? ". +-,),))). #. +1,)1),))). C. +1,)(),))). %. +1,)0),))).

Use the following to answer questions 5-7 Colgate Company, which uses the high7low method to analy<e cost behavior, has determined that machine hours best e2plain the company:s utilities cost. The company:s relevant range of activity varies from a low of ,)) machine hours to a high of 1,1)) machine hours, with the following data being available for the first si2 months of the year* Month >anuary 5ebruary March "pril May >une !tilities +0,/)) 0,(,) 0,-.) -,(,) -,,8. -,1.) Machine =ours 0)) /8) 01) -8) -.) -))

.. The variable utilities cost per machine hour is* ". +).10. #. +'..). C. +..)). %. +...). &. an amount other than those listed above. ,. The fi2ed utilities cost per month is* ". +(,/,'. #. +',')). C. +',/,). %. +.,1)). &. an amount other than those listed above. /. !sing the high7low method, the utilities cost associated with -0) machine hours would be* ". +-,.1). #. +-,,,). C. +-,/)). %. +-,/-). &. an amount other than those listed above.

0. 1hich of the following would ta?e place if a company were able to reduce its variable cost per unit? Contribution Margin Increase Increase %ecrease %ecrease Increase #rea?7even oint Increase %ecrease Increase %ecrease @o effect

". #. C. %. &.

-. 1hich of the following would ta?e place if a company e2perienced an increase in fi2ed costs? ". @et income would increase. #. The brea?7even point would increase. C. The contribution margin would increase. %. The contribution margin would decrease. &. More than one of the above events would occur. 1). " recent income statement of 5o2 Corporation reported the following data* 6ales revenue Variable costs 5i2ed costs +(,,)),))) 1,,)),))) 1,))),)))

If these data are based on the sale of 1),))) units, the brea?7even point would be* ". 8,))) units. #. 8,//0 units. C. (,,)) units. %. .,))) units. &. an amount other than those given above. 11. $ibco Co., ma?es and sells only one product. The unit contribution margin is +, and the brea?7even point in unit sales is 8',))). The company:s fi2ed costs are* ". +',))). #. +1',')). C. +'),))). %. +1'',))). &. an amount other than those given above.

18. Aellow, Inc., sells a single product for +1). Variable costs are +' per unit and fi2ed costs total +18),))) at a volume level of 1),))) units. 1hat dollar sales level would Aellow have to achieve to earn a target net profit of +8'),)))? ". +')),))). #. +.)),))). C. +,)),))). %. +/.),))). &. +-)),))). 1(. Bamar C Co. ma?es and sells two types of shoes, lain and 5ancy. "nnual volume 3in units4 is 1),))) shoes. ;ther data concerning these products are as follows* !nit selling price Variable cost per unit lain +8).)) 18.)) 5ancy +(..)) 8'..)

6i2ty percent of the unit sales are lain, and annual fi2ed e2penses are +'.,))). "ssuming that the sales mi2 remains constant, the number of units of lain that the company must sell to brea? even is* ". 8,))). #. (,))). C. (,(/.. %. .,))). &. .,,8..

1'. 9reen Company:s variable e2penses are /.D of sales. "t a sales level of +')),))), the company:s degree of operating leverage is 0. "t this sales level, fi2ed e2penses eEual* a. +0/,.)). b. +1)),))). c. +.),))). d. +/.,))).

1.. "ll of the following are e2pensed under variable costing e2cept* ". variable manufacturing overhead. #. fi2ed manufacturing overhead. C. variable selling and administrative costs. %. fi2ed selling and administrative costs. &. items FCF and F%F above.

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Use the following to answer questions 1!-17 Indiana Company incurred the following costs during the past year when planned production and actual production each totaled 8),))) units* %irect materials used %irect labor Variable manufacturing overhead 5i2ed manufacturing overhead Variable selling and administrative costs 5i2ed selling and administrative costs +80),))) 18),))) 1,),))) 1)),))) ,),))) -),)))

1,. If Indiana uses variable costing, the total inventoriable costs for the year would be* ". +')),))). #. +',),))). C. +.,),))). %. +,8),))). &. +,,),))). 1/. The per7unit inventoriable cost under absorption costing is* ". +-..). #. +8..)). C. +80.)). %. +((.)). &. +')..). 10. 9ome<:s inventory increased during the year. ;n the basis of this information, income reported under absorption costing* ". will be the same as that reported under variable costing. #. will be higher than that reported under variable costing. C. will be lower than that reported under variable costing. %. will differ from that reported under variable costing, the direction of which cannot be determined from the information given. &. will be less than that reported in the previous period.

1-. >oy Company reported +,.,))) of net income for the year by using absorption costing. The company had no beginning inventory, planned and actual production of 8),))) units, and sales of 10,))) units. Variable manufacturing costs were +8) per unit, and total budgeted fi2ed manufacturing overhead was +1)),))). If there were no variances, net income under variable costing would be* ". #. C. %. &. +1.,))). +..,))). +,.,))). +/.,))). +11.,))).

8). $oberts, which began business at the start of the current year, had the following data* lanned and actual production* '),))) units 6ales* (/,))) units at +1. per unit Manufacturing costs* Variable* +' per unit 5i2ed* +8,),))) 6elling and administrative costs* Variable* +1 per unit 5i2ed* +(8,))) The amount of gross margin the company would disclose on an absorption7 costing income statement is* ". +-/,.)). #. +1'/,))). C. +1,,,.)). %. +(/),))). &. none of the above. 81. 5lint began business at the start of the current year. The company planned to produce 8.,))) units, and actual production conformed to e2pectations. 6ales totaled 8),))) units at +8/ each. Costs incurred were* 5i2ed manufacturing overhead 5i2ed selling and administrative cost Variable manufacturing cost per unit Variable selling and administrative cost per unit 1hat would the company:s variable7costing income be? ". +18.,))). #. +1(),))). C. +1..,))). %. +1,),))). &. some other amount. +1.),))) 1)),))) / 1

88. 1hich of the following budgets is based on many other master7budget components? ". %irect labor budget. #. ;verhead budget. C. 6ales budget. %. Cash budget. &. 6elling and administrative e2pense budget. 8(. Coleman, Inc., anticipates sales of .),))) units, '0,))) units, and .1,))) units in >uly, "ugust, and 6eptember, respectively. Company policy is to maintain an ending finished7goods inventory eEual to ')D of the following month:s sales. ;n the basis of this information, how many units would the company plan to produce in "ugust? ". ',,0)). #. '-,8)). C. '-,0)). %. .8,8)). &. @one of the above. Use the following to answer questions 2" @orthwest manufactures a product reEuiring ).. ounces of platinum per unit. The cost of platinum is appro2imately +(,) per ounceG the company maintains an ending platinum inventory eEual to 1)D of the following month:s production usage. The following data were ta?en from the most recent Euarterly production budget* lanned production in units >uly 1,))) "ugust 1,1)) 6eptember -0)

8'. The cost of platinum to be purchased to support "ugust production is* ". +1-.,0'). #. +1-0,))). C. +8)),1,). %. +(-1,,0). &. @one of the above. 8.. Trimble Company budgeted sales on account of +18),))) for >uly, +811,))) for "ugust, and +1-0,))) for 6eptember. Collection e2perience indicates that none of the budgeted sales will be collected in the month of the sale, ,)D will be collected the month after the sale, (,D in the second month, and 'D will be uncollectible. The cash receipts from accounts receivable that should be budgeted for 6eptember would be* "4 +1,-,0)). #4 +1'/,-,). C4 +1-/,00). %4 +1-',/,).

8,. %iego ma?es all purchases on account, subHect to the following payment pattern* aid in the month of purchase* ()D aid in the first month following purchase* ,)D aid in the second month following purchase* 1)D If purchases for >anuary, 5ebruary, and March were +8)),))), +10),))), and +8(),))), respectively, what were the firm:s budgeted payments in March? ". +,-,))). #. +1(0,))). C. +1//,))). %. +1-/,))). &. @one of the above.