ACC 20100-AOL Assessment Questions Spring 2019 1. Within the relevant range, as production increases: a. Variable cost per unit increases b. Variable cost per unit decreases c. Fixed cost per unit increases d. Fixed cost per unit decreases 2. On the Schedule of Cost of Goods Manufactured, the final Cost of Goods Manufactured figure represents: a. The amount of cost transferred from Finished Goods to Cost of Goods Sold during the period b. The amount of cost of goods completed during the current year whether they were started before or during the current year c. The amount of cost placed into production during the period d. The amount of cost charged to Work in Process during the period 3. Over-applied manufacturing overhead means that a. The estimated manufacturing overhead cost was less than the applied manufacturing overhead cost b. The applied manufacturing overhead cost was less than the actual manufacturing overhead cost c. The applied manufacturing overhead cost was greater than the actual manufacturing overhead coat d. The estimated manufacturing overhead cost was less than the actual manufacturing overhead cost 4. The break-even point in unit sales increases when variable expenses a. Increase and the selling price remains unchanged b. Decrease and the selling price remains unchanged c. Decrease and the selling price increases d. Remain unchanged and the selling price increases 5. All other things being equal, if a division’s traceable fixed expenses increase: a. The division’s segment margin will decrease b. The division’s segment margin ratio will remain the same c. The overall company profit will remain the same d. The division’s contribution margin ratio will decrease 6. Management of Dustin Corporation is considering dropping product R97C. Data from the company’s accounting system appear below: Sales Variable expenses Fixed manufacturing expenses Fixed selling & administrative expenses $130,000 56,000 49,000 35,000 In the company’s accounting system all fixed expenses of the company are fully allocated to product. Further investigation has revealed that $34,000 of the fixed manufacturing expenses and $20,000 of the fixed selling and administrative expenses are avoidable if product R97Cis discontinued. What would be the effect on the company’s overall net operating income if product R97C were dropped? a. b. c. d. Overall net operating income would increase by $20,000 Overall net operating income would increase by $10,000 Overall net operating income would decrease by $20,000 Overall net operating income would decrease by $10,000 7. If the labor rate variance is unfavorable, then a. the actual labor rate exceeded the standard labor rate b. the standard labor rate exceeded the actual labor rate c. standard hours allowed for the actual output exceeded actual hours d. actual hours exceeded standard hours allowed for the actual output 8. Adams Snow Removal cost formula for its vehicle operating cost is $1,900 per month plus $430 per snow-day. For the month of December, the company planned for activity of 16 snow-days, but the actual level of activity was 21 snow-days. The actual vehicle operating cost for the month was $11,470. The vehicle operating cost in the flexible budget for December would be closest to: a. b. c. d. $ 8,739 $ 8,780 $10,930 $11,470 9. Residual income can be a better measure for performance evaluation of an investment center manager than return on investment because: a. b. c. d. The problems associated with measuring the asset base are eliminated Only the gross book value of assets needs to be calculated Returns do not increase as assets are depreciated Desirable investment decisions will not be rejected by divisions that already have a high ROI 10. Which of the following three statements are correct? I. A profit center has control over both cost and revenue II. An investment center has control over invested funds, but not over costs and revenue III. A cost center has no control over sales a. b. c. d. Only I and III Only I and II Only I Only II
