ashworth college BU330 online exam 5 latest 2016 may.

Part 1 of 2 – 45.0/
50.0 Points

Question 1 of 40
2.5/ 2.5 Points
Assume the following amounts:

Total fixed costs $24,000
Selling price per unit $20
Variable costs per unit $15
If sales revenue per unit increases to $22 and 12,000 units
are sold, what is the operating income?
A. $264,000
B. $60,000
C. $108,000
D. $84,000

Question 2 of 40
2.5/ 2.5 Points
The area to the right of the breakeven point and between the
total revenue line and the total expense line represents:
A. expected profits.

B. expected losses.
C. variable
expenses.
D. fixed expenses.

Question 3 of 40
2.5/ 2.5 Points
To find the number of units that need to be sold in order to
breakeven or generate a target profit, the formula used is:
A. (fixed expenses +
operating income) ÷ contribution margin per unit.
B. (fixed expenses +
operating income) ÷ contribution margin ratio.
C. (fixed expenses –
operating income) ÷ contribution margin ratio.
D. (fixed expenses –
operating income) ÷ contribution margin per unit.

Question 4 of 40
2.5/ 2.5 Points
Sky High Seats manufactures seats for airplanes. The company
has the capacity to produce 100,000 seats per year, but is currently producing
and selling 75,000 seats per year. The following information relates to current
production:

Sale price per unit $400

Variable costs per unit: $220
Manufacturing $50
Marketing and
administrative

Total fixed costs:

Manufacturing $750,000
Marketing and
administrative $200,000
If a special sales order is accepted for 3,000 seats at a
price of $300 per unit, and fixed costs increase by $10,000, how would
operating income be affected? (NOTE: Assume regular sales are not affected by
the special order.)
A. Decrease by
$80,000
B. Increase by
$230,000
C. Increase by
$90,000
D. Increase by
$80,000

Question 5 of 40
2.5/ 2.5 Points
Pluto Incorporated provided the following information
regarding its single product:

Direct materials used $240,000
Direct labor incurred $420,000
Variable manufacturing overhead $160,000
Fixed manufacturing overhead $100,000
Variable selling and administrative expenses $60,000
Fixed selling and administrative expenses $20,000
The regular selling price for the product is $80. The annual
quantity of units produced and sold is 40,000 units (the costs above relate to
the 40,000 units production level). The company has excess capacity and regular
sales will not be affected by this special order. There was no beginning
inventory. What would be the effect on operating income of accepting a special
order for 3,500 units at a sale price of $55 per product?
A. Increase by
$115,500
B. Increase by
$269,500
C. Decrease by
$115,500
D. Decrease by
$269,500

Question 6 of 40
2.5/ 2.5 Points
Sky High Seats manufactures seats for airplanes. The company
has the capacity to produce 100,000 seats per year, but is currently producing
and selling 75,000 seats per year. The following information relates to current
production:

Sale price per unit $400

Variable costs per unit: $220
Manufacturing $50
Marketing and
administrative

Total fixed costs:

Manufacturing $750,000
Marketing and
administrative $200,000
If a special sales order is accepted for 7,000 seats at a
price of $350 per unit, and fixed costs remain unchanged, how would operating
income be affected? (NOTE: Assume regular sales are not affected by the special
order.)
A. Increase by
$560,000
B. Decrease by
$560,000
C. Increase by
$2,450,000
D. Increase by
$8,000,000

Question 7 of 40
2.5/ 2.5 Points
In a special sales order decision, incremental fixed costs
that will be incurred if the special order is accepted are considered to be:
A. opportunity
costs.
B. irrelevant to the
decision.
C. relevant to the
decision.
D. sunk costs.

Question 8 of 40
0.0/ 2.5 Points
Samson Incorporated provided the following information
regarding its only product:

Sale price per unit $50.00
Direct materials used $160,000
Direct labor incurred $185,000
Variable manufacturing overhead $120,000
Variable selling and administrative expenses $70,000
Fixed manufacturing overhead $65,000
Fixed selling and administrative expenses $12,000
Units produced and sold 20,000

Assume no beginning inventory
Assuming there is excess capacity, what would be the effect
on operating income of accepting a special order for 1,200 units at a sale
price of $47 per product? The 1,200 units would not require any variable
selling and administrative expenses. (NOTE: Assume regular sales are not
affected by the special order.)
A. Increase by
$84,300
B. Decrease by
$28,500
C. Increase by
$24,300
D. Increase by
$28,500

Question 9 of 40
2.5/ 2.5 Points
A manager should always reject a special order if:
A. the special order
price is less than the variable costs of the order.
B. there is
available excess capacity.
C. the special order
price is less than the regular sales price.
D. the special order
will require variable nonmanufacturing expenses.

Question 10 of 40
2.5/ 2.5 Points
A product is sold at $60.00 per unit, the variable expense
per unit is $30, and total fixed expenses are $200,000, what are the breakeven
sales in dollars?
A. $3,333
B. $100,000
C. $133,333
D. $400,000

Question 11 of 40
2.5/ 2.5 Points
To find the breakeven point using the shortcut formulas, you
use:
A. zero for the
contribution margin per unit.
B. zero for the
fixed expenses.
C. zero for the
contribution margin ratio.
D. zero for the
operating income.

Question 12 of 40
2.5/ 2.5 Points
The horizontal line intersecting the vertical y-axis at the
level of total cost on a CVP graph represents:
A. total costs.
B. total variable
costs.
C. total fixed
costs.
D. breakeven point.

Question 13 of 40
2.5/ 2.5 Points
Which of the following best describes a “sunk
cost”?
A. Costs that were
incurred in the past and cannot be changed
B. Benefits foregone
by choosing a particular alternative course of action
C. A factor that
restricts the production or sale of a product
D. Expected future
data that differ among alternatives

Question 14 of 40
2.5/ 2.5 Points
“Contribution margin per unit” is best described
by which of the following?
A. Sales price per
unit minus fixed cost per unit
B. Sales price per
unit minus variable cost unit
C. Sales price per
unit minus fixed and variable costs per unit
D. Units sold time
contribution margin ratio

Question 15 of 40
2.5/ 2.5 Points
Blue Technologies manufactures and sells DVD players. Great
Products Company has offered Blue Technologies $22 per DVD player for 10,000
DVD players. Blue Technologies’ normal selling price is $30 per DVD player. The
total manufacturing cost per DVD player is $18 and consists of variable costs
of $14 per DVD player and fixed overhead costs of $4 per DVD player. (NOTE:
Assume excess capacity and no effect on regular sales.)

How much are the expected increase (decrease) in revenues
and expenses from the special sales order?
A. Expected increase
in revenues $220,000; expected increase in expenses $140,000
B. Expected increase
in revenues $220,000; expected increase in expenses $40,000
C. Expected increase
in revenues $300,000; expected increase in expenses $140,000
D. Expected increase
in revenues $220,000; expected increase in expenses $120,000

Question 16 of 40
2.5/ 2.5 Points
The Muffin House produces and sells a variety of muffins.
The selling price per dozen is $15, variable costs are $9 per dozen, and total
fixed costs are $4,200. How many dozen muffins must The Muffin House sell to
breakeven?
A. 10,500
B. 700
C. 280
D. 175

Question 17 of 40
2.5/ 2.5 Points
Corny and Sweet grows and sells sweet corn at its roadside
produce stand. The selling price per dozen is $3.75, variable costs are $1.25
per dozen, and total fixed costs are $750.00. What are breakeven sales in
dollars?
A. $563
B. $300
C. $375
D. $1,125

Question 18 of 40
0.0/ 2.5 Points
If total fixed costs are $455,000, the contribution margin
per unit is $25.00, and targeted operating income is $25,000, how many units
must be sold to breakeven?
A. 11,375,000
B. 19,200
C. 18,200
D. 625,000

Question 19 of 40
2.5/ 2.5 Points
The breakeven point may be defined as the number of units a
company must sell to do which of the following?
A. Generate a net
loss
B. Generate a zero
profit
C. Earn more net
income than the previous accounting period
D. Generate a net
income

Question 20 of 40
2.5/ 2.5 Points
The effect of a plant closing on employee morale is an
example of which of the following?
A. A qualitative
factor
B. A quantitative
factor
C. A sunk cost
D. A variable cost

Part 2 of 2 – 37.5/
50.0 Points

Question 21 of 40
2.5/ 2.5 Points
In a(n) ________ center, managers are accountable for both
revenues and costs.
A. cost
B. profit
C. equity
D. investment

Question 22 of 40
0.0/ 2.5 Points
All of the following are responsibility centers EXCEPT:
A. profit centers.
B. investment
centers.
C. customer centers.

D. cost centers.

Question 23 of 40
2.5/ 2.5 Points
Brockman Company is preparing its cash budget for the
upcoming month. The budgeted beginning cash balance is expected to be $35,000.
Budgeted cash disbursements are $123,000, while budgeted cash receipts are
$130,000. Brockman Company wants to have an ending cash balance of $48,000. How
much would Brockman Company need to borrow to achieve its desired ending cash
balance?
A. $6,000
B. $90,000
C. $42,000
D. $55,000

Question 24 of 40
2.5/ 2.5 Points
Assume Cucumber Company expects each division to earn an 8%
target rate of return. Assume the Company’s Pickle Division had the following
results.

Sales $24,500,000
Operating income $1,250,000

Total assets $15,500,000

The Division’s RI is:
A. ($10,000).
B. $10,000.
C. ($710,000).
D. $710,000.

Question 25 of 40
0.0/ 2.5 Points
Green Company has budgeted sales of 23,000 units for June
and 25,000 units for July. Green’s policy is to maintain its finished goods
inventory at 25% of the following month’s sales. Accordingly, at the end of
May, Green had 5,750 units on hand. How many units must it produce in June in
order to support the sales goal and maintain its policy regarding finished
goods inventory?
A. 6,250 units
B. 23,000 units
C. 23,500 units
D. 29,250 units

Question 26 of 40
0.0/ 2.5 Points
Selected financial data for The Portland Porcelain Works
Coffee Mug Division is as follows.

Sales $2,300,000
Operating income $414,000
Total assets $718,750
Current liabilities $180,000
Target rate of return 10%
Weighted average cost of capital 8%
What is The Portland Porcelain Works Coffee Mug Division
capital turnover?
A. 5.6
B. 12.8
C. 3.2
D. 1.7

Question 27 of 40
2.5/ 2.5 Points
Regarding the budgeting process, which of the following
statements is true?
A. The budget should
always be designed by top corporate management.
B. The budget should
be approved by the company’s external auditors.
C. The budget should
be designed from the bottom up, with input from employees at all levels.
D. All of the listed
statements are true regarding the budgeting process.

Question 28 of 40
2.5/ 2.5 Points
Budget committees most often would include all of the
following people EXCEPT:
A. CEO.
B. research and
development manager.
C. shareholder.
D. marketing
manager.

Question 29 of 40
2.5/ 2.5 Points
The difference between actual and budgeted figures is known
as:
A. fluctuations.
B. variances.
C. overages.
D. underages.

Question 30 of 40
0.0/ 2.5 Points
The performance evaluation of a profit center is typically
based on its:
A. flexible budget
variance.
B. static budget
variance.
C. return on
investment.
D. return on assets.

Question 31 of 40
2.5/ 2.5 Points
The ________ budget is the only budget stated ONLY in units,
not dollars.
A. production
B. sales
C. direct materials
D. manufacturing
overhead

Question 32 of 40
0.0/ 2.5 Points
Assume Cucumber Company expects each division to earn an 8%
target rate of return. Assume the Company’s Pickle Division had the following
results.

Sales $24,500,000
Operating income $1,250,000
Total assets $15,500,000

The Division’s ROI is:
A. 8.1%.
B. 15.8%.
C. 5.1%.
D. 7.0%.

Question 33 of 40
2.5/ 2.5 Points
Forty Winks Corporation manufactures nightstands. The
production budget shows that Forty Winks Corporation plans to produce 1,200
nightstands in March and 1,050 nightstands in April. Each nightstand requires
.50 direct labor hours in its production. Forty Winks Corporation has a direct
labor rate of $12 per direct labor hour. What is the total combined direct
labor cost that should be budgeted for March and April?
A. 6,300
B. 7,200
C. 27,000
D. 13,500

Question 34 of 40
2.5/ 2.5 Points
If a company must decrease its selling price while all of
the company’s expenses remain constant, what will happen to return on
investment (ROI)?
A. ROI will
decrease.
B. ROI will
increase.
C. ROI will not be
affected.
D. We cannot
determine the effect from the information provided.

Question 35 of 40
2.5/ 2.5 Points
The results of a customer survey about customer experiences
with the company’s services would be an example of measuring which perspective?
A. Financial
B. Customer
C. Internal business

D. Learning and
growth

Question 36 of 40
2.5/ 2.5 Points
For the most recent year, Robin Company reports operating
income of $650,000. Robin’s sales margin is 10%, and capital turnover is 2.0.
What is Robin’s return on investment (ROI)?
A. 5%
B. 1%
C. 100%
D. 20%

Question 37 of 40
2.5/ 2.5 Points
Kotrick Company has beginning inventory of 15,000 units and
expected sales of 23,000 units. If the desired ending inventory is 18,000
units, how many units should be produced?
A. 20,000
B. 56,500
C. 10,000
D. 26,000

Question 38 of 40
2.5/ 2.5 Points
Which of the following types of cash outlays has its own
budget?
A. Capital
expenditures
B. Dividends
C. Income taxes
D. All of the above

Question 39 of 40
2.5/ 2.5 Points
Feeney Furniture prepared the following sales budget.

Month Cash Sales Credit Sales
March $20,000 $10,000
April $36,000 $16,000
May $42,000 $40,000
June $54,000 $48,000
Credit collections are 15% two months following the sale,
50% in the month following the sale, and 30% in the month of sale. The
remaining 5% is expected to be uncollectible. What are the total cash
collections in June?
A. $36,800
B. $90,800
C. $86,000
D. $96,600

Question 40 of 40
2.5/ 2.5 Points
Beginning inventory is $120,000 and ending inventory is 60%
of beginning inventory. Compute cost of goods sold for the period if purchases
are $400,000.
A. $72,000
B. $448,000
C. $520,000
D. $592,000