managerial accounting part iv

Question 1

1. The general formula for the minimum transfer price is: minimum transfer price equals

a. fixed cost + opportunity cost.
b. external purchase price.
c. total cost + opportunity cost.
d. variable cost + opportunity cost.

Answer 1

d. variable cost + opportunity cost

Question 2

Cost of goods manufactured is calculated as follows:

a. Beginning Work in Process + direct materials used + direct labor + manufacturing
overhead + ending Work in Process.
b. Direct materials used + direct labor + manufacturing overhead – beginning Work in
Process + ending Work in Process.
c. Beginning Work in Process + direct materials used + direct labor + manufacturing
overhead – ending Work in Process.
d. Direct materials used + direct labor + manufacturing overhead – ending Work in
Process – beginning Work in Process.

Answer 2

C. Beginning work in process + direct materials used + direct labor + manufacturing overhead - ending work in process

Question 3

The costs that are easiest to trace directly to products are

a. direct materials and direct labor.
b. direct labor and overhead.
c. direct materials and overhead.
d. none of the above; all three costs are equally easy to trace to the product.

Answer 3

a. direct materials and direct labor.

Question 4

The break-even point is where

A) total sales equal total variable costs.
B) contribution margin equals total fixed costs.
C) total variable costs equal total fixed costs.
D) total sales equal total fixed costs.

Answer 4

B) contribution margin equals total fixed costs.

Question 5

Which of the following is a true statement about process cost systems?

a. In process cost systems, costs are accumulated but not assigned.
b. A process cost system has one work in process account for each process.
c. A process cost system has one work in process account for each job.
d. Unit costs are not computed in process cost systems

Answer 5

b. A process cost system has one work in process account for each process.

Question 6

A company has total fixed costs of $240,000 and a contribution margin ratio of 20%.
The total sales necessary to break even are

A) $960,000.
B) $1,200,000.
C) $300,000.
D) $288,000.

Answer 6

B) $1,200,000

Question 7

In cost-plus pricing, the markup consists of

a. manufacturing costs.
b. desired ROI.
c. selling and administrative costs.
d. total cost and desired ROI

Answer 7

b. desired ROI

Question 8

Fixed costs are $3,000,000 and the unit contribution margin is $150. What is the break-even point?

A) $7,500,000
B) $20,000,000
C) 7,500 units
D) 20,000 units

Answer 8

D) 20,000 units