ACC 220 5,6,7, and 8

Sales mix is

The relative percentage in which a company sells its multiple products

When a company assigns the costs of direct materials, direct labor, and both variable and fixed manufacturing overhead to products, that company is using

Absorption costing

Net income under absorption costing is gross profit less

Variable selling and administrative expenses and fixed selling and administrative expenses

Cost that will differ between alternatives and influence the outcome of a decision are

Relevant costs

Bond Co. is using the target cost approach on a new product. Information gathered so far reveals:
Expected annual sales
400,000 units
Desired profit per unit
$0.35
Target cost
$168,000

What is the target selling price per unit?

$0.77

400,000x.35=168,000

140,000+168,000=308,000
308,000/400,000=$0.77

All of the following are correct statements about cost-plus pricing approach except that it

Includes only variable costs in the cost base

In the cost-plus pricing approach, the desired ROI per unit is computed by multiplying the ROI percentage by

Total assets

An increase in the level of activity will have the following effects on unit costs for variable and fixed costs:

Unit Variable cost: Remain constant

Unity Fixed cost:
Decrease

Frazier manufacturing company collected the following production data for the past month: If the high-low methos is used, what is the monthly total cost equation?

Total cost= $13,200+$33/unit.

66,000-49,500/1,600-1,100= Price per unit ($33/unit).

66,000-(1,600x33)=price (13,200)

At the high level of activity in November, 7,000 machine hours were run and power costs we $18,000. In April, a month of low activity, 2,000 machine hours were run and power costs were $9,000. Using high-low method, the estimated fixed cost element of power costs is

5,400.

$18,000-$9000/7,000-2,000=1.8

18,000-(7,000x1.8)

Contribution margin

equals Sales - Variable Costs

The break-even point is where

contribution margin equals total fixed costs.

Capitol Manufacturing sells 4,000 units of product A anually, and 6,000 units of Product B anually. The sales mix for Product A is

40%. 6,000+4000=10,000

4,000/10,000=.40
.4x100= 40%

Which is the first step in the management decision-making process

Identify the problem and assign responsibility

Which of the following will always be a relevant cost?

Opportunity Cost

A revenue that differs between alternatives and makes a difference in decision-making is called

Incremental revenue

Which of the following is an irrelevant cost

A sunk cost

If a plant is operating at full capacity and receives a one-time opportunity to accept an order at a special price below its usual price, then

The order will likely be rejected

Marcus company gathered the following data about the three products that it produces. Which should not proceed further

Product B

Costs incurred before the split-off point are

sunk costs

A company must price its product to cover its costs and earn a reasonable profit in

The long run

In time-and-material pricing, a material loading charge covers all of the following except

purchasing costs, related overhead, and desired profit margin are all covered

A Variable cost is a cost that

a. Varies per unit at every level of activity
b. Occurs at various times during the year
c. varies in total in proportion to changes in the level of activity
d. may or may not be incurred, depending on management's discretion

Varies in total in proportion to changes in the level of activity.

Two costs at Bradshaw company appear below for specific months of operation

a. deliverey costs and utilities are both variable
b. delivery costs and utility costs are both mixed
c. utility and mixed delivery costs are variable
d. delivery costs are mixed and utilities are variable

Delivery costs are mixed and utilities are variable

A mixed cost contains

A variable element and a fixed element