Question 11.11.Which of the following equations can be used to compute a firm’s magnitude of operating leverage? Net income/sales Fixed costs/contribution margin Net income/gross margin Contribution margin/net income Question 12.12.Booker Company operates a factory with two departments, X and Y. The rent paid on the manufacturing facility would most likely be allocated to departments X and Y on the basis of: direct labor hours. machine hours. square footage occupied. units sold. Question 13.13.The KnitWitt Corporation manufactures knitted shawls and scarves. The company expects to incur $1,500,000 in overhead costs during 2010. The following budget information is for 2010: ShawlsScarvesTotalNumber of units expected to be produced50,000100,000150,000Direct labor hours250,000800,0001,050,000Machine hours100,00080,000180,000If the company uses direct labor hours as the cost driver, what will be the allocation rate for 2010? $1.43 per direct labor hour $10 per direct labor hour $8.33 per direct labor hour $1.88 per direct labor hour Question 14.14.Ransom Manufacturing Company operates its three production departments within a single facility. Each department produces its own products and maintains its own production equipment. Although they share a common facility, each department is overseen by separate supervisor. Which one of the following costs is a direct cost of each department? Lease payment on facility Depreciation on the facility Plant manager salary Cost of goods sold Question 15.15.Which of the following statements is true regarding the salary of the manager of a fast food hamburger restaurant?The salary is a fixed cost that is directly traceable to the cost of making hamburgers. The salary is a fixed cost that is directly traceable to the cost of operating a specific restaurant. The salary is a variable cost that cannot be traced to the cost of operating a specific restaurant. None of the above. Question 16.16.A chair manufacturer makes custom chairs using hand tools, wood, glue, and varnish. Which of the following statements is true? The costs of wood and glue would be treated as direct costs. Wood, glue, and varnish would all be direct materials. Wood would be accounted for as a direct cost, and glue and varnish as indirect costs. The concepts of direct and indirect costs are not applicable here. Question 17.17.Humboldt Corporation manufactures electronic products, including calculators and printers.Cost items of the company include: Labor on assembling a printerSalary of an employee who supervises calculator manufacturingMaterials used in making a printerCompany presidents salarySalary of the manager of the Calculator DivisionDepreciation on corporate headquarters buildingInk cartridges installed in printer during manufactureDepreciation on equipment used in making calculatorsSupplies used in corporate offices Which of the costs listed above is a direct cost assuming the cost object is the company as a whole? All of the costs listed All of the costs except number 4 All of the costs except numbers 4 and 6 None of the aboveQuestion 18.18.Which of the following costs is most likely to be directly traceable to a specific department in a retail clothing store? The cost of heating and air conditioning the department The cost of supplies The cost of commissions paid to the sales staff All of the above Question 19.19.The margin of safety can be defined as the excess of budgeted sales over: break-even sales. net income. fixed costs. variable costs.Question 20.20.Humboldt Corporation manufactures electronic products, including calculators and printers.Cost items of the company include: Labor on assembling a printerSalary of an employee who supervises calculator manufacturingMaterials used in making a printerCompany presidents salarySalary of the manager of the Calculator DivisionDepreciation on corporate headquarters buildingInk cartridges installed in printer during manufactureDepreciation on equipment used in making calculatorsSupplies used in corporate officesWhich of the costs listed above is a direct cost assuming the cost object is the Calculator Division? Numbers 2, 5, and 6 Numbers 2, 5, and 8 Number 2 only None of the costs is direct to the Calculator Division
Question 11.11.Which of the following equations can be used to compute a firm’s magnitude of operating leverage? Net income/sales Fixed costs/contribution margin Net income/gross margin Contribution margin/net income
Question 12.12.Booker Company operates a factory with two departments, X and Y. The rent paid on the manufacturing facility would most likely be allocated to departments X and Y on the basis of: direct labor hours. machine hours. square footage occupied. units sold.
Question 13.13.The KnitWitt Corporation manufactures knitted shawls and scarves. The company expects to incur $1,500,000 in overhead costs during 2010. The following budget information is for 2010: ShawlsScarvesTotalNumber of units expected to be produced50,000100,000150,000Direct labor hours250,000800,0001,050,000Machine hours100,00080,000180,000If the company uses direct labor hours as the cost driver, what will be the allocation rate for 2010? $1.43 per direct labor hour $10 per direct labor hour $8.33 per direct labor hour $1.88 per direct labor hour Question 14.14.Ransom Manufacturing Company operates its three production departments within a single facility. Each department produces its own products and maintains its own production equipment. Although they share a common facility, each department is overseen by separate supervisor. Which one of the following costs is a direct cost of each department? Lease payment on facility Depreciation on the facility Plant manager salary Cost of goods sold
Question 15.15.Which of the following statements is true regarding the salary of the manager of a fast food hamburger restaurant?The salary is a fixed cost that is directly traceable to the cost of making hamburgers. The salary is a fixed cost that is directly traceable to the cost of operating a specific restaurant. The salary is a variable cost that cannot be traced to the cost of operating a specific restaurant. None of the above.
Question 16.16.A chair manufacturer makes custom chairs using hand tools, wood, glue, and varnish. Which of the following statements is true? The costs of wood and glue would be treated as direct costs. Wood, glue, and varnish would all be direct materials. Wood would be accounted for as a direct cost, and glue and varnish as indirect costs. The concepts of direct and indirect costs are not applicable here.
Question 17.17.Humboldt Corporation manufactures electronic products, including calculators and printers.Cost items of the company include: Labor on assembling a printerSalary of an employee who supervises calculator manufacturingMaterials used in making a printerCompany presidents salarySalary of the manager of the Calculator DivisionDepreciation on corporate headquarters buildingInk cartridges installed in printer during manufactureDepreciation on equipment used in making calculatorsSupplies used in corporate offices Which of the costs listed above is a direct cost assuming the cost object is the company as a whole? All of the costs listed All of the costs except number 4 All of the costs except numbers 4 and 6 None of the aboveQuestion 18.18.Which of the following costs is most likely to be directly traceable to a specific department in a retail clothing store? The cost of heating and air conditioning the department The cost of supplies The cost of commissions paid to the sales staff All of the above
Question 19.19.The margin of safety can be defined as the excess of budgeted sales over: break-even sales. net income. fixed costs. variable costs.Question 20.20.Humboldt Corporation manufactures electronic products, including calculators and printers.Cost items of the company include: Labor on assembling a printerSalary of an employee who supervises calculator manufacturingMaterials used in making a printerCompany presidents salarySalary of the manager of the Calculator DivisionDepreciation on corporate headquarters buildingInk cartridges installed in printer during manufactureDepreciation on equipment used in making calculatorsSupplies used in corporate officesWhich of the costs listed above is a direct cost assuming the cost object is the Calculator Division? Numbers 2, 5, and 6 Numbers 2, 5, and 8 Number 2 only None of the costs is direct to the Calculator Division
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