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Question 41

What is the variable cost ratio if the variable cost per unit is $10 and the sales price per unit is $25?

A. 0.25
B. 0.40
C. 0.50
D. 0.60

Answer: B

Explanation: The variable cost ratio is calculated by dividing the variable cost per unit by the sales price per unit. ($10 / $25 = 0.40).

Question 42

Which of the following is included in the cost of goods sold for a manufacturing company?

A. Administrative expenses
B. Direct labor costs
C. Marketing expenses
D. Sales commissions

Answer: B

Explanation: The cost of goods sold includes all costs directly related to the production of goods, including direct labor

Question 43

What is the predetermined overhead rate if the estimated overhead is $50,000 and the estimated labor hours are 10,000 hours?

A. $5 per labor hour
B. $10 per labor hour
C. $50 per labor hour
D. $100 per labor hour

Answer: A

Explanation: The predetermined overhead rate is calculated by dividing estimated overhead by the estimated labor hours. ($50,000 / 10,000 hours = $5 per labor hour).

Question 44

Which of the following is a direct material cost?

A. Office supplies
B. Factory utilities
C. Steel used to manufacture cars
D. Wages of factory supervisors

Answer: C

Explanation: Direct materials are the raw materials that can be directly traced to the production of a product, such as steel used in car manufacturing.

Question 45

Which of the following is classified as a current liability?

A. Accounts receivable
B. Prepaid insurance
C. Notes payable (due within one year)
D. Land

Answer: C

Explanation: Current liabilities are obligations that are due within one year, such as notes payable due within that period.

Question 46

What is the break-even point in units if the contribution margin per unit is $25 and the fixed costs are $50,000?

A. 1,000 units
B. 2,000 units
C. 2,500 units
D. 3,000 units

Answer: B

Explanation: The break-even point in units is calculated by dividing fixed costs by the contribution margin per unit. ($50,000 / $25 = 2,000 units).

Question 47

Which of the following is an example of a controllable cost for a department manager?

A. Factory rent
B. Direct labor
C. Insurance premiums
D. Depreciation

Answer: B

Explanation: Direct labor is a controllable cost because a department manager can influence labor usage and costs, whereas fixed costs like rent are not easily controllable.

Question 48

Which account is considered an asset?

A. Accounts payable
B. Common stock
C. Inventory
D. Sales revenue

Answer: C

Explanation: Inventory is classified as a current asset, as it represents goods that are available for sale within a short period.

Question 49

What is an unfavorable cost variance?

A. When actual costs are higher than budgeted costs
B. When actual costs are lower than budgeted costs
C. When sales exceed the break-even point
D. When fixed costs decrease during the period

Answer: A

Explanation: An unfavorable cost variance occurs when the actual costs incurred are higher than what was budgeted or expected.

Question 50

Which of the following is a period cost?

A. Direct materials
B. Depreciation on factory equipment
C. Office rent
D. Direct labor

Answer: C

Explanation: Office rent is a period cost because it is not directly related to the production process and is expensed in the period it is incurred.

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