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web.groovymark@gmail.com
- December 8, 2024
Question 21
Which of the following is an example of a controllable cost for a department manager?
A. Property taxes
B. Rent
C. Direct materials
D. Depreciation
Answer: C
Explanation: Direct materials are controllable because managers can influence the quantity used in production.
Question 22
What is an asset in a company’s financial statements?
A. Salaries payable
B. Cash
C. Sales revenue
D. Retained earnings
Answer: B
Explanation: Cash is considered a current asset, as it is readily available for use by the company.
Question 23
If actual overhead costs exceed applied overhead costs, what is the result?
A. Underapplied overhead
B. Overapplied overhead
C. Favorable cost variance
D. Unfavorable cost variance
Answer: A
Explanation: Underapplied overhead occurs when the actual overhead costs incurred are greater than the overhead that has been applied to production.
Question 24
Which of the following costs remains constant per unit but varies in total?
A. Fixed cost
B. Variable cost
C. Mixed cost
D. Stepped cost
Answer: B
Explanation: Variable costs remain the same on a per-unit basis but increase in total as production levels increase.
Question 25
Which of the following is an example of an investing activity in the statement of cash flows?
A. Paying employees
B. Purchasing equipment
C. Paying dividends
D. Borrowing money
Answer: B
Explanation: Purchasing equipment is an investing activity, as it involves acquiring long-term assets for business operations.
Question 26
What is the break-even point in units if the fixed costs are $20,000 and the contribution margin per unit is $5?
A. 2,000 units
B. 3,000 units
C. 4,000 units
D. 5,000 units
Answer: D
Explanation: The break-even point in units is calculated by dividing fixed costs by the contribution margin per unit. ($20,000 / $5 = 4,000 units).
Question 27
Which financial statement reports net income or loss over a specific period?
A. Balance sheet
B. Statement of cash flows
C. Income statement
D. Statement of retained earnings
Answer: C
Explanation: The income statement shows the company's revenues and expenses, resulting in net income or net loss for a specific period.
Question 28
What is the contribution margin per unit if the sales price is $80 and the variable cost is $50?
A. $20
B. $30
C. $40
D. $50
Answer: B
Explanation: Contribution margin per unit is calculated by subtracting the variable cost from the sales price. ($80 - $50 = $30).
Question 29
Which of the following is not considered a manufacturing overhead cost?
A. Depreciation on factory equipment
B. Factory insurance
C. Direct labor
D. Factory maintenance
Answer: C
Explanation: Direct labor is a direct cost and not part of manufacturing overhead.
Question 30
What is the break-even point in sales dollars if fixed costs are $10,000 and the contribution margin ratio is 40%?
A. $10,000
B. $15,000
C. $20,000
D. $25,000
Answer: C
Explanation: Break-even in sales dollars is calculated by dividing fixed costs by the contribution margin ratio. ($10,000 / 0.40 = $25,000).
Question 31
Which of the following is an example of a fixed cost?
A. Direct labor
B. Sales commissions
C. Factory rent
D. Raw materials
Answer: C
Explanation: Fixed costs, like factory rent, remain constant regardless of the level of production
Question 32
What is a company’s net income if it has sales of $100,000, total expenses of $70,000, and an income tax expense of $5,000?
A. $20,000
B. $25,000
C. $30,000
D. $35,000
Answer: B
Explanation: Net income is calculated by subtracting total expenses and income tax from sales. ($100,000 - $70,000 - $5,000 = $25,000).
Question 33
Which costing system would be most appropriate for a company that mass-produces identical items?
A. Job order costing
B. Process costing
C. Activity-based costing
D. Standard costing
Answer: B
Explanation: Process costing is used when products are identical and mass-produced, as costs are averaged over all units produced.
Question 34
Which of the following describes period costs?
A. Costs that are directly tied to production
B. Costs that are expensed when incurred
C. Costs that remain the same regardless of production volume
D. Costs that are included in inventory
Answer: B
Explanation: Period costs are expensed in the period in which they are incurred, such as office rent or administrative expenses.
Question 35
If a company purchases equipment using a loan, how will the accounting equation be affected?
A. Assets increase; liabilities increase
B. Assets decrease; liabilities increase
C. Assets increase; expenses increase
D. Assets decrease; equity decreases
Answer: A
Explanation: Purchasing equipment on credit increases both assets and liabilities, as the company gains equipment but also incurs debt.
Question 36
Which budget provides information about expected sales revenue?
A. Production budget
B. Cash budget
C. Sales budget
D. Manufacturing overhead budget
Answer: C
Explanation: The sales budget outlines expected sales revenue based on projected sales volume and prices.
Question 37
What is the contribution margin ratio if the sales price per unit is $100 and the variable cost per unit is $60?
A. 0.20
B. 0.30
C. 0.40
D. 0.50
Answer: C
Explanation: Contribution margin ratio is calculated by dividing the contribution margin by the sales price. ($40 / $100 = 0.40).
Question 38
Which of the following is considered a mixed cost?
A. Factory rent
B. Sales commissions
C. Utilities
D. Direct materials
Answer: C
Explanation: Mixed costs, such as utilities, have both fixed and variable components.
Question 39
Which financial statement shows a company’s assets, liabilities, and equity as of a specific date?
A. Income statement
B. Balance sheet
C. Statement of cash flows
D. Statement of retained earnings
Answer: B
Explanation: The balance sheet presents the financial position of a company at a specific point in time, including assets, liabilities, and equity.
Question 40
Which cost remains the same in total but varies per unit with changes in production levels?
A. Fixed cost
B. Variable cost
C. Mixed cost
D. Stepped cost
Answer: A
Explanation: Fixed costs remain constant in total, but the cost per unit decreases as production increases.
