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web.groovymark@gmail.com
- December 8, 2024
Question 41
Which of the following is an indirect cost in a manufacturing environment?
A. Raw materials
B. Direct labor
C. Factory rent
D. Sales commissions
Answer: C
Explanation: Indirect costs, like factory rent, cannot be traced directly to specific units of production.
Question 42
What is the formula to calculate break-even in sales dollars?
A. Fixed costs / Contribution margin per unit
B. Variable costs / Contribution margin ratio
C. Fixed costs / Contribution margin ratio
D. Total costs / Variable cost per unit
Answer: C
Explanation: Break-even in sales dollars is calculated by dividing fixed costs by the contribution margin ratio.
Question 43
Which of the following is an example of a financing activity?
A. Borrowing money
B. Purchasing equipment
C. Paying salaries
D. Selling inventory
Answer: A
Explanation: Borrowing money is considered a financing activity, as it relates to raising capital for the company.
Question 44
Which of the following is classified as an asset?
A. Accounts payable
B. Sales revenue
C. Machinery
D. Income taxes
Answer: C
Explanation: Machinery is an asset as it represents a resource owned by the company that is expected to provide future economic benefits.
Question 45
What type of cost varies directly with production volume?
A. Fixed cost
B. Variable cost
C. Mixed cost
D. Stepped cost
Answer: B
Explanation: Variable costs, such as raw materials, increase in total as production levels increase.
Question 46
What is the predetermined overhead rate if estimated overhead is $200,000 and the estimated machine hours are 10,000 hours?
A, $15 per machine hour
B. $20 per machine hour
C. $25 per machine hour
D. $30 per machine hour
Answer: C
Explanation: The predetermined overhead rate is calculated by dividing estimated overhead by estimated machine hours. ($200,000 / 10,000 hours = $20 per machine hour).
Question 47
Which budget focuses on the estimated costs of running an office?
A. Production budget
B. Manufacturing overhead budget
C. Administrative expense budget
D. Sales budget
Answer: C
Explanation: The administrative expense budget includes non-production costs, such as office rent, utilities, and administrative salaries.
Question 48
Which of the following represents total liabilities and owner’s equity in the balance sheet?
A. Total expenses
B. Total revenue
C. Total assets
D. Total cash
Answer: C
Explanation: Total liabilities and owner’s equity must equal total assets on the balance sheet, ensuring the accounting equation remains balanced.
Question 49
If a company sells 1,000 units at $10 per unit, and the variable cost per unit is $6, what is the total contribution margin?
A. $2,000
B. $3,000
C. $4,000
D. $5,000
Answer: C
Explanation: The total contribution margin is calculated by multiplying the contribution margin per unit by the number of units sold. (($10 - $6) x 1,000 = $4,000).
Question 50
What is the cost of goods sold if beginning inventory is $50,000, purchases are $100,000, and ending inventory is $40,000?
A. $90,000
B. $100,000
C. $110,000
D. $120,000
Answer: C
Explanation: Cost of goods sold is calculated as beginning inventory plus purchases minus ending inventory. ($50,000 + $100,000 - $40,000 = $110,000).
