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web.groovymark@gmail.com
- December 8, 2024
Question 41
Which of the following is an example of a fixed cost?
A. Direct materials
B. Factory rent
C. Sales commissions
D. Direct labor
Answer: B
Explanation: Factory rent is a fixed cost, as it remains the same regardless of production levels.
Question 42
Which financial statement reports a company’s revenues and expenses for a specific period?
A. Balance sheet
B. Income statement
C. Statement of cash flows
D. Statement of retained earnings
Answer: B
Explanation: The income statement shows a company’s revenues and expenses over a specific period, resulting in net income or loss.
Question 43
What is the predetermined overhead rate if estimated overhead is $250,000 and estimated machine hours are 25,000 hours?
A. $5 per machine hour
B. $8 per machine hour
C. $10 per machine hour
D. $12 per machine hour
Answer: C
Explanation: The predetermined overhead rate is calculated by dividing estimated overhead by estimated machine hours. ($250,000 / 25,000 hours = $10 per machine hour).
Question 44
Which of the following is classified as an operating activity on the statement of cash flows?
A. Borrowing money
B. Purchasing equipment
C. Paying employees
D. Issuing stock
Answer: C
Explanation: Paying employees is an operating activity because it is related to the company’s day-to-day business operations.
Question 45
Which budget includes expected production costs other than direct materials and direct labor?
A. Manufacturing overhead budget
B. Direct labor budget
C. Sales budget
D. Production budget
Answer: A
Explanation: The manufacturing overhead budget includes all indirect production costs, such as factory maintenance and utilities.
Question 46
What is the contribution margin if the sales price per unit is $40 and the variable cost per unit is $25?
A. $10
B. $15
C. $20
D. $25
Answer: B
Explanation: Contribution margin is calculated by subtracting variable costs from the sales price. ($40 - $25 = $15).
Question 47
Which financial statement summarizes a company’s financial position at a specific point in time?
A. Income statement
B. Balance sheet
C. Statement of cash flows
D. Statement of retained earnings
Answer: B
Explanation: The balance sheet presents a company’s financial position, including assets, liabilities, and equity, at a specific point in time.
Question 48
Which of the following is considered a current liability?
A. Mortgage payable
B. Bonds payable
C. Accounts payable
D. Retained earnings
Answer: C
Explanation: Accounts payable is a current liability because it is expected to be paid within one year.
Question 49
What is the journal entry to record the sale of goods on credit?
A. Debit cash; credit sales
B. Debit accounts receivable; credit sales
C. Debit sales; credit cash
D. Debit sales; credit accounts payable
Answer: B
Explanation: When goods are sold on credit, accounts receivable is debited (increased), and sales are credited (increased).
Question 50
What is the total variable cost if a company produces 500 units at a variable cost of $8 per unit?
A. $2,500
B. $3,000
C. $4,000
D. $5,000
Answer: D
Explanation: Total variable cost is calculated by multiplying the number of units by the variable cost per unit. (500 units x $8 = $4,000).
