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London Plastics has monthly fixed costs of $84,000,while its variable costs are $4.00 per unit.If the sales price of a unit is $15.00 and London Plastics sell 14,000 units,the company's average fixed costs per unit will be


A) $6.00 per unit.
B) $10.00 per unit.
C) $4.00 per unit.
D) $11.00 per unit.

E) C) and D)
F) B) and D)

Correct Answer

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Certain materials used in a manufacturing plant cannot be traced to a specific unit.What are these materials called?


A) General materials
B) Direct materials
C) Indirect materials
D) Finished materials

E) All of the above
F) C) and D)

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Lucky Cow Dairy provided the following expense information for May: Lucky Cow Dairy provided the following expense information for May: What is the total cost for the distribution category of the value chain? A) $217,000 B) $23,000 C) $20,000 D) $151,000 What is the total cost for the distribution category of the value chain?


A) $217,000
B) $23,000
C) $20,000
D) $151,000

E) C) and D)
F) B) and D)

Correct Answer

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Decision making is guided only by differential costs.

A) True
B) False

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Which of the following is an example of a period cost when manufacturing products?


A) Depreciation expense on factory equipment
B) Advertising expense
C) Indirect materials used in the factory
D) Property taxes on the plant

E) A) and D)
F) B) and D)

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Which of the following types of companies has raw materials,work in process and finished goods inventory?


A) Retailers
B) Manufacturers
C) Wholesalers
D) Service companies

E) A) and C)
F) C) and D)

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Paper Clip Company sells office supplies.The following information summarizes the company's operating activities for the year: Paper Clip Company sells office supplies.The following information summarizes the company's operating activities for the year: What is operating income? A) $154,500 B) $56,000 C) $38,000 D) $46,000 What is operating income?


A) $154,500
B) $56,000
C) $38,000
D) $46,000

E) A) and B)
F) A) and D)

Correct Answer

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A company is deciding whether to purchase production equipment that can produce units more quickly than the current equipment.Which of the following costs would be relevant to its decision?


A) The cost of the new equipment
B) The salary of the factory manager
C) The cost of raw materials
D) The original purchase price of the current machinery

E) A) and B)
F) C) and D)

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Which of the following is an example of a fixed cost for a manufacturer?


A) Income Taxes
B) Machine Repair Expense
C) Fire Insurance on buildings
D) Delivery Fuel Expense

E) B) and C)
F) A) and C)

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Selected information regarding a company's most recent quarter follows (all data in thousands) . Selected information regarding a company's most recent quarter follows (all data in thousands) . What was the beginning finished goods inventory? A) $2,100 B) $500 C) $710 D) $800 What was the beginning finished goods inventory?


A) $2,100
B) $500
C) $710
D) $800

E) A) and B)
F) B) and C)

Correct Answer

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Sally wants to purchase a new sofa because she purchased a new home at the beach.Sally visited two stores and she narrowed down her choices to a red sofa and a blue sofa.Sally owns pets so she considers the cost of insurance to insure each sofa.Sally compiled the following data and she realizes that the sales tax to purchase the sofa is 10% in her state. Sally wants to purchase a new sofa because she purchased a new home at the beach.Sally visited two stores and she narrowed down her choices to a red sofa and a blue sofa.Sally owns pets so she considers the cost of insurance to insure each sofa.Sally compiled the following data and she realizes that the sales tax to purchase the sofa is 10% in her state. Which sofa should Sally purchase? What costs are relevant in her decision? Why? Which sofa should Sally purchase? What costs are relevant in her decision? Why?

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Sally should purchase the blue sofa.The ...

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Joe's Bottling Company provided the following expense information for July: Joe's Bottling Company provided the following expense information for July: What is the total cost for the distribution category of the value chain? A) $40,000 B) $43,000 C) $219,000 D) $171,000 What is the total cost for the distribution category of the value chain?


A) $40,000
B) $43,000
C) $219,000
D) $171,000

E) All of the above
F) B) and C)

Correct Answer

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How do variable costs per unit behave?


A) They decrease as production increases.
B) They increase as production decreases.
C) They decrease as production decreases.
D) They remain the same throughout production levels within the relevant range.

E) B) and D)
F) B) and C)

Correct Answer

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Which of the following items could be found in work in process inventory at a candy bar manufacturer?


A) Candy bars made but not coated in chocolate
B) Cocoa products to make candy bars
C) Sugar products to make candy bars
D) Candy bars completed but not yet sold

E) B) and D)
F) All of the above

Correct Answer

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What type of company resells tangible products it purchases ready-made from suppliers?


A) Merchandiser
B) Retailer
C) Wholesaler
D) All of the above

E) A) and D)
F) All of the above

Correct Answer

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When making a decision to buy a new computer,all of the following should be considered except


A) differential costs.
B) relevant costs.
C) qualitative characteristics.
D) sunk costs.

E) B) and C)
F) B) and D)

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All of the following items would be found in raw materials inventory for a furniture manufacturer except


A) wood.
B) fabric.
C) steel framing.
D) assembly worker wages.

E) A) and B)
F) None of the above

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Receipt of materials is part of the firm's value chain.

A) True
B) False

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Schlabig & Associates,a public accounting firm that provides business consulting to a consumer,is what type of company?


A) Manufacturer
B) Retailer
C) Service
D) Wholesaler

E) B) and C)
F) C) and D)

Correct Answer

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Selected financial information for Brookeville Manufacturing is presented in the following table (000s omitted) . Selected financial information for Brookeville Manufacturing is presented in the following table (000s omitted) . What was the cost of direct materials used? A) $600 B) $380 C) $420 D) $400 What was the cost of direct materials used?


A) $600
B) $380
C) $420
D) $400

E) B) and C)
F) All of the above

Correct Answer

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