# FINANCE

1)Under a relevant range of production, when total quantities sold increase, total fixed costs

 [removed] a. increase [removed] b. decrease [removed] c. remain equal [removed] d. there is no relationship

2)Conversion costs are

 [removed] a. only direct material [removed] b. only direct labor [removed] c. only overhead [removed] d. overhead and direct labor

3)XY Company sells its unique product at \$30.00. Variable costs per unit are \$20.00. Total fixed sales salaries per month \$40,000.00. Other fixed costs per month \$60,000.00. Assume that the company wants to change the sales salaries as follows: Total fixed sales salaries per month 25,000. Sales commission of 10% of sales.?Find at what sale-level is the company indifferent between the two alternatives

 [removed] a. \$5,000 [removed] b. 5,000 units [removed] c. 10,000 [removed] d. 7,500 units

 4) AJ Company makes three products. ? ? ? Current selling price per unit, variable cost per unit, and machine hours required are as follows: ? ? Products ? ? X Y Z Current selling price per unit \$20 \$30 \$20 Variable cost per unit 10 18 12 Machine hours required for each unit 2 3 4 The company has a maximum of 1000 machine hours available per month.

Assume the company produces all products; find the total contribution margin per hour.

 [removed] a. \$13.50 [removed] b. \$12 [removed] c. \$9 [removed] d. \$4

 5) TC Company makes several printing works using two machines (X and Y). Data on the two machines for June 2010 are as follows: X Y Direct material 10 15 Time required for each unit (TR) 2 3 Expected volume during the month (EV) 2,000 500 Expected labor cost per hour 50 Budgeted overhead costs 660,000 Determine

 The overhead rate per labor hour [removed] 1. FOAR = \$120.00 per hour worked [removed] 2. FOAR = 120.00 per dollar [removed] 3. FOAR = \$60.00 per hour worked [removed] 4. FOAR = \$120.00 per overhead costs

6) Assume the cost structure is as follows: TC = 25,000 + 5q, where TC = total costs, q = quantities sold. Under relevant range of sales, selling price per unit is \$8.00. Total fixed costs are

 [removed] \$100,000 [removed] \$50,000 [removed] \$25,000 [removed] More information is needed 7)   The income statements of Tahany Company for June and July 2005 are as follows: June July Sales 610 650 Cost of goods sold 420 460 Gross margin 190 190 Selling and administrative expenses 185 195 Income before tax 5 -5

Using High Low Method, the variable component of cost of goods sold is

 [removed] a. 1 [removed] b. 0.25 [removed] c. 1.25 [removed] d. 0

8) Non value added activities are

 [removed] a. Direct material (only) [removed] b. Direct labor (only) [removed] c. Overhead (only) [removed] d. Not essential costs to make/manufacture a product

 9)  Tany Corporation is a small table manufacturing company operating in the north of Puerto Rico. Managers estimate the following costs per unit (one table) Direct material (DM) \$6.00 Direct labor (DL) \$4.00 Variable manufacturing overhead (VMO) \$3.00 Variable administrative expenses (VAE) \$1.00 The estimated contribution margin is 30% Monthly fixed costs are Manufacturing \$10,000.00 Administrative \$5,000.00

 [removed] a. 2,000 [removed] b. 2,200 [removed] c. 2,500 [removed] d. 2,750

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