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:
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


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. 1.00
[removed] b. .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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