Question 1

A company sells a product for $$20 per unit. The variable cost per unit is 12$$, and total fixed costs are $16,000. What is the contribution margin per unit?

Accepted Answer

$8

Question 2

Given the following data for a company: Sales price per unit = $$50, Variable cost per unit = 30$$, Fixed costs = $$40,000. What is the breakeven point in units? Use the formula $$	ext{Breakeven (units)} = \frac{	ext{Fixed Costs}}{	ext{Contribution Margin per unit}}$.

Accepted Answer

2,000 units

Question 3

A service company provides consulting at $$100 per hour. Variable costs are 40 $$per hour, and fixed costs are $$12,000 per month. What is the contribution margin ratio? Use $$	ext{CM Ratio} = \frac{	ext{CM per unit}}{	ext{Sales price per unit}}$.

Accepted Answer

60%

Question 4

If a company wants to achieve a target profit of $$24,000, with a contribution margin per unit of 6 $$and fixed costs of $$12,000, how many units must be sold? Use $$	ext{Required Sales (units)} = \frac{	ext{Fixed Costs} + 	ext{Target Profit}}{	ext{CM per unit}}$.

Accepted Answer

6,000 units

Question 5

Which of the following statements best describes the difference between absorption costing and variable costing?

Accepted Answer

Absorption costing includes fixed manufacturing overhead in product costs, while variable costing treats it as a period expense.

Question 6

A company has the following data for the month: Sales = $$100,000, Variable Costs = 60$$,000, Fixed Costs = $25,000. What is the net operating income under variable costing?

Accepted Answer

$15,000

Question 7

A service company performed 500 hours of consulting at $$80 per hour. Variable costs were 30 $$per hour. What is the total contribution margin for the period?

Accepted Answer

$25,000

Question 8

Which of the following budgets is typically prepared first in the master budgeting process?

Accepted Answer

Sales budget

Question 9

A company expects to sell 2,000 units next month. Desired ending inventory is 300 units, and beginning inventory is 200 units. How many units should be produced? Use $$	ext{Required Production} = 	ext{Expected Sales} + 	ext{Desired Ending Inventory} - 	ext{Beginning Inventory}.$$

Accepted Answer

2,100 units

Question 10

If the cost of goods sold is $$60,000, beginning inventory is 10$$,000, and ending inventory is $$8,000, what are the purchases for the period? Use $$	ext{COGS} = 	ext{Beginning Inventory} + 	ext{Purchases} - 	ext{Ending Inventory}$.

Accepted Answer

$62,000

Question 11

A company budgets $$12,000 for SG&A expenses, but actual expenses were 13$$,500. What is the SG&A variance, and is it favorable or unfavorable?

Accepted Answer

$1,500 unfavorable

Question 12

A company’s direct labor standard is 2 hours per unit at $$15 per hour. In a month, 1,000 units were produced, and 2,200 hours were used at 16 $$per hour. What is the direct labor efficiency variance? Use $$	ext{DL Efficiency Variance} = (	ext{Actual Hours} - 	ext{Standard Hours Allowed}) 	imes 	ext{Standard Rate}.$$

Accepted Answer

$3,000 unfavorable

Question 13

A company’s variable overhead rate is $$4 per direct labor hour. The standard hours allowed for actual production are 1,500 hours, but 1,600 hours were used. What is the variable overhead efficiency variance? Use $$	ext{VOH Efficiency Variance} = (	ext{Actual Hours} - 	ext{Standard Hours Allowed}) 	imes 	ext{VOH Rate}$.

Accepted Answer

$400 unfavorable

Question 14

A company’s fixed overhead budgeted is $$10,000, and the applied fixed overhead based on standard hours is 9$$,000. What is the fixed overhead volume variance? Use $$	ext{FOH Volume Variance} = 	ext{Budgeted FOH} - 	ext{Applied FOH}.$$

Accepted Answer

$1,000 unfavorable

Question 15

A company’s actual variable overhead costs were $$7,200. The standard variable overhead rate is 3 $$per direct labor hour, and 2,400 hours were worked. What is the variable overhead spending variance? Use $$	ext{VOH Spending Variance} = 	ext{Actual VOH} - (	ext{Actual Hours} 	imes 	ext{Standard Rate}).$$

Accepted Answer

$0

Question 16

A company’s standard direct labor cost is $$20,000 for the actual output, but the actual direct labor cost incurred was 18$$,000. What is the direct labor cost variance, and is it favorable or unfavorable?

Accepted Answer

$2,000 favorable

Question 17

A company’s sales budget for the next quarter is $120,000. If the company expects to collect 70% of sales in the same quarter and the rest in the next quarter, how much cash will be collected this quarter?

Accepted Answer

$84,000

Question 18

A company’s absorption costing income statement shows a higher net income than its variable costing income statement. Which of the following is the most likely reason?

Accepted Answer

Inventory levels increased during the period.

Question 19

A company’s standard fixed overhead rate is $$5 per unit. The company budgeted to produce 2,000 units but actually produced 1,800 units. What is the fixed overhead volume variance? Use $$	ext{FOH Volume Variance} = (	ext{Budgeted Units} - 	ext{Actual Units}) 	imes 	ext{Standard FOH Rate}$.

Accepted Answer

$1,000 unfavorable

Question 20

A company’s sales budget is $$200,000, cost of goods sold is 120$$,000, and SG&A expenses are $50,000. What is the budgeted net income?

Accepted Answer

$30,000

Key Concepts in Cost-Volume-Profit Analysis, Costing Methods, Budgeting, and Variance Analysis

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