Solved by verified expert :Please show work on this paper. Do not use any spreadsheetattachments.Question 3If a company increases its fixed costs for Product Z, then the contribution margin per unit willa.b.c.d.Remain the sameDecreaseIncreaseIncomplete informationQuestion 4When production levels are expected to increase within a relevant range, and a flexible budget isused, what effect would be anticipated with respect to each of the following costs?Fixed costs per unita. No changeb. Decreasec. No changed. DecreaseVariable costs per unitNo changeNo changeDecreaseDecreaseQuestion 5Wang Company provides the following information for their first year of operation:SalesSelling and administrative costs:FixedVariableVariable production costs per unit:Direct materialsDirect laborVariable overheadFixed factory overheadProductionIf Wang uses variable costing, operating income would be:a. $11,500b. $14,0005,000 units @ $10$1,000$1 per unit$2$2$1$7,5007,500 unitsc. $16,500d. $20,000Question 6The management of Ahad Engineering Services has been approached about purchasing a newmanagement information system. The perceived advantages of the system include each of thefollowing, except:a. The new system will reduce confusion by doing away with dual presentations of informationby line item and object of expenditure.b. The new system will enable customized business dashboards, with each executive having realtime reports of critical business information.c. The new system will enable automatic preparation of both internal variable costinginformation and external absorption costing information.d. The new system will facilitate disaggregation of overall results into business segmentinformation.Question 7Strickland Company prepared segment information relative to its office furniture manufacturingdivision. The controllable contribution margin differed from the segment margin by $100,000.This amount corresponds to the:a. Total variable costs.b. Controllable fixed costs.c. Uncontrollable fixed costs.d. Non-traceable costs.Question 8Maverick Corporation had four operating segments. Information for each segment is included inthe following table. Maverick has a threshold rate of return of 7%. Which segment has the largestresidual income?Segment ASegment BSegment CSegment DOperating Income$100,000$200,000$300,000$400,000Operating Assets$200,000$300,000$300,000$5,000,000a. Segment Ab. Segment Bc. Segment Cd. Segment DQuestion 9Which of the following decisions involve differential analysis?a. The decision by University to drop its intercollegiate football programb. The decision to close a segment of a businessc. The decision by a record store to add videotapes to the product line.d. All of the above.Question 10Fixed costs are $90,000, variable cost per unit is $1.80, and budgeted units of output are 200,000units. Determine the budgeted production costs.a. $360,000b. $450,000c. $414,000d. $540,000Questions 11 and 12 are based on the following information:Anderson Enterprises incurred the following costs while producing 500 units: direct materials,$15 per unit; direct labor, $37.50 per unit; variable manufacturing overhead, $22.50 per unit;total fixed overhead costs, $15,000; variable selling and administrative costs, $7.50 per unit; totalfixed selling and administrative costs, $11,250.Question 11What is the per unit product cost using variable costing?a. $105 per unitb. $82.50 per unitc. $75 per unitd. $135 per unitQuestion 12What is the operating income using variable costing if 450 units are sold for $150 each?a. $4,125b. $7,500c. $750d. $3,750Question 13Production costs (including $30,000 of fixed costs) are budgeted at $150,000 for an expectedoutput of 100,000 units. Actual output was 90,000 units, while actual costs were $142,500. Whatis the budget variance and is it favorable or unfavorable.a. $4,500 unfavorableb. $6,500 favorablec. $5,500 unfavorabled. $4,500 favorableQuestion 14Information technology has made it easier for managers to perform all of the following tasksexcepta. Combining individual units budgets into the companywide budget.b. Removing budgetary slack from the budget.c. Sensitivity analysesd. Preparing performance reports that identify variances between actual and budgetedrevenues and costs.Use the following information to answer questions 15 and 16.Suppose Amazon sells 1,000 hardcover books per day at an average price of $15. Assume thatAmazons cost for the books is 75% of the selling price it charges retail customers. Amazon hasno beginning inventory, but it wants to have a three-day supply of ending inventory. Assume thatselling and administrative expenses are $500 per day.Question 15Compute Amazons budgeted sales for the next (seven-day) week.a. $78,750b. $108,500c. $217,500d. $105,000Question 16Determine Amazons budgeted purchases for the next (seven-day) week.a. $150,000b. $112,500c. $78,750d. $37,500Question 17The budgeted statement of cash flows is part of which element of the master budget?a. The financial budgetb. The operating budgetc. The capital expenditures budgetd. None of the aboveQuestion 18The Best buy company had the following revenue over the past three years:2007$300,0002008$350,0002009$450,000To forecast revenues for 2010, Best Buy Company uses the average for the past three years. Thecompanys breakeven revenue is $400,000 per year. What is Best buy predicted margin of safetyfor 2010a. $400,000b. $0c. $100,000d. $50,000Question 19If a company increases its selling price per unit for Product A, the new breakeven point willa. Remain the sameb. Decreasec. Increased. None of the aboveQuestion 20Straight-line depreciation on a company truck is aa. Variable cost.b. Fixed costc. Mixed costd. High-low costPART 2Question 1Jacob Davis recently graduated from medical school. He is considering opening his own familypractice doctor office. A doctors office is a high-fixed cost business, as it requires considerableexpenditures for facilities, labor, and equipment, no matter how many families are served.Assume the annual fixed cost of operations is $400,000. Further assume that the only significantvariable cost relates to patients served. An average patient served costs $250. Jacobs banker hasasked a variety of questions in contemplation of providing a loan for this business.Requirements:a. If the average family is charged $475 for services, how many families must be served toclear the break-even point?b. If the banker believes Jacob will only serve 1,000 families during the first year inbusiness, how much will the business lose during its first year of operation?c. If Jacob believes his profits will be at least $100,000 during the first year, how much is heanticipating for total revenue?d. The banker has suggested that Jacob can reduce his fixed costs by $100,000 if he will notpurchase certain equipment. Jacob can instead lease or rent this equipment as needed. Thevariable cost of leasing this equipment is $55 per family served. Will this suggestion helpJacob reach the break-even point sooner?Question 2Carpet Clean manufactures a chemical cleaner. The company was formed during the current year.As a result, there was no beginning inventory. Management is evaluating performance andinventory management issues, and desires to know both net income and ending inventory undergenerally accepted accounting principles (absorption costing) as well as variable costingmethods. Relevant facts are as follows:Selling price per gallon$11.00Variable manufacturing cost per gallon $2.00Variable SG&A costs per gallon$2.25Fixed manufacturing costs $2,900,000Fixed SG&A$470,000Total gallons produced 1,625,000Total gallons sold1,500,000Requirement:Prepare income statements based on the absorption costing and variable costing methods.
