2.4   Questions 1) The horizontal axis on the cost-volume-profit graph is the ________. A) dollars of cost B) sales volume in units C) dollars of revenue D) net income 2) The vertical axis on the cost-volume-profit graph is the ________. A) dollars of cost B) sales volume in units C) dollars of revenue D) dollars of cost and revenue 3) Which of the following is NOT an underlying assumption of cost-volume-profit analysis? A) We can classify expenses into fixed and variable categories. B) Sales mix will be constant. C) Revenues and expenses are linear over the relevant range. D) There […]

25) What is the net effect on operating income as a result of the price-recovery component? A) decreased operating income due to decreased selling price and inability to recover increased costs B) decreased operating income due to the inability to recover increased costs C) increased operating income due to the increased number of units produced and sold D) increased operating income due to the revenue effect of the price-recovery component 26) Overall, was Wingard's strategy successful for 2012? A) No, because the selling price per unit decreased. B) Yes, because operating income increased. C) Yes, because less direct materials were […]

Answer the following questions using the information below: Timothy Company has invested $1,000,000 in a plant to make vending machines. The target operating income desired from the plant is $150,000 annually. The company plans annual sales of 1,500 vending machines at a selling price of $1,000 each. 11) What is the target rate of return on investment for Timothy Company? A) 15.0% B) 17.6% C) 10.0% D) 11.1% 12) What is the markup percentage as a percentage of cost for Timothy Company? A) 15.0% B) 17.6% C) 10.0% D) 11.1% 13) What is the cost base of each vending machine […]

31) Timothy Company has budgeted sales of $780,000 with the following budgeted costs: Direct materials$168,000 Direct manufacturing labor132,000 Factory overhead Variable96,000 Fixed108,000 Selling and administrative expenses Variable72,000 Fixed100,000 Compute the average markup percentage for setting prices as a percentage of: a.Total manufacturing costs b.The variable cost of the product c.The full cost of the product d.Variable manufacturing costs 1) Life-cycle costing is the name given to: A) a method of cost planning to reduce manufacturing costs to targeted levels B) the process of examining each component of a product to determine whether its cost can be reduced C) the process […]

16) Life-cycle budgeting is particularly important when nonproduction costs are significant. 17) The product life cycle spans the time from initial R&D on a product to when customer service and support is no longer offered for that product. 18) Customer life-cycle costs focus on total costs incurred by the customer from purchase to disposal. 19) Life-cycle budgeting estimates the costs and revenues attributed to a product from its initial R&D through production of a prototype product. 20) A firm using product life-cycle reporting will have a calendar-based focus for this report. 21) Henderson Company is in the process of evaluating […]