15) In multiproduct situations when sales mix shifts toward the product with the lowest contribution margin, the breakeven quantity will decrease. 16) In multiproduct situations when sales mix shifts toward the product with the highest contribution margin, operating income will be higher. 17) To calculate the breakeven point in a multiproduct situation, one must assume that the sales mix of the various products remains constant. 18) If a company's sales mix is 2 units of product A for every 3 units of product B, and the company sells 3,000 units in total of both products, only 2,000 units of product […]

7) Assume there is an increase in advertising expenditures and all other CVP parameters remain constant. This change will: A) reduce operating income B) reduce contribution margin C) increase variable costs D) increase selling price 8) Bassman Company operates on a contribution margin of 30% and currently has fixed costs of $400,000. Next year, sales are projected to be $2,000,000. An advertising campaign is being evaluated that costs an additional $60,000. How much would sales have to increase to justify the additional expenditure? A) $120,000 B) $180,000 C) $200,000 D) $600,000 Answer the following questions using the information below: Martha […]

1) ________ costing is used by a business to price homogeneous products. A) Actual B) Job C) Process D) Traditional 2) Process costing: A) allocates all product costs, including materials and labor B) results in different costs for different units produced C) is commonly used by general contractors who construct custom-built homes D) is used exclusively in manufacturing 3) ________ costing is used by a business to price unique products for different jobs. A) Actual B) Job C) Process D) Traditional 4) Job costing: A) can only be used in manufacturing B) records the flow of costs for each customer […]

21) Companies typically wait for accurate information regarding actual manufacturing overhead costs before pricing a job. 22) The budgeted indirect cost rate is the budgeted indirect costs divided by budgeted quantity of the cost allocation base. 23) Direct costs are traced the same way for actual costing and normal costing. 24) Normal costing assigns indirect costs based on an actual indirect-cost rate. 25) A budgeted indirect-cost rate is computed for each cost pool using budgeted indirect costs and the budgeted quantity of the cost-allocation base. 26) For normal costing, even though the budgeted indirect-cost rate is based on estimates, indirect […]

11) What is the journal entry used to write off the difference between allocated and actual overhead using the proration approach? A) Manufacturing Overhead Allocated              200,000     Work-in-Process Control              10,000     Finished Goods Control              20,000 Manufacturing Overhead Control              230,000 B) Manufacturing Overhead Allocated              225,000 Work-in-Process Control              1,250 Finished Goods Control              2,500 Cost of Goods Sold              21,250 Manufacturing Overhead Control              200,000 C) Manufacturing Overhead Control              225,000 Work-in-Process Control              1,250 Finished Goods Control              2,500 Cost of Goods Sold              21,250 Manufacturing Overhead Allocated              200,000 D) Manufacturing Overhead Allocated              200,000 Work-in-Process Control              1,250 Finished Goods Control              2,500 Cost of Goods Sold              21,250 Manufacturing Overhead […]