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  • Sample Problems On Cost Accounting

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    milleran
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    Edco Company produced and sold 45,000 units last year. Their sales revenue was $1,350,000 with total manufacturing costs of $585,000 variable and $270,000 fixed. Selling costs were $40,500 variable and $54,000 fixed. Administrative costs were $184,500 variable and $108,000 fixed. Edco's operating leverage factor was 5. If sales revenues increase 15%, income before taxes will increase by 75%.

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    Sample Problems on Cost Accounting

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    Edco Company produced and sold 45,000 units last year. Their sales revenue was $1,350,000 with total manufacturing costs of $585,000 variable and $270,000 fixed. Selling costs were $40,500 variable and $54,000 fixed. Administrative costs were $184,500 variable and $108,000 fixed. Edco's operating leverage factor was 5. If sales revenues increase 15%, income before taxes will increase by 75%.

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    2K просмотров2 страницы

    Sample Problems On Cost Accounting

    Загружено:

    milleran
    Edco Company produced and sold 45,000 units last year. Their sales revenue was $1,350,000 with total manufacturing costs of $585,000 variable and $270,000 fixed. Selling costs were $40,500 variable and $54,000 fixed. Administrative costs were $184,500 variable and $108,000 fixed. Edco's operating leverage factor was 5. If sales revenues increase 15%, income before taxes will increase by 75%.

    Авторское право:

    © All Rights Reserved
    Скачайте в формате DOCX, PDF, TXT или читайте онлайн в Scribd
    Отметить как неприемлемый контент
    из 2

    Use the following to answer questions 63-64:

    Edco Company produced and sold 45,000 units of a single product last year, with the following
    results:

    Sales revenue $1,350,000


    Manufacturing costs:
    Variable 585,000
    Fixed 270,000
    Selling costs:
    Variable 40,500
    Fixed 54,000
    Administrative costs:
    Variable 184,500
    Fixed 108,000

    63. Edco's operating leverage factor was:


    A. 4.
    B. 5.
    C. 6.
    D. 7.
    E. 8.

    Answer: B LO: 8 Type: A

    64. If Edco's sales revenues increase 15%, what will be the percentage increase in income before
    income taxes?
    A. 15%.
    B. 45%.
    C. 60%.
    D. 75%.
    E. An amount other than those above.

    Answer: D LO: 8 Type: A

    65. When advanced manufacturing systems are installed, what effect does such installation
    usually have on fixed costs and the break-even point?
    Fixed Costs Break-even Point
    A. Increase Increase
    B. Increase Decrease
    C. Decrease Increase
    D. Decrease Decrease
    E. Do not change Does not change

    Answer: A LO: 8 Type: RC


    66. Which of the following statements is (are) true regarding a company that has implemented
    flexible manufacturing systems and activity-based costing?

    I. The company has erred, as these two practices used in conjunction with one another
    will severely limit the firm's ability to analyze costs over the relevant range.
    II. Costs formerly viewed as fixed under traditional-costing systems may now be
    considered variable with respect to changes in cost drivers such as number of setups,
    number of material moves, and so forth.
    III. As compared with the results obtained under a traditional-costing system, the concept
    of break-even analysis loses meaning.

    A. I only.
    B. II only.
    C. III only.
    D. I and II.
    E. II and III.

    Answer: B LO: 10 Type: N

    67. A company, subject to a 40% tax rate, desires to earn $500,000 of after-tax income. How
    much should the firm add to fixed costs when figuring the sales revenues necessary to
    produce this income level?
    A. $200,000.
    B. $300,000.
    C. $500,000.
    D. $833,333.
    E. $1,250,000.

    Answer: D LO: 11 Type: A

    68. Barney, Inc., is subject to a 40% income tax rate. The following data pertain to the period
    just ended when the company produced and sold 45,000 units:

    Sales revenue $1,350,000


    Variable costs 810,000
    Fixed costs 432,000

    How many units must Barney sell to earn an after-tax profit of $180,000?
    A. 42,000.
    B. 45,000.
    C. 51,000.
    D. 61,000.
    E. An amount other than those above.

    Answer: D LO: 11 Type: A

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