Tag: accounting

69. The evaluation of an investment having uneven cash flows using the payback method: a. cannot be done. b. can be done only by matching cash inflows and investment outflows on a year-by-year basis. c. will produce essentially the same results as those obtained through the use of discounted cash flow techniques. d. requires the use of a sophisticated calculator or computer software.

Managerial Accounting

Average Rating 0 out of 5 stars. 0 votes.You must log in to submit a review.69. The evaluation of an[…]

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“38. Carlton Company sells a single product at a selling price of $40 per unit. Variable costs are $22 per unit and fixed costs are $82,800. Carlton’s break- even point is: a. $184,000 b. 3,764 units c. $150,545 d. 2,070 units”,”1Sales = Variable expenses + Fixed expenses + Profits40Q = 22Q + 82,800 + 018Q = 82,800Q = 4,600 Break-even in $ = 4,600 x 40 = $184,000ORBreak-even point = Fixed Costs = 82,800 = 4,600 units Selling – Variable Costs 18Break-even in $ = 4,600 x $40 = $184,000Answer 2:Break-even point= Fixed Costs = 82,800 = 184

Managerial Accounting

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“39. The Clyde Company’s variable costs are 35% of sales. Clyde Company is contemplating an advertising campaign that will cost $25,000. If sales are expected to increase $75,000, the company’s net income will increase by: a. $26,250 b. $23,750 c. $1,250 d. $65,000”,”2Sales 100% – Variable expenses 35%= Contribution Margin 65% Contribution margin is 65%Profit from new sales (75,000 x .65) = $48,750- Cost of Advertising (25,000) Increase in net income 23

Managerial Accounting

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“40. The following information pertains to Clove Co. for the year ending December 31, 19×2: Budgeted sales $1,000,000 Breakeven sales 700,000 Budgeted contribution margin 600,000 Clove’s margin of safety is a. $300,000 b. $400,000 c. $500,000 d. $800,000”,”1Margin of Safety = budgeted sales – breakeven sales = 1,000,000 – 700,000 = $300

Managerial Accounting

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“56. RedRock Company uses flexible budgeting for cost control. RedRock produced 10,800 units of product during October, incurring indirect material costs of $13,000. Its master budget for the year reflected indirect material costs of $180,000 at a production volume of 144,000 units. A flexible budget for October production would reflect indirect material costs of: a. $13,000. b. $13,500. c. $13,975. d. $11,700. e. $15,000.”,”2Indirect materials per unit from the budget = Indirect Material Costs / Production Volume = 180,000 = $1.25 /unit 144,000Flexible budget:Units of product x Indirect materials per unit = Indirect material costs10,800 x $1.25 = $13

Managerial Accounting

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41. Advocates of variable costing argue that a. fixed production costs should be added to inventory because such costs have future service potential and therefore are inventoriable as an asset. b. fixed production costs should be capitalized as an asset and amortized over future periods when benefits from such costs are expected to be received. c. fixed production costs should be charged to the period incurred unless sales do not equal production in which case any difference should be capitalized as an asset and amortized over future periods. d. fixed production costs should be charged to the period incurred in all cases since such costs cannot be avoided in the future.

Managerial Accounting

Average Rating 0 out of 5 stars. 0 votes.You must log in to submit a review.41. Advocates of variable costing[…]

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