Question

8. Assume that Current Sales are $100,000; and Break even in sales dollars is $75,000. What is the Margin of Safety ratio?

a. 25%

b. 50%

c. 75%

d. 100%

9. Assume Fixed costs are $10,000; Selling price is $30 and variable costs are $10. What is the break even in units? Give answer to the nearest unit.

Group of answer choices

a. 500 units

b. 1,000 units

c. 250 units

d 334 units

10. If Direct Labor is 1 hour per unit at a rate of $25 per hour, what would be the budgeted amount for Direct Labor costs for the year if we expect to use 500 hours in the first six months and 600 hours in the second six months?

a. $55,000

b. $27,500

c. $2,200

f $25,000

11. If Variable MOH is $2 per direct labor hour and the fixed MOH (all cash) is $2,500 per month, what is the amount of MOH budgeted for the month if 1,000 Direct Labor hours are budgeted?

a. $2,500

b. $2,000

c. $4,500

d. $5,000

12. Assume Fixed costs are $10,000; Selling price is $30 and variable costs are $10. What is the break even in sales Dollars?

a. $10,000

b. $12,000

c. $14,000

d. $15,000

18. The Direct materials, Direct Labor, and MOH budgers are usually based off the:

a. Sales Budget

b. Production Budget

c. Cash Budget

d. Selling & Administrative Budget

21.Where the lines cross in a Cost-Volume-Profit graph represents:

a. Cost of Goods Sold

b. Net Loss

c. Net Income

d. Break Even

22. A budget that shows expected costs for a range of activity levels is called a:

a. Sales Budget

b. Static Budget

c. Selling & Administrative Budget

d. Flexible Budget

23.

Common Fixed Costs are:

a. Fixed costs that relate to just one segment

b. fixed costs that can be avoided if segment is dropped

c. fixed costs that are not traceable to a segment

d. all of the above

Answer 1

8	Margin of Safety ratio =[($100,000 - $75,000) / $100,000]*100 =25%
	So Option A is answer
9	Break-even Point =$10,000 / ($30 - $10) =500 units
	So Option A is answer
10	Direct labor cost for the year =(500+600)*$25 =$27,500
	So Option B is answer
11	Budgeted MOH =$2,500 + (1000*$2) =$4,500
	So Option C is answer
12	Contribution margin ratio =$20 / $30 =66.66666667%
	Break-even Point =$10,000 / 0.666666667 =$15,000
	So Option D is answer
18	Direct material, Direct labor and MOH budget are based from Production Budget.
	So Option B is answer
21	At Break-even the lines cross which is also known as interesection point.
	So Option D is answer
22	Flexible Budget shows the expected costs for a range of activity level
	So Option D is answer
23	Common Fixed costs are those costs which can't be traced to any particular segment.
	So Option C is answer