Question

Question 01: Select the best answers for the following questions:

1. Sales price – Variable Prime cost – Variable FOH per unit

a) Factory cost b) Contribution margin

c) Common cost share d) Margin of safety

2. is the FOH rate applied to the whole production facility

a) Predetermined FOH rate b) Blanket FOH rate

c) Budgeted FOH rate d) Both (a) & (c)

3. The completion percentage for previous department in EPQ is usually

a) 50% b) 100%

c) More than 50% but less than 100% d) 75%

4. If margin of safety is $2,000 and breakeven sales are 5,000 units then planned sales are

a) $7,000 b) $2,000

c) 60% d) None of these

5. Is usually not allocated any cost in joint product costing approach

a) By-product b) Low quality joint product

c) Low quantity joint product d) Further processed product

6. In breakeven chart the area below the breakeven point reflects

a) Profit b) Loss

c) Variable cost d) Revenue

7. If planned sales are 500 units & breakeven sales are 200 units then MOS ratio =

a) 50% b) 60%

c) 70% d) 80%

8. Total Factory Cost = Prime Cost + Conversion Cost -

a) FOH b) Indirect labor

c) Direct Labor d) Both (b) & (c)

9. In decision making & CVP analysis sunk cost is

a) Relevant cost b) Avoidable cost

c) Un-avoidable cost d) Irrelevant cost

10. If per unit contribution margin is $2.5 & fixed costs are $30,000 breakeven point in units is

a) 75,000 b) 12,000

c) 63,000 d) None of these

Answer 1

1

Sales price – Variable Prime cost – Variable FOH per unit

Answer is Contribution margin

Sales-Variable cost = Contribution margin

2

is the FOH rate applied to the whole production facility

Answer is  Both (a) & (c)

4

If margin of safety is $2,000 and breakeven sales are 5,000 units then planned sales are

Answer is $7000

Break even sales +Margin of safetey = planned sales

6

In breakeven chart the area below the breakeven point reflects

Answer is Loss

Area above breakeven chart is profit and Area below breakeven chart is loss

7

If planned sales are 500 units & breakeven sales are 200 units then MOS ratio

Answer is 40%

Break even sales=MOS/Sales =200/500=40%

8

Total Factory Cost = Prime Cost + Conversion Cost -

Answer is  Direct Labor

Conversion costs= Direct Labor+FOH

Prime Cost =direct materials costs + direct labor costs

9

In decision making & CVP analysis sunk cost is

Answer Irrelevant cost

irrelevant cost is a cost that will not change as the result of a management decision.

10

If per unit contribution margin is $2.5 & fixed costs are $30,000 breakeven point in units is

Break even point =fixed cost/Contribution per Unit =$30000/2.5 =12000 Units