Question

) Genosis Metals provided the following information for last month:

            Sales                              $20,000

            Variable costs                    8,000

            Fixed costs                        4,000

            Operating income            $8,000

If sales reduce to half the amount in the next month, what is the projected operating income?

A) $0

B) $4,000

C) $2,000

D) $6,000

Answer the following questions using the information below:

Buildz Manufacturing currently produces 1,000 tables per month. The following per unit data for 1,000 tables apply for sales to regular customers:

            Direct materials                               $50

            Direct manufacturing labor                10

            Variable manufacturing overhead      15

            Fixed manufacturing overhead          30

                  Total manufacturing costs         $105

2) The plant has capacity for 3,000 tables and is considering expanding production to 3,000 tables. What is the total cost of producing 3,000 tables?

A) $255,000

B) $225,000

C) $175,000

D) $235,000

3) What is the per unit cost when producing 3,000 tables?

A) $58.33

B) $175.00

C) $85.00

D) $125.45

Answer the following questions using the information below:

Pederson Company reported the following:

            Manufacturing costs            $150,000

            Units manufactured            5,000

            Units sold                           4,700 units sold for $75 per unit

            Beginning inventory          100 units

4) What is the average manufacturing cost per unit?

A) $40.00

B) $42.00

C) $30.00

D) $32.00

5) What is the manufacturing cost for the ending finished goods inventory?

A) $12,000

B) $8,000

C) $11,000

D) $5,000

Answer the following questions using the information below:

Northern Star sells several products. Information of average revenue and costs is as follows:

            Selling price per unit                      $20.00

            Variable costs per unit:

                  Direct material                           $4.00

                  Direct manufacturing labor         $1.60

                  Manufacturing overhead             $0.40

                  Selling costs                                $2.00

            Annual fixed costs                         $96,000

The company sells 12,000 units at the end of the year.

6) The contribution margin per unit is ________.

A) $11.00

B) $12.00

C) $4.00

D) $14.00

Answer 1

Answer to 1 : The correct answer is "C" : $2,000
Reason :
Calculation of Operating Income when sales reduces to half
Particulars	Amount ($)
Sales	10,000
Variable Costs	4,000	((8,000/20,000)*10,000)
Fixed Costs	4,000
Operating Income	2,000
Answer to 2 : The correct answer is "A" : $255,000
Reason :
Calculation of Total Cost of producing 3,000 tables
Particulars	Amount ($)
Direct Materials	1,50,000	(3,000*50)
Direct Labour	30,000	(3,000*10)
Variable Man. OHs	45,000	(3,000*15)
Fixed Man. OHs	30,000	(1,000*30 - Fixed)
Total Manufacturing Costs	2,55,000
Answer to 3 : The correct answer is "C" : $85
Reason :
Calculation of Per Unit Cost of producing 3,000 tables
Particulars	Amount ($)
Direct Materials	50
Direct Labour	10
Variable Man. OHs	15
Fixed Man. OHs	10	($30,000/3,000 units)
Total Manufacturing Costs	85
Answer to 4 : The correct answer is "C" : $30
Reason :
Average manufacturing cost per unit = Total manufacturing costs/Units manufactured = $150,000/5,000 units = $30
Answer to 5 : The correct answer is "A" : $12,000
Reason :
Calculation of manufacturing cost for ending inventory
Ending finished goods inventory = Opening + Manufactured - Sold = 100+5000-4700 = 400 units
Total Manufacturing cost for ending inventory = Ending Inventory * Average Manufacturing cost per unit = 400 units * $30 = $12,000
Answer to 6 : The correct answer is "B" : $12
Reason :
Calculation of Contribution margin per unit
Particulars	Amount ($)
Sales	20
Less : Variable Costs :
Direct Material	4
Direct Labour	1.6
Manufacturing OHs	0.4
Selling costs	2	(Assumed variable since fixed costs are separately provided)
Total Manufacturing Costs	12