20.      Which of the following is the major assumption as to cost and revenue behavior underlying conventional cost-volume-profit calculations?

21.      A cost or revenue is _________ if the change results in a difference between alternatives.

22.      The short-run differential costs of a product are $25. Fixed costs are $5 per unit based on 10,000 units produced during this period. The company has adequate capacity to accept a special order of 1,000 units. What is the minimum price that could be charged using the differential approach to pricing?

23.      Sebastian Enterprises sells a product for $25 per unit and has the following costs for the product

The company received a special order for 100 units of the product. The order would require rental of a special tool which costs $200. What is the minimum price per unit that Sebastian Enterprises should charge for this special order if they wish to earn a $300 profit on this order? Assume there is sufficient idle capacity to accept this order.

Q2- What is the accrual basis of accounting? When should revenue and expense be recognized in the accrual basis? Provide an example.

1. For a firm with revenue growing each month and a collection pattern that averages 55 days, the amount of cash collections during any one month will never exceed monthly sales for the same month. TRUE/FALSE

2. Assume that a profitable firm has been notified that all costs for the coming year will decrease by 2%.  The firm will respond by decreasing all selling prices by 2%.  The impact of these changes will be to

a. lower the breakeven point in sales dollars

b. increase the breakeven point in sales dollars

c. have no impact on the breakeven point in sales dollars

3. The company sells inventory costing $20,000 for $35,000.  The customer has been billed for the sales price but has not yet paid the amount. This transaction

a. increases the balance of total assets

b. causes no change to the balance of total assets

c. decreases the balance of total assets

4. The company sells a machine that it purchased 5 years ago for $40,000.  The original cost of the machine was $120,000 and $90,000 of accumulated depreciation was recorded just prior to sale.  This event

a. increased the asset balance and increased net income

b. increased the asset balance and decreased net income

c. decreased the asset balance and increased net income

d. decreased the asset balance and decreased net income

AP9.2 James and Katie will be auditing the revenue account for their retail client, Go Big Tires. They disagree about how to test the occurrence assertion for the revenue account. James thinks they should use Procedure A, while Katie thinks Procedure B is appropriate.

A. Select a sample of sales from the sales journal and agree the details in the journal to the invoices sent to customers, shipping documents, and customer orders.

B. Select a sample of invoices sent to customers, shipping documents, and customer orders and agree to the details recorded in the sales journal.

Required

Who do you agree with, James or Katie, and why? Which assertion does the other procedure provide evidence about?

Calculate the economic breakeven dollar volume of revenue for a project requiring an initial investment of $3,693,130 and providing annual cash flows equal to 15% of revenue minus annual fixed costs of $250,000. None of the initial investment is recoverable. Assume the project will generate these cash flows for 10 years and the discount rate is 10%.

1A. Which of the following does the revenue estimate depend on?

1B. What will be the value of Variable Costs if the production of the company is equal to zero?

1C. Which of the following is an equity financing?

1D. Which of the following is a hybrid equity financing?

The Kansas Department of Revenue will take a random sample of state tax returns to estimate the proportion of taxpayers who have errors on their tax returns. What is the sample size required in order to have a maximum margin of error of 4 percentage points? (Choose the option closest to the correct value, show work.)

a. 625 b. 2500                                    c. 4 percent of the population

in 200 words or more, what are some ways in learning to understand revenue and cost relationships? What is the different between the two? Give an example

· Question 16

· Question 17

· Question 18