Q. If a company has a break-even point of 1,000 units and sells each unit for $50, what is the total revenue at the break-even point?
A.
$50,000
B.
$25,000
C.
$100,000
D.
$75,000
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Solution
Total revenue at the break-even point is calculated as Break-even Units (1,000) multiplied by Selling Price per Unit ($50), resulting in $50,000.
Correct Answer:
A
— $50,000
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Q. If a company has a budgeted production of 1,000 units and actual production of 1,200 units, what type of variance is this?
A.
Favorable Variance
B.
Unfavorable Variance
C.
Volume Variance
D.
Price Variance
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Solution
This is a volume variance as it reflects the difference between budgeted and actual production levels.
Correct Answer:
C
— Volume Variance
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Q. If a company has a budgeted production of 1,000 units and actual production of 1,200 units, what is the variance in fixed overhead costs if the budgeted fixed overhead is $5,000?
A.
$0
B.
$500
C.
$1,000
D.
$1,200
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Solution
Fixed overhead costs remain the same regardless of production levels, so the variance is $0.
Correct Answer:
A
— $0
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Q. If a company has a marginal cost of $15 per unit and sells each unit for $25, what is the contribution margin per unit?
A.
$10
B.
$15
C.
$25
D.
$5
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Solution
Contribution margin per unit is calculated as Selling Price ($25) minus Marginal Cost ($15), which equals $10.
Correct Answer:
A
— $10
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Q. If a company has a standard cost of $5 per unit and the actual cost is $6 per unit, what type of cost variance is this?
A.
Favorable Variance
B.
Unfavorable Variance
C.
No Variance
D.
Standard Variance
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Solution
This is an unfavorable variance as the actual cost exceeds the standard cost.
Correct Answer:
B
— Unfavorable Variance
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Q. In a case study, a company has a budgeted cost of goods sold of $40,000 and actual cost of goods sold of $45,000. What is the cost variance?
A.
$5,000 Favorable
B.
$5,000 Unfavorable
C.
$0
D.
$10,000 Unfavorable
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Solution
The cost variance is calculated as Actual Cost of Goods Sold ($45,000) minus Budgeted Cost of Goods Sold ($40,000), resulting in a $5,000 unfavorable variance.
Correct Answer:
B
— $5,000 Unfavorable
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Q. In a case study, a company has a contribution margin of $40 per unit and fixed costs of $200,000. How many units must be sold to achieve a target profit of $100,000?
A.
5,000 units
B.
7,500 units
C.
10,000 units
D.
12,500 units
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Solution
Required units = (Fixed Costs + Target Profit) / Contribution Margin = ($200,000 + $100,000) / $40 = 7,500 units.
Correct Answer:
C
— 10,000 units
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Q. In a case study, a company has total fixed costs of $100,000 and sells its product for $25. If the variable cost per unit is $15, how many units must be sold to break even?
A.
5,000 units
B.
10,000 units
C.
15,000 units
D.
20,000 units
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Solution
Break-even point in units = Fixed Costs / (Selling Price - Variable Cost) = $100,000 / ($25 - $15) = 10,000 units.
Correct Answer:
B
— 10,000 units
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Q. In a case study, a company has total sales of $50,000 and total variable costs of $30,000. What is the contribution margin?
A.
$20,000
B.
$30,000
C.
$50,000
D.
$10,000
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Solution
Contribution margin is calculated as Sales Revenue ($50,000) minus Variable Costs ($30,000), which equals $20,000.
Correct Answer:
A
— $20,000
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Q. In a case study, a company incurs $10,000 in rent for its factory. How should this cost be classified?
A.
Variable Cost
B.
Direct Cost
C.
Fixed Cost
D.
Mixed Cost
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Solution
Rent for the factory is a fixed cost as it does not change with the level of production.
Correct Answer:
C
— Fixed Cost
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Q. In a case study, a company incurs $10,000 in rent for its factory. This cost is classified as:
A.
Variable Cost
B.
Fixed Cost
C.
Direct Cost
D.
Indirect Cost
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Solution
Rent for the factory is a fixed cost as it does not change with the level of production.
Correct Answer:
B
— Fixed Cost
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Q. In a case study, a company sells a product for $50, with variable costs of $30 and fixed costs of $10, what is the contribution margin?
A.
$10
B.
$20
C.
$30
D.
$40
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Solution
Contribution margin is calculated as selling price minus variable costs, which is $50 - $30 = $20.
Correct Answer:
B
— $20
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Q. What is the primary purpose of variance analysis?
A.
To calculate profit
B.
To compare budgeted and actual performance
C.
To determine fixed costs
D.
To set sales prices
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Solution
Variance analysis is primarily used to compare budgeted performance against actual performance to identify discrepancies.
Correct Answer:
B
— To compare budgeted and actual performance
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Q. What type of cost is directly associated with the production of a specific product?
A.
Fixed Cost
B.
Variable Cost
C.
Sunk Cost
D.
Opportunity Cost
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Solution
Variable costs change with the level of production and are directly tied to the manufacturing of a product.
Correct Answer:
B
— Variable Cost
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Q. What type of cost is directly associated with the production of goods?
A.
Fixed Cost
B.
Variable Cost
C.
Sunk Cost
D.
Opportunity Cost
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Solution
Variable costs change with the level of production and are directly associated with the production of goods.
Correct Answer:
B
— Variable Cost
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Q. Which cost classification includes costs that can be traced directly to a specific product?
A.
Indirect Costs
B.
Direct Costs
C.
Fixed Costs
D.
Variable Costs
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Solution
Direct costs are those that can be traced directly to a specific product.
Correct Answer:
B
— Direct Costs
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Q. Which costing method includes both fixed and variable costs in product costing?
A.
Absorption Costing
B.
Marginal Costing
C.
Activity-Based Costing
D.
Standard Costing
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Solution
Absorption costing includes both fixed and variable costs in the cost of a product.
Correct Answer:
A
— Absorption Costing
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Q. Which of the following is NOT a component of cost control?
A.
Budgeting
B.
Variance Analysis
C.
Cost Allocation
D.
Cost Reduction
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Solution
Cost allocation is not a direct component of cost control; it is more about distributing costs rather than controlling them.
Correct Answer:
C
— Cost Allocation
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Q. Which of the following is NOT a component of the contribution margin?
A.
Sales Revenue
B.
Variable Costs
C.
Fixed Costs
D.
Contribution Margin
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Solution
Fixed costs are not a component of the contribution margin; it is calculated as Sales Revenue minus Variable Costs.
Correct Answer:
C
— Fixed Costs
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