Question

MULTIPLE CHOICE QUESTIONS / 100 Points). 1 The relevant range is a. The range of activity in which variable costs will be curvilinear. b. The range of activity in which fixed costs will be curvilinear. The range over which the company expects to operate during the period. d. Usually from zero to 100% of operating capacity 2. Semi variable cost consists of a: a. Variable cost element and a fixed cost element. b. Fixed cost element and a controllable cost element. Relevant cost element and a controllable cost element. d. Variable cost element and relevant cost element. 3. Contribution margin is: a. Revenue remaining after deducting variable costs b. Expressed as contribution margin per unit Selling price less cost of goods sold d. The same as gross profit. 4. Gossen Company is planning to sell 200,000 pliers at $4 per unit. The contribution margin is 25%. If Gossen will breakeven at this level of sales, what is the fixed cost? $100,000 $160,000 C $200,000 $300,000 5. Marshall Company had actual sales of $600,000 when breakeven sales were $20,000. What is the margin of safety ratio? a 25% b. 30% 33.33% d. 45% 6. Standards differ from budgets in that: a. Budgets but not standards may be used in valuing inventories b. Budgets but not standards may be journalized and posted C. Budgets are a total amount and standards are a unit amount d. Only budgets contribute to managerial planning and control 7. The advantages of standard costs include all of the following EXCEPT: a. Management by exception may be used b. Management planning is facilitated They may simplify the costing of inventories d. Management must use a static budget.

Answer 1

1. The relevant range is:

c. The range over which the company expects to operate during the period.

2. Semi-variable cost consists of a :

a. Variable cost element and a fixed cost element.

3. Contribution margin is:

a. Revenue remaining after deducting variable costs.

4. Gossen Company is planning to sell 200,000 pliers at $ 4 per unit. The contribution margin is 25%. If Gossen will breakeven at this level of sales, what is the fixed cost?

c. $ 200,000

Working Notes

Contribution =Actual Sales x Contribution Margin ratio

=( 200,000 units X 4 per unit) X 25%

=$ 800,000 X 25%

=$ 200,000

If Gossen will breakeven at this level of sales, the fixed cost will be equal to contribution i.e $ 200,000

5. Marshall company had actual sales of $ 600,000 when breakeven were $ 200,000. What is the margin of safety ration?

c. 33.33 %

Working Note

Margin of Safety = (Breakeven Sales /Actual Sales) X 100%

= ($ 200,000/ $ 600,000) X100%

=33.33%

Note :- Answer can match if we take $ 200,000 instead of $ 20,000 given in question.

6. Standards differ from budgets in that:

d. Only budgets contribute to managerial planning and control

7. The advantages of Standards costs include all of the following EXCEPT:

d. Management must use a static budget.