1) The contribution margin approach is useful in a manufacturing setting but cannot be used for other types of firms, such as retailing

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1) The contribution margin approach is useful in a manufacturing setting but cannot be used for other types of firms, such as retailing. True or False?

2 The following selected information pertains to Ajax Processing Co.: direct materials, P162,500; indirect materials, P112,500; factory payroll, P175,000 of direct labor and P111,250 of indirect labor; and other factory overhead incurred, P137,500. The total prime cost was:

 

3. The Richy Company uses the machine hour method of applying factory overhead to production. The budgeted factory overhead last year was P100,000, and there were 20,000 machine hours budgeted. Job 04 was started and completed during the period. Direct materials costing P450 were incurred. Twenty-five direct labor hours were worked at a cost of P175, and 20 machine hours were incurred. What was the cost of Job 04?

 

4. Wally Company has a process cost system. All materials are introduced at the beginning of the process in Department One. The following information is available for the month of January 2013: Work in process, 1/1/2013 (40% completed as to conversion costs 1,000 Started in January 4,000 Transferred to Department Two during January 4,200 Work-in-process, 1/31/2013 (25% as to conversion costs 800

What are the equivalent units of production for labor and factory overhead under Average method for the month of January 2013?

 

5 Using a contribution approach is the same as using variable costing. True or false?

 

6 Wally Company has a process cost system. All materials are introduced at the beginning of the process in Department One. The following information is available for the month of January 2013: Work in process, 1/1/2013 (40% completed as to conversion costs 1,000 Started in January 4,000 Transferred to Department Two during January 4,200 Work-in-process, 1/31/2013 (25% as to conversion costs 800

What are the equivalent units of production for labor and factory overhead under Average method for the month of January 2013?

 

7 Bronson uses a job order cost system and applies factory overhead to production orders on the basis of direct-labor cost. The overhead rates for 2013 are 200% for department A and 50% for department B, respectively. Job 003 started and completed during 2013, was changed with the following costs:

Department A B

Direct materials:      Dept A - P25,000;   dept B - P5,000

Direct labor:            Dept A - ?;               dept B - 30,000

Factory overhead:   Dept A - 40,000;     dept B - ?

The total manufacturing cost associated with Job 003 should be?

 

8 Wally Company has a process cost system. All materials are introduced at the beginning of the process in Department One. The following information is available for the month of January 2013:

Work in process, 1/1/2013 (40% completed as to conversion costs 1,000

Started in January 4,000

Transferred to Department Two during January 4,200

Work-in-process, 1/31/2013 (25% as to conversion costs 800

What are the equivalent units of production for materials under FIFO method for the month of January 2013?

 

9 The contribution margin per unit is the difference between the selling price and the variable cost per unit, and the contribution margin ratio is the ratio of the contribution margin to the selling price per unit. If the selling price and the variable cost per unit both increase 10 percent and fixed costs do not change, what is the effect on the contribution margin per unit and the contribution margin ratio?

 

10 Johns Company operates in three different industries each of which is appropriately regarded as a reportable segment. Segment No. 1 contributed 60 percent of Johns Company's total sales. Sales for Segment No. 1 were 600,000 dollars and variable costs were 400,000 dollars. The total common costs for all segments were 320,000 dollars. Johns allocates common costs based on the ratio of each segment's sales to total sales. What should be the contribution margin presented for Segment No. 1?

 

11  To obtain the break-even point in units, the total fixed costs should be divided by the contribution margin ratio. True or False?

 

12 Cracky Industries electricity costs and machine hours over a six-month period follow:

Feb  1,250

March 1,500

April 1,200

May 1,400

June    1,100

Months electricity cost

Jan  $2,400

Feb  2,600

March 2,700

April 2,500

May 2,800

June    2,500

Using the method, what is the formula that can be used to estimate electricity costs at different levels of volume?