Multiple Choice Answers

After the sales budget is prepared, the capital expenditures budget is normally prepared next.

In an investment center, the manager has responsibility and authority for making decisions that affect:
a. costs
b. revenues
c. assets
d. costs, revenues, and assets

The relevant range is useful for analyzing cost behavior for management decision-making purposes.

The costs of services charged to a profit center on the basis of its use of those services are called:
a. operating expenses
b. noncontrollable charges
c. service department charges
d. activity charges

McClelland Corporation uses the total cost concept of product pricing. Below is cost information for the production and sale of 40,000 units of its sole product. McClelland desires a profit equal to a 14% rate of return on invested assets of $400,000.
Fixed factory overhead cost $25,000.00
Fixed selling and administrative costs 5,000.00
Variable direct materials cost per unit 3.00
Variable direct labor cost per unit 1.25
Variable factory overhead cost per unit .75
Variable selling and administrative cost per unit 3.00
The cost per unit for the production and sale of the company’s product is:
a. $ 8.00
b. $ 8.75
c. $10.00
d. $ 9.00