Multiple Choice Answers

The budgeted volume of production is normally computed as the sum of (1) the expected sales volume and (2) the desired ending inventory.


Soap Company manufactures Soap X and Soap Y and can sell all it can make of either. Based on the following data, if Soap could reduce the processing time for X by 10%, which of the following statements is true?
Sales Price $20 $25
Variable Costs 14 15
Hours needed to process 3 5

a. There would be no difference in the contribution margin per hour as compared to it before the processing time reduction.
b. It would take 162 minutes to process one unit of X. =3*90
c. The contribution margin per hour for X would be $2.
d. Soap Y would still be the most profitable.

Periods in time that experience increasing price levels are known as periods of:

a. inflation
b. recession
c. depression
d. deflation

The anticipated purchase of a fixed asset for $400,000 with a useful life of 5 years and no residual value is expected to yield total income of $150,000. The expected average rate of return, giving effect to depreciation on investment is 15%.


Which of the following is NOT an example of a cost that varies in total as the number of units produced changes?

a. Electricity per KWH to operate factory equipment
b. Direct materials cost
c. Straight-line depreciation on factory equipment
d. Wages of assembly worker