28 Dec •contribution-margin ratio.

• Magnolia Industries combines all manufacturing overhead into a single cost pool and allocates this overhead to products by using machine hours. Activity-based costing would likely show that with Magnolia’s current procedures that:

•all of the company’s products are undercosted.

•the company’s high-volume products are undercosted.

•all of the company’s products are overcosted.

•the company’s high-volume products are overcosted.

•the company’s low-volume products are overcosted.

•When determining customer profitability, activity-based costing can be used to analyze:

•orders processed.

•sales visits.

•special packaging and handling.

•billing and collections.

•All of the answers are correct.

•Baxter customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 10,000 calls and incurred costs of $312,000. Of these calls, 3,800 were for the company’s wholesale operation; the remainder was for the retail division. Costs allocated to the retail division are:

•$0.

•$31,200.

•$118,560.

•$193,440.

•$203,000.

•Which of the following is not a broad, cost classification category typically used in activity-based costing?

•Unit-level.

•Batch-level.

•Product-sustaining level.

•Facility-level.

•Management-level.

ACC650 Managerial Accounting

Week 4 Quiz

• The difference between budgeted sales revenue and break-even sales revenue is the:

•contribution margin.

•contribution-margin ratio.

•safety margin.

•target net profit.

•operating leverage.

• Amounts spent for charitable contributions are an example of a (n):

•committed fixed cost.

•committed variable cost.

•discretionary fixed cost.

•discretionary variable cost.

•engineered cost.

• A cost that has both a fixed and variable component is known as a:

• step-fixed cost.

•step-variable cost.

•semivariable cost.

•curvilinear cost.

•discretionary cost.

• The break-even point is that level of activity where:

•total revenue equals total cost.

•variable cost equals fixed cost.

•total contribution margin equals the sum of variable cost plus fixed cost.

•sales revenue equals total variable cost.

•profit is greater than zero.

• Partner Industries sells a single product for $50 that has a variable cost of $30. Fixed costs amount to $5 per unit when anticipated sales targets are met. If the company sells one unit in excess of its break-even volume, profit will be:

•$15.

•$20.

•$50.

•an amount that cannot be derived based on the information presented.

•an amount other than $15, $20, or $50 and one that can be derived based on the information presented.