Financial Accounting > EXAM > Accounting Midterm I - Practice Questions SOLUTIONS Chapters 1, 2 & 8 (All)

Accounting Midterm I - Practice Questions SOLUTIONS Chapters 1, 2 & 8

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Midterm - Practice Questions – Chapters 1, 2 & 8 SOLUTIONS 1 Explanation: “B” is correct because the fixed costs are always the same. As the more units are developed, these fixed costs can be... spread over the units. If there are more units to spread the fixed costs, the fixed costs per unit will be lower. If you produce less units, the fixed costs per unit will be higher Ex. If fixed costs are always $100 if they produce 10 units, the fixed cost per unit will be $100/10 units = $10 per unit If they then begin to produce 9 units instead of 10 units, fixed cost per unit will be $100/9 units =$11.11 per unit Explanation: Conversion costs = MOH + DL If MOH = 20% than DL = 80% of CC CC = DL/80% =$38,000/80% CC = $47,500 MOH = 20% of CC MOH = 47,500*20% = $9,500 Midterm I - Practice Questions SOLUTIONS Chapters 1, 2 & 8 Multiple Choice Questions 1. Within the relevant range: A) variable cost per unit decreases as production decreases. B) fixed cost per unit increases as production decreases. C) fixed cost per unit decreases as production decreases. D) variable cost per unit increases as production decreases. 2. Abbott Company's manufacturing overhead is 20% of its total conversion costs. If direct labor is $38,000 and if direct materials are $23,000, the manufacturing overhead is: A) $9,500. B) $152,000. C) $5,750. D) $15,250. 3. During the month of July, McElroy Company's direct labor cost totaled $36,000 and direct labor cost was 60% of prime cost. If total manufacturing costs during July were $85,000, the manufacturing overhead was: A) $24,000. B) $25,000. C) $49,000. [Show More]

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