BA 213 PRINCIPLES OF ACCOUNTING III INSTRUCTOR: USHA RAMANUJAM

DEAR STUDENTS,

HERE ARE THE TEST#2 REVIEW QUESTIONS. ANSWERS ARE HIGHLIGHTED. IF YOU WISH TO WORK THE QUESTIONS FIRST, I SUGGEST HIGHLIGHTING THE ENTIRE REVIEW SO YOU DON 'T KNOW WHICH IS THE ANSWER!! SEE YOU IN CLASS!

USHA

TEST 2 - REVIEW QUESTIONS.

1. Discretionary fixed costs:

A) cannot be changed since they are fixed.

B) have a long-term planning horizon, generally encompassing many years.

C) are made up of facilities, equipment, and basic organization.

D) responses b and c are both correct.

E) NONE OF THESE.

2. Which of the following would usually be considered a committed fixed cost for a retail sales corporation?

A) LEASE PAYMENTS MADE ON ITS STORE BUILDINGS
*…show more content…*

A) $132,000

B) $136,000

C) $168,000

D) $176,000

12. Black Company 's sales are $600,000, its fixed expenses are $150,000, and its variable expenses are 60% of sales. Based on this information, the margin of safety is:

A) $90,000

B) $190,000

C) $225,000

D) $240,000

13. During last year, Thor Lab supplied hospitals with a comprehensive diagnostic kit for $120. At a volume of 80,000 kits, Thor had fixed expenses of $1,000,000 and net operating income of $200,000. Because of an adverse legal decision, Thor 's liability insurance expenses this year will be $1,200,000 more than they were last year. Assuming that the volume and other costs are unchanged, what should be the sales price this year if Thor is to make the same $200,000 net operating income?

A) $120

B) $135

C) $150

D) $240

14. Mason Company 's selling price was $20.00 per unit. Fixed expenses totaled $54,000, variable expenses were $14.00 per unit, and the company reported a profit of $9,000 for the year. The break-even point for Mason Company is:

A) 10,500 units

B) 4,500 units

C) 8,500 units

D) 9,000 UNITS

15. Garcia Veterinary Clinic expects the following operating results next year:

Sales (total)

$600,000

Variable expenses (total)

$120,000

Fixed expenses (total)

$300,000

What is Garcia 's break-even point next year in sales dollars?

A) $240,000

B) $375,000

C) $400,000

D) $420,000

16. Gamma Company has sales of

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