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21. Ideal standards (Points: 4) are rigorous but attainable. are the standards generally usedin a master budget. reflect optimal performance under perfect operating conditions .will always motivate employees to achieve the maximum output.

22. n un!avorable materials "uantity variance would occur i! (Points: 4) more materials

were purchased than were used. actual pounds o! materials used were less than thestandard pounds allowed. actual labor hours used were greater than the standard laborhours allowed. actual pounds of materials used were greater than the standardpounds allowed.

2#. $he direct labor "uantity standard is sometimes called the direct labor (Points: 4)volume standard. e!!ectiveness standard. efficiency standard . "uality standard.

24. $he di!!erence between a budget and a standard is that (Points: 4) a budget expresseswhat costs were% while a standard expresses what costs should be. a budget expressesmanagement&s plans% while a standard re!lects what actually happened. a budget

expresses a total amount, while a standard expresses a unit amount . standards areexcluded !rom the cost accounting system% whereas budgets are generally incorporatedinto the cost accounting system.

2'. argent. om plans to sell 2%*** purple lawn chairs during +ay% 1%,** in -une% and2%*** during -uly. $he company eeps 1'/ o! the next month&s sales as ending inventory.0ow many units should argent. om produce during -une (Points: 4) 1,915 2%2** 1% '

3ot enough in!ormation to determine.

(1,900 + (2,000 x .15 ! (1,900 x .15 " 1,915

2 . 5hich o! the !ollowing would not appear as a !ixed expense on a selling and admini6strative expense budget (Points: 4) #reight$out 7!!ice salaries Property taxes8epreciation

29. $he direct materials budget shows: 8esired ending direct materials # %*** pounds$otal materials re"uired '4%*** pounds 8irect materials purchases 49%4** pounds $hetotal direct materials needed !or production is (Points: 4) 1%,000 pounds . % ** pounds.11%4** pounds. 1*1%4** pounds.

(5&,000 ! ' ,000 " 1%,000

2 . I! there were 9*%*** pounds o! raw materials on hand on -anuary 1% 14*%*** poundsare desired !or inventory at -anuary #1% and 42*%*** pounds are re"uired !or -anuary

production% how many pounds o! raw materials should be purchased in -anuary (Points:4) #'*%*** pounds ' *%*** pounds 2 *%*** pounds &90,000 pounds

()0,000 + * ! &20,000 " 1&0,000 x " &90,000

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2,. 5hen will the elimination o! a product line have no e!!ect on the company&s overall pro!it (Points: 4) hen the a-oidable fixed costs e ual the product line/scontribution margin 5hen the unavoidable !ixed costs e"ual the product line&scontribution margin 5hen there are no !ixed costs incurred by the product line 5hen the

product line contribution margin is negative

#*. product line should be eliminated whenever (Points: 4) the product line generates anet loss. the unavoidable !ixed costs exceed the product line&s contribution margin. theproduct line generates a negati-e contribution margin . the avoidable costs are lessthan the product line&s contribution margin.

#1. $he costs incurred prior to the split6o!! point are re!erred to as (Points: 4) separablecosts. split6o!! costs. oint product costs . oint costs.

#2. $ruc el% Inc. currently manu!actures a wic et as its main product. $he costs per unitare as !ollows: 8irect materials and direct labor ;22 savings @ ;2*%*** +a e> savings @;4*%*** a e sa-ings " 320,000

" (5,000 4 (322 + 310 !(5,000 4 3'

##. orrento ompany&s plant is operating at less than !ull capacity. $he company ustreceived a one6time opportunity to accept an order at a special price below its usual price.$he special price exceeds its variable costs. $here!ore% which statement is true (Points:4) =ixed costs are relevant. he order will li ely be accepted . $he order will li ely bere ected. orrento should expand its plant capacity be!ore accepting the order.

#4. lvareA ompany is considering the !ollowing alternatives: lternative lternative? Bevenues ;'*%*** ; *%***

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Cess:< ;#*%***+ ;#*%***

Cess: = ;1 %***7perating Income ;14%***

ncremental :rofit " 31&,000 $ 310,000

#'. 5hat is the ey !actor in determining sales mix i! a company has limited resources(Points: 4) ;ontribution margin per unit of limited resource $he amount o! !ixed costs

per unit $otal contribution margin $he cost o! limited resources

# . In a sales mix situation% at any level o! units sold% net income will be higher i! (Points:4) more higher contribution margin units are sold than lower contribution marginunits . more lower contribution margin units are sold than higher contribution marginunits. more !ixed expenses are incurred. weighted6average unit contribution margindecreases.

#9. Iguchi ompany sells 2%*** units o! Product annually% and #%*** units o! Product ?annually. $he sales mix !or Product is (Points: 4) &0< . */. 9/. cannot determine!rom in!ormation given.

" 2,000 = (2,000 + ',000

# . $he margin o! sa!ety ratio is (Points: 4) expected sales divided by brea 6even sales.expected sales less brea 6even sales. margin of safety in dollars di-ided by expectedsales . margin o! sa!ety in dollars divided by brea 6even sales.

#,. In 2** % +asset sold #%*** units at ;'** each.

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42. company re"uires ;1%*2*%*** in sales to meet its net income target. Its contributionmargin is #*/% and !ixed costs are ;1 *%***. 5hat is the target net income (Points: 4);#* %*** ;2#4%*** ;42*%***312 ,000

ales ;1%*2*%***Cess: < (9*/) ;914%***+ ;#* %***

Cess: = ;1 *%***Bet ncome 312 ,000

4#. 0ess% Inc. sells a product with a contribution margin o! ;12 per unit% !ixed costs o!;94%4**% and sales !or the current year o! ;1**%***. 0ow much is 0ess&s brea 6even

point (Points: 4) 4% ** units ;2'% ** ,200 units 2%1## units

8?: " 3)&,&00=312

" ,200 units

44. $he brea 6even point is where (Points: 4) total sales e"ual total variable costs.contribution margin e uals total fixed costs . total variable costs e"ual total !ixed costs.total sales e"ual total !ixed costs.

4'. $iny $ots $oys has actual sales o! ;4**%*** and a brea 6even point o! ;2 *%***. 0owmuch is its margin o! sa!ety ratio (Points: 4) '5< '/ 1'4/ '#. /

argin of @afety " 3&00,000 $ 32 0,000 " 31&0,000argin of @afety Aatio " 31&0,000=3&00,000 " '5 Dnit variable expenses% ;14> $otal !ixedexpenses% ;42%***> ctual sales !or the month o! -une% 4%*** units. 0ow much is themargin o! sa!ety !or the company !or -une (Points: 4) ;9*%*** 3105,000 ; #%*** ;2%'**

>; " 3&2 $ 31& " 32%

8?: " 3&2,000 = 32% " 1,500 units8?: 3 " 1,500 4 3&2 " 3 ',000?xpected @ales 3 " 3&2 4 &,000 " 31 %,000

C@ " 3105,000