# Flying Cloud Co. has the following operating data for its manufacturing operations:

2. Flying Cloud Co. has the following operating data for its manufacturing operations:250 Unit variable cost 100 Total fixed costs \$840,000 The company has decided to increase the wages of hourly workers which will increase the unit variable cost by 10%. Increases in the salaries of factory supervisors and property taxes for the factory will increase fixed costs by 4%. If sales prices are held constant, the next break-even point for Flying Cloud Co. will be: A) decreased by 640 units B) increased by 400 units C) increased by 800 units D) increased by 640 units 3. The Warbler Jeans Company produces two different types of jeans. One is called the Ã¢â‚¬Å“Simple LifeÃ¢â‚¬Â and the other is called the Ã¢â‚¬Å“Fancy LifeÃ¢â‚¬Â The companyÃ¢â‚¬â„¢s Production Budget requires 353,500 units of Simple jeans and 196,000 Fancy jeans to be manufactured. It is estimated that 2.5 direct labor hours will be needed to manufacture one pair of Simple Life jeans and 3.75 hours of direct labor hours for each pair of Fancy Life jeans.What is the total number of direct labor hours needed for both lines of jeans? A) 735,000 direct labor hours B) 883,750 direct labor hours C) 1,618,750 direct labor hours D) 353,500 direct labor hours 4. Under absorption costing, which of the following costs would not be included in finished goods inventory? A) direct labor cost B) direct materials cost C) variable and fixed factory overhead cost D) variable and fixed selling and administrative expenses 5. A business operated at 100% of capacity during its first month and incurred the following costs:4,000 \$204,000 2,000 36,000 If 2,000 units remain unsold at the end of the month and sales total \$300,000 for the month, what is the amount of the manufacturing margin that would be reported on the variable costing income statement? A) \$106,000 B) \$140,000 C) \$114,800 D) \$104,000 6. Rusty Co. sells two products, X and Y. Last year Rusty sold 5,000 units of XÃ¢â‚¬â„¢s and 35,000 units of YÃ¢â‚¬â„¢s. Related data are: Unit Selling Price Unit Variable Unit contribution Product Price Cost Margin X \$110.00 \$70.00 \$40.00 50.00 \$20.00 What was Rusty Co.Ã¢â‚¬â„¢s weighted average unit variable cost? A) \$120.00 B) \$70.00 C) \$52.50 D) \$50.00 7. As production increases, what should happen to the variable costs per unit? A) Either increase or decrease, depending on the fixed costs. B) Stay the same. C) Decrease. D) Increase. 8. When preparing the cash budget, all the following should be considered except: A) Cash payments to suppliers. B) Cash payments for equipment. C) Cash receipts from customers. D) Depreciation expense. 10. Under absorption costing, which of the following costs would not be included in finished goods inventory? A) overtime wages paid factory workers B) advertising costs for a furniture manufacturer C) hourly wages of assembly worker D) straight-line depreciation on factory equipment 12. Under variable costing, which of the following costs would be included in finished goods inventory? A) only variable factory overhead cost B) only fixed factory overhead cost C) both variable and fixed factory overhead cost D) neither variable nor fixed factory overhead cost 13. The primary difference between a fixed budget and a flexible budget is that a fixed budget A) is a plan for a single level of production, whereas a flexible budget can be converted to any level of production. B) is concerned only with future acquisitions of fixed assets, whereas a flexible budget is concerned with expenses that vary with sales. C) cannot be changed after the period begins, whereas flexible budget can be changed after the period begins. D) includes only fixed costs, whereas a flexible budget includes only variable costs. 14. It would be acceptable to have the selling price of a product just above the variable costs and expenses of making and selling it in: A) the short run B) the long run C) monopoly situations D) both the short run and long run 18. Production and sales estimates for April are as follows:Estimated inventory (units), April 1 9,000 Desired inventory (units), April 30 8,000 Area A 3,500 Area B 4,750 Area C 4,250 Unit sales price \$20 The budgeted total sales for April is: A) \$230,000 B) \$200,000 C) \$250,000 D) \$270,000 19. If fixed costs are \$240,000, the unit selling price is \$36, and the unit variable costs are \$20, what is the break-even sales (units)? A) 27,000 units B) 12,000 units C) 15,000 units D) 6,667 units 20. Which of the following is an example of a cost that varies in total as the number of units produced changes? A) Direct materials cost B) Property taxes on factory buildings C) Salary of a production supervisor D) Straight-line depreciation on factory equipment 21. If fixed costs are \$1,500,000, the unit selling price is \$250, and the unit variable costs are \$130, what is the amount of sales required to realize an operating income of \$200,000? A) 16,000 units B) 14,166 units C) 11,538 units D) 12,500 units

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