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Managerial Accounting - equivalent units for conversion costs

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Question 16: Marginal Maintenance Company makes screwdrivers in a single process and uses weighted average process costing. All material is added at the start of the process. The following information is available for May production:

What are the equivalent units for conversion costs?

A 19,000

B 20,000

C 21,000

D 19,800

Question 17: Dreamland Company produces pillows. Each pillow has a variable cost of $8 and fixed costs are $78,000 per month. Each pillow sells for $17. If the company produces and sells 65,000 pillows in February, at this level of activity, total costs per unit are:

A $8.00.

B $9.20.

C $9.00.

D $7.80.

Question 18: PotteryWorks Company sold 60,000 units of product for $22 per unit. Their unit product cost using process costing is $11 per unit and the company has fixed costs of $240,000 per month. The company predicts that a $2 decrease in the selling price will generate a 20% increase in sales during the next period. If the company lowers the price which of the following will occur in the next period?

A Net income will increase by $36,000.

B Net income will decrease by $12,000.

C Total fixed costs will increase by $48,000.

D The variable costs per unit will decline by $2 per unit.

Question 19: Sam's Chop has budgeted the following costs for a month in which 1,500 steak dinners will be produced and sold: Materials, $3,750; labor (variable), $3,000; rent(fixed),$2,400; straight-line depreciation, $600; and other costs that don't change when the number of dinner sold changes, $1,800. Sam sells the steak dinners for $10.00 each.

What is the budgeted total fixed cost?

A $11,550

B $7,800

C $4,800

D $3,750

Question 20: Paul's Pizza produced and sold 2,000 pizzas last month and had fixed costs of $6,000. If production and sales are expected to increase by 10% next month, which of the following statements is true?

A Total fixed costs will increase.

B Total fixed costs will decrease.

C Fixed cost per unit will increase.

D Fixed cost per unit will decrease.

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Solution Summary

The solution explains some multiple choice questions relating to managerial accounting