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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.