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    Cost accounting issues: relevant activity base for a cost, variable costs, absorption costing income statements, Martin Company's budgeted inventory and more...

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    Question 16 (1 point)

    The relevant activity base for a cost depends upon which base is most closely associated with the cost and the decision-making needs of management.

    ? True

    ? False

    Question 23 (1 point)

    Because variable costs are assumed to change in constant proportion with changes in the activity level, the graph of the variable costs when plotted against the activity level appears as a circle.

    ? True

    ? False

    Question 25 (2 points)

    A business operated at 100% of capacity during its first month and incurred the following costs:
    Production costs (5,000 units):
    Direct materials $70,000
    Direct labor 20,000
    Variable factory overhead 10,000
    Fixed factory overhead 2,000 $102,000

    Operating expenses:
    Variable operating expenses $17,000
    Fixed operating expenses 1,000 18,000

    If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, what would be the amount of income from operations reported on the absorption costing income statement?

    ? 50,400
    ? 50,000
    ? 52,000
    ? 70,000

    Question 49 (2 points)

    The Martin Company had a finished goods inventory of 55,000 units on January 1. It's projected sales for the next four months were: January - 200,000 units; February - 180,000 units; March - 210,000 units; and April - 230,000 units. The Martin Company wishes to maintain a desired ending finished goods inventory of 20% of the following months sales. What would the budgeted inventory for March 31 be?

    ? 46,000
    ? 36,000
    ? Cannot be determined from the data given
    ? 42,000

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