BRAINSCAPE1
BUS-A200 Test 2 Exam with
complete solutions latest version
How is the balance sheet of a merchandising firm different from the balance sheet of a
service business? - CORRECT ANSWER-It includes the asset, Merchandise Inventory
The break-even point is that level of activity where total revenue equals - CORRECT
ANSWER-Total Cost
Management is interested in utilizing the full capacity of production facilities because it -
CORRECT ANSWER-Spreads fixed costs over a greater number of units, thereby
reducing the fixed cost per unit
The terms on an invoice are 4/15, n/30. This means that: - CORRECT ANSWER-A
discount of 4% is given if payment is made within 15 days from the date of the invoice
The primary disadvantage of a just-in-time inventory system is - CORRECT ANSWER-
The risk is increased of losing sales opportunities or having to shut down manufacturing
operations because of inventory shortages
If prices are rising, which of the following gives the highest cost of goods sold? -
CORRECT ANSWER-LIFO
Which of the following is a product cost? - CORRECT ANSWER-Depreciation of the
production facilities
Last year Josephine Company broke even. The company sells one product with a
selling price of $100 and a variable cost per unit of $75. This year the company would
like to earn a profit of $60,000. How many more units must the company sell this year
than it sold last year? - CORRECT ANSWER-2,400
The Cutlass Company had sold 30,000 units of its product totaling $1,050,000 in sales
and a net income of $90,000. At the break-even point, the company's total contribution
margin equals $600,000. Based on this information, the company's variable expenses
would be: - CORRECT ANSWER-$12 per unit
BRAINSCAPE1
, BRAINSCAPE1
Which of the following items should be included in the inventory of Bison Corporation?
I. Goods in transit from Bison to a customer, shipped FOB destination
II. Goods in transit from Bison to a customer, shipped FOB shipping point
III. Goods in transit from a supplier to Bison, Shipped FOB destination
IV. Goods in transit from a supplier to Bison, Shipped FOB shipping point - CORRECT
ANSWER-I & IV only
Wall Company incurred $30,000 of fixed ost and $40,000 of variable cost when 1,000
units of product were made and sold.
If the company's volume doubles, the cost per unit will what? - CORRECT ANSWER-
Decrease
Wall Company incurred $30,000 of fixed ost and $40,000 of variable cost when 1,000
units of product were made and sold.
If the company's volume increases to 1,500 units, the company's total costs will be
what? - CORRECT ANSWER-$90,000
What costs should be included in the Merchandise Inventory account of a
merchandising firm? - CORRECT ANSWER-All costs necessary to acquire inventory
and prepare it for sale
Unger Company uses the perpetual inventory method. Unger sold goods that costs
$3,500 for $7,200. If the sale was made to a customer on account, the sale will what? -
CORRECT ANSWER-Increase total assets by $3,700
Which of the following appears in the income statement of a merchandising business,
but not in the income statement of a business that renders only services? - CORRECT
ANSWER-Gross Profit
Product costs are also referred to as what? - CORRECT ANSWER-Inventory Costs
What is the relationship between gross margin and net income? - CORRECT
ANSWER-Gross Margin - Selling and Administrative Expenses = Net Income
Which inventory method results in the lowest income taxes during periods of increasing
prices? - CORRECT ANSWER-Last-in-last-out (LIFO)
The inventory valuation method that results in the recognition of the most recent
inventory costs on the balance sheet and income statement, respectively, is what? -
CORRECT ANSWER-Balance Sheet: FIFO | Income statement: LIFO
When raw materials enter the production process in a traditional manufacturing setting,
their costs are transferred to a what? - CORRECT ANSWER-Work In Process Account
Which of the following is a true statement regarding product and/or period costs? -
CORRECT ANSWER-Period costs never appear on the balance sheet
BRAINSCAPE1
BUS-A200 Test 2 Exam with
complete solutions latest version
How is the balance sheet of a merchandising firm different from the balance sheet of a
service business? - CORRECT ANSWER-It includes the asset, Merchandise Inventory
The break-even point is that level of activity where total revenue equals - CORRECT
ANSWER-Total Cost
Management is interested in utilizing the full capacity of production facilities because it -
CORRECT ANSWER-Spreads fixed costs over a greater number of units, thereby
reducing the fixed cost per unit
The terms on an invoice are 4/15, n/30. This means that: - CORRECT ANSWER-A
discount of 4% is given if payment is made within 15 days from the date of the invoice
The primary disadvantage of a just-in-time inventory system is - CORRECT ANSWER-
The risk is increased of losing sales opportunities or having to shut down manufacturing
operations because of inventory shortages
If prices are rising, which of the following gives the highest cost of goods sold? -
CORRECT ANSWER-LIFO
Which of the following is a product cost? - CORRECT ANSWER-Depreciation of the
production facilities
Last year Josephine Company broke even. The company sells one product with a
selling price of $100 and a variable cost per unit of $75. This year the company would
like to earn a profit of $60,000. How many more units must the company sell this year
than it sold last year? - CORRECT ANSWER-2,400
The Cutlass Company had sold 30,000 units of its product totaling $1,050,000 in sales
and a net income of $90,000. At the break-even point, the company's total contribution
margin equals $600,000. Based on this information, the company's variable expenses
would be: - CORRECT ANSWER-$12 per unit
BRAINSCAPE1
, BRAINSCAPE1
Which of the following items should be included in the inventory of Bison Corporation?
I. Goods in transit from Bison to a customer, shipped FOB destination
II. Goods in transit from Bison to a customer, shipped FOB shipping point
III. Goods in transit from a supplier to Bison, Shipped FOB destination
IV. Goods in transit from a supplier to Bison, Shipped FOB shipping point - CORRECT
ANSWER-I & IV only
Wall Company incurred $30,000 of fixed ost and $40,000 of variable cost when 1,000
units of product were made and sold.
If the company's volume doubles, the cost per unit will what? - CORRECT ANSWER-
Decrease
Wall Company incurred $30,000 of fixed ost and $40,000 of variable cost when 1,000
units of product were made and sold.
If the company's volume increases to 1,500 units, the company's total costs will be
what? - CORRECT ANSWER-$90,000
What costs should be included in the Merchandise Inventory account of a
merchandising firm? - CORRECT ANSWER-All costs necessary to acquire inventory
and prepare it for sale
Unger Company uses the perpetual inventory method. Unger sold goods that costs
$3,500 for $7,200. If the sale was made to a customer on account, the sale will what? -
CORRECT ANSWER-Increase total assets by $3,700
Which of the following appears in the income statement of a merchandising business,
but not in the income statement of a business that renders only services? - CORRECT
ANSWER-Gross Profit
Product costs are also referred to as what? - CORRECT ANSWER-Inventory Costs
What is the relationship between gross margin and net income? - CORRECT
ANSWER-Gross Margin - Selling and Administrative Expenses = Net Income
Which inventory method results in the lowest income taxes during periods of increasing
prices? - CORRECT ANSWER-Last-in-last-out (LIFO)
The inventory valuation method that results in the recognition of the most recent
inventory costs on the balance sheet and income statement, respectively, is what? -
CORRECT ANSWER-Balance Sheet: FIFO | Income statement: LIFO
When raw materials enter the production process in a traditional manufacturing setting,
their costs are transferred to a what? - CORRECT ANSWER-Work In Process Account
Which of the following is a true statement regarding product and/or period costs? -
CORRECT ANSWER-Period costs never appear on the balance sheet
BRAINSCAPE1
