The accounting records for Grant Manufacturing Company included the following cost information relating to its first year of operations:

The accounting records for Grant Manufacturing Company included the following cost information relating to its first year of operations:

Assume the company produced 10,000 units of inventory and sold 7,600 of these units during the year for $133,760. Under variable costing, what is the contribution margin for the year?  (Ignore selling and administrative expenses.)
Multiple Choice
$2,000.
$40,000.
None of these answers are correct. Correct
$58,720.
Answer
None of these answers are correct. Correct

Explanation

	Cost per unit	Variable Costing
Direct materials	$22,000 ÷ 10,000	$	2.20
Direct labor	$56,000 ÷ 10,000	$	5.60
Variable manufacturing overhead	$26,000 ÷ 10,000	$	2.60
Cost per unit		$	10.40

Contribution margin = Sales − Variable costs
Contribution margin = $133,760 − (7,600 units × $10.40 per unit) = $54,720

If a company experiences an increase in rent expense, the total cost line on the cost-volume-profit graph will:
Multiple Choice
shift upward and have a steeper slope, and the break-even point will also shift upward.
shift upward, and the break-even point will shift downward.
shift upward, and the break-even point will also shift upward. Correct
shift upward and have a flatter slope, and the break-even point will be unchanged.
Answer
shift upward, and the break-even point will also shift upward. Correct
Explanation
If fixed costs, such as rent, increase, the total cost line will shift upward. Recall that the break-even point equals fixed costs divided by the contribution margin per unit. If fixed costs increase, the break-even point increases.

The study of an individual financial statement item over several accounting periods is called:
Multiple Choice
Time and motion analysis.
Ratio analysis.
Vertical analysis.
Horizontal analysis.Correct
 Answer
 Horizontal analysis.Correct


Warren Company applies overhead based on direct labor cost. Warren Company estimated that it would incur $92,000 in manufacturing overhead costs and $61,000 of direct labor costs during the current year. Actual manufacturing overhead cost totaled $77,000 and actual direct labor costs totaled $57,000 during the current year. If total manufacturing costs were $162,000, what amount of direct materials was used during the year?

Multiple Choice
$28,000Correct

None of these answers are correct.

$14,000
$13,000
Answer
$28,000 Correct
Explanation
Total manufacturing costs = Direct materials used + Direct labor + Actual manufacturing overhead costs

Direct materials used = Total manufacturing costs − (Direct labor + Actual manufacturing overhead costs)

Direct materials used = $162,000 − ($57,000 + $77,000) = $28,000

The following balance sheet information is provided for Patton Company:

Assuming Year 2 cost of goods sold is $372,000, what is the company's average days to sell inventory?

Multiple Choice

27.96 days

31.40 days Correct
34.83 days

11.63 days

Answer
31.40 days Correct

Explanation
Inventory turnover = Cost of goods sold ÷ [(Beginning inventory + ending inventory) ÷ 2]
Inventory turnover = $372,000 ÷ [($28,500 + $35,500) ÷ 2] = $372,000 ÷ $32,000 = 11.63 times
Average days to sell inventory = 365 days ÷ Inventory turnover
Average days to sell inventory = 365 days ÷ 11.63 times = 31.40 days

Travis Company had no beginning work in process or finished goods. Its total manufacturing costs for the year were $878,000. If cost of goods manufactured was $676,000 and cost of goods sold was $518,000, the amount of ending work in process would have been:

Multiple Choice
$360,000.
$720,000.
$158,000.
$202,000.Correct

Answer
$202,000.Correct
Explanation
Cost of goods manufactured = Beginning work in process + Total manufacturing costs − Ending work in process

$676,000 = $0 + $878,000 − Ending work in process

Ending work in process = $878,000 − $676,000 = $202,000

Which of the following is not a possible alternate term for costs that can be eliminated by taking a specified course of action?
Multiple Choice
Relevant costs
Differential costs
Opportunity costs Correct
Avoidable costs
Answer
Opportunity costs Correct
Explanation
An opportunity cost is the sacrifice that is incurred in order to obtain an alternative opportunity.

Thanks