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14. A machine shop has direct materials cost of $1,800,000 direct labour of $4,200,000 (direct labour rate is $50 per hour) and budgeted indirect manufacturing costs of $850,000. Management believes that indirect manufacturing costs increase with direct labour hours. What is the budgeted indirect manufacturing cost rate (closest rate)?

a. $17

b. $2.33

c. $2.12

d. $4.94

e. $10.12

15. The term used to describe a situation when at least one miscosted product causes other products to be miscosted in the organization is known as:

a. cross-subsidization.

b. product sub-optimization.

c. product overcosting

d. product undercosting.

e. product marketing.

16. Woolfords CVP income statement included sales of 5,000 units, a selling price of $50, variable expenses of $30 per unit, and net income of $25,000. Fixed expenses are

a. $75,000.

b. $100,000.

c. $250,000.

d. $150,000

17. The contribution margin ratio is

a. contribution margin divided by sales.

b. sales divided by fixed expenses.

c. sales divided by variable expenses.

d. sales divided by contribution margin.

18. In 2019, Teller Company sold 3,000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $270,000. The same selling price, variable expenses, and fixed expenses are expected for 2020. What is Tellers break-even point in sales dollars for 2020?

a. $900,000

b. $2,571,429

c. $2,700,000

d. $1,800,000

19. Warner Manufacturing reported sales of $2,000,000 last year (100,000 units at $20 each), when the break-even point was 80,000 units. Warners margin of safety ratio is

a. 120%.

b. 25%.

c. 80%.

d. 20%.

20. ABC Company listed the following data for the current year:

Budgeted factory overhead $1,044,000

Budgeted direct labor hours 69,600

Budgeted machine hours 24,000

Actual factory overhead 1,037,400

Actual labor hours 72,600

Actual machine hours 23,600

Assuming ABC Company applied overhead based on direct labor hours, the company's predetermined overhead rate for the year is:

a. $15.00 per direct labor hour.

b. $43.95 per direct labor hour.

c. $15.50 per direct labor hour.

d. $14.28 per direct lab

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