The following breakeven chart has been drawn for a company’s single product:?
Which of the following statements about the product are correct?
?(i) The product’s selling price is $10 per unit.?
(ii) The product’s variable cost is $8 per unit.?
(iii) The product incurs fixed costs of $30,000 per period.?
(iv) The product earns a profit of $70,000 at a level of activity of 10,000 units.?
Statement (i) is correct. The line which passes through the origin indicates the sales?revenue at various levels of activity. At an activity level of 10,000 units, the sales revenue?is $100,000, therefore the selling price is $10 per unit.?
Statement (ii) is incorrect. The sloping line which intercepts the vertical axis at $30,000?shows the total cost at various levels of activity. The total cost for 10,000 units is $80,000,?from which we subtract the $30,000 fixed costs.?
Statement (iii) is correct. The fixed cost is the cost incurred at zero activity, and is shown??as a horizontal line at $30,000.?
Statement (iv) is incorrect. The profit for 10,000 units is the difference between the sales?value $100,000 and the total cost of $80,000, which amounts to $20,000.?
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?The following statements have been made about material price planning variances:?
(1) The publication of material price planning variances should always lead to automatic?updates of standard costs.?
(2) The causes of material price planning variances do not need to be investigated by?managers at any level in the organisation.?
Which of the above statement(s) is/are true??
?Leaf limited has had a mixed year. Its market share has improved two percentage points to?20% but the overall market had contracted by 5% in the same period.? The budgeted sales?were 504,000 units and standard contribution was $12 per unit.?
?What is the level of actual sales??
?The finance director of Paint Mixers Ltd has produced the table below showing the variance?results for the first three months of the year:?
? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?January? ? ? ? ? ? ? ? ? ? February? ? ? ? ? ? ? ? ? ?March?
Material price variance? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? $3,000 A? ? ? ? ? ? ? ? ? ?$2,000 A? ? ? ? ? ? ? ? ?$1,000 A?
Material mix variance? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?$2,000 A? ? ? ? ? ? ? ? ? ? ? $750 A? ? ? ? ? ? ? ? ? ? ?$100 F?
Material yield variance? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?$4,000 A? ? ? ? ? ? ? ? ? ?$2,000 A? ? ? ? ? ? ? ? ? ? ? ? $50F?
Which of the following interpretations of the variances analysis exercise above is NOT?correct???
?The following statements have been made in relation to the use of standard costs in rapidly?changing environments:?
(1) Variance analysis results will take into account important criteria such as customer?satisfaction or quality of production.?
(2) Achieving standards is suitable in most modern manufacturing environments.?
Which of the above statement(s) is/are true??
?The following statements have been made about planning and control as described in the?three tiers of Robert Anthony’ s decision-making hierarchy:?
(1) Strategic planning is concerned with making decisions about the efficient and?effective use of existing resources.?
(2) Operational control is about ensuring that specific tasks are carried out efficiently?and effectively.?
Which of the above statements is/are true??
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