Acc – which of the following is an example of direct labor

1.Which of the following is an example of direct labor?
a. chef in a restaurant
b. janitor in a production plant
c. security guard for the factory
d. management accountant

2.If fixed costs increase, the breakeven point in units will
a. increase
b. decrease
c. remain the same
d. remain the same; however, contribution per unit will decrease

3.Which of the following is false?
a. favorable labor efficiency variance could result from using higher quality materials that result in fewer inspections.
b. a favorable labor rate variance could result from lower wage workers quitting
c. a favorable materials price variance could result from purchasing identical materials from another supplier at a lower price
d. an unfavorable materials usage variance could result from not efficiently utilizing raw materials, thus causing waste
e. all of these are false.

The manager of Alpha Division projects the following for next year:
Sales $100,000
Operating income $30,000
Operating assets $200,000
The manager can invest in an additional project that would require $30,000 investment in additional assets and would generate $4,200 of additional income. The company’s minimum rate of return is 12%

4.What is the residual income for Alpha Division without the additional investment?
a. $30,000
b. $24,000
c. $6,600
d. $4,200
e. $6,000

Color Pro uses part 87 a in the production of color printers. Unit manufacturing costs of part 87a are:
Direct materials $8.00
Direct labor 2
Variable overhead 1
Fixed overhead 4

ColorPro uses 100,000 units of 87a per year. Filbert Company has offered to sell ColorPro 100,000 units of 87a per year for $12.00. Fixed overhead is unavoidable.

5. Should ColorPro make or buy the part?
a. make the part because it will save $100,000 over buying it
b. buy the part because it will save $100,000 over making it
c. make the part because it will save $1,100,000 over buying it
d. buy the part because it will save 1,100,000 over making it
e. buy the part because it will save $300,000 over making it

6.Now suppose that ColorPro discovers that other costs will increase by $7,000 per year if the component is purchased rather than made internally. Should ColorPro make or buy the part?
a. make the part because it will save $100,000 over buying it
b. buy the part because it will save $100,000 over making it
c. make the part because it will save $107,000 over buying it
d. buy the part because it will save $107,000 over making it
e. make the part because it will save $10,000 over buying it

7.A firm is evaluating a project that has a net present value of $0 when a discount rate of 8 percent is used. A discount rate of 6 percent will result in
a. negative net present value
b. positive net present value
c. net present value of $0
d. The question cannot be answered based upon the information provided.

8.In calculating net cash from operating activities using the indirect method, an increase in accounts receivable during a period is 
a. deducted from net income
b. added to net income
c. ignored because it does not affect income
d. ignored because it does not affect expenses

9.In vertical analysis, line items on the income statement are generally expressed as a percentage of 
a. sales
b. net income
c. total assets
d cost of goods sold

10. Cash flows from operating activities, as reported on the statement of cash flows, would include:
a. receipts from the sale of investments.
b. net income
c. payments of dividends
d receipts from the issuance of common stock

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