QUESTION: 69

A company has a budgeted contribution to sales (C/S) ratio of 30% and a budgeted operating profit margin of 20%. Budgeted sales were $100,000.

In month 2, actual production and sales volumes and all costs were as budgeted. The actual C/S ratio was 33% .

Which of the following statements, about the company's contribution and operating profit in month 2, is correct?

Actual operating profit was more than 10% higher than budgeted operating profit.
Actual contribution was less than 10% higher than budgeted contribution.
Actual operating profit was less than 10% higher than budgeted operating profit.
Actual contribution was exactly 10% higher than budgeted contribution.

Answer(s): A

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QUESTION: 70

RST is preparing a quotation, on a relevant cost basis, for a special order.

Which TWO of the following are relevant costs that should be included in the quotation?

$2,000 disposal costs which would be saved when obsolete materials are used for the special order.
The cost of a manager who is seconded from a different division to manage the special order. The manager is paid a fixed salary.
Depreciation charges relating to equipment that will be used on the special order.
The reduction in the resale value of machinery, due to be sold immediately, but now to be used to produce the special order.
The cost of materials, as determined by the inventory system, that are currently in inventory but are used regularly on other products.

Answer(s): A,D

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QUESTION: 71

A manufacturing company has a capacity of 10,000 units. The flexed production cost budget of the company is as follows:

All costs are either fixed, variable or semi-variable.

What is the budgeted total production cost if the company operates at 85% capacity?

$13,680
$14,025
$15,980
$12,852

Answer(s): A

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QUESTION: 72

A company's product has the following standard selling price, variable costs and contribution:

Budgeted sales and production was 20,000 units and actual was 19,500 units.

Due to a market downturn the production and sales budget should have been 10% lower.

What is the operational sales volume contribution variance?

$10,000A
$30,000F
$97,500F
$32,500A

Answer(s): B

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QUESTION: 72

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