D196 Principles of Financial and Managerial Accounting - Set 2 - Part 3

Correct Answer: 0.40

The variable cost ratio is calculated by dividing the variable cost per unit by the sales price per unit. ($10 / $25 = 0.40).

Correct Answer: Direct labor costs

The cost of goods sold includes all costs directly related to the production of goods, including direct labor.

Correct Answer: $5 per labor hour

The predetermined overhead rate is calculated by dividing estimated overhead by the estimated labor hours. ($50,000 / 10,000 hours = $5 per labor hour).

Correct Answer: Steel used to manufacture cars

Direct materials are the raw materials that can be directly traced to the production of a product, such as steel used in car manufacturing.

Correct Answer: Notes payable (due within one year)

Current liabilities are obligations that are due within one year, such as notes payable due within that period.

Correct Answer: 2,000 units

The break-even point in units is calculated by dividing fixed costs by the contribution margin per unit. ($50,000 / $25 = 2,000 units).

Correct Answer: Direct labor

Direct labor is a controllable cost because a department manager can influence labor usage and costs, whereas fixed costs like rent are not easily controllable.

Correct Answer: Inventory

Inventory is classified as a current asset, as it represents goods that are available for sale within a short period.

Correct Answer: When actual costs are higher than budgeted costs

An unfavorable cost variance occurs when the actual costs incurred are higher than what was budgeted or expected.

Correct Answer: Office rent

Office rent is a period cost because it is not directly related to the production process and is expensed in the period it is incurred.