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

Correct Answer: Factory rent

Indirect costs, like factory rent, cannot be traced directly to specific units of production.

Correct Answer: Fixed costs / Contribution margin ratio

Break-even in sales dollars is calculated by dividing fixed costs by the contribution margin ratio.

Correct Answer: Borrowing money

Borrowing money is considered a financing activity, as it relates to raising capital for the company.

Correct Answer: Machinery

Machinery is an asset as it represents a resource owned by the company that is expected to provide future economic benefits.

Correct Answer: Variable cost

Variable costs, such as raw materials, increase in total as production levels increase.

Correct Answer: $20 per machine hour

The predetermined overhead rate is calculated by dividing estimated overhead by estimated machine hours. ($200,000 / 10,000 hours = $20 per machine hour).

Correct Answer: Administrative expense budget

The administrative expense budget includes non-production costs, such as office rent, utilities, and administrative salaries.

Correct Answer: Total assets

Total liabilities and owners equity must equal total assets on the balance sheet, ensuring the accounting equation remains balanced.

Correct Answer: $4,000

The total contribution margin is calculated by multiplying the contribution margin per unit by the number of units sold. (($10 - $6) x 1,000 = $4,000).

Correct Answer: $110,000

Cost of goods sold is calculated as beginning inventory plus purchases minus ending inventory. ($50,000 + $100,000 - $40,000 = $110,000).