1. Which of the following is a variable cost2. When the total f.docx

1. Which of the following is a variable cost?
2. When the total fixed costs decreases, the contribution margin per unit _____
3. An activity-based costing system is developed in four steps.
4. Fixed costs per unit decrease as production levels decrease true or false
5. Companies calculate the predetermined overhead rate at the beginning of an accounting period using the actual values of overhead costs. True or false
6. The margin of safety focuses on how much operating income is left over from sales revenue after covering all variable and fixed costs. True or false
7. Variable cost per unit is constant throughout various relevant ranges. True or false
8. Consider the following information 
Number of units
         130,000
Sales price per unit
 $          1,000
Variable cost per unit
                 400
Total fixed cost
         720,000
Target Profit (operating income)
     1,800,000
 Calculate:
a)       Contribution margin per unit
b)       Contribution margin ratio
c)       Breakeven points in units
d)       Breakeven points in sales dollars
e)       Units to achieve target profit  (operating income)
9. Activity-based costing focuses on a single predetermined overhead rate for cost analysis. True or false
10. Contribution margin ratio is equal to ________.
11. --------------- is a method of assigning costs to inventories backwards from Cost of Goods Sold to Finished Goods
Inventory and/or Work in Process Inventory accounts.
12. Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of twenty separate parts. The direct material cost is $95 and each ceiling fan requires 2.5 hours of machine time to manufacture. Additional information is as follows:
Activity
Allocation Base
Cost Allocation Rate $
Materials handling
Number of parts
0.08
Machining
Machine hours
7.20
Assembling
Number of parts
0.35
Packaging
Number of finished units
2.70
13. What is the cost of machining per ceiling fan?
Appraisal costs are costs incurred ________.
14. Modiste Inc. manufactures two kinds of bags—totes and satchels. The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base. Estimated overhead costs for the year are $24,250. Additional information is given below.

Totes
Satchels
Direct materials cost per unit
$35
$40
Direct labor cost per unit
$55
$60
Number of units
500
350
Calculate the predetermined overhead allocation rate.
15. Companies use balanced scorecard to measure how well one is doing against performance levels either inside or outside of the organization. True or false
16. ________ is a "what if" technique that estimates profit or loss results if selling price, costs, volume, or underlying assumptions change.
17. Agostino Inc. uses a just-in-time costing system. During the month, Agostino Inc. incurred $300,000 as direct labor and $9,000 as overhead. Which of the following is the correct journal entry to record the conversion costs?
18 ...

1. 1. Which of the following is a variable cost?
2. When the total fixed costs decreases, the contribution margin
per unit _____
3. An activity-based costing system is developed in four steps.
4. Fixed costs per unit decrease as production levels decrease
true or false
5. Companies calculate the predetermined overhead rate at the
beginning of an accounting period using the actual values of
overhead costs. True or false
6. The margin of safety focuses on how much operating income
is left over from sales revenue after covering all variable and
fixed costs. True or false
7. Variable cost per unit is constant throughout various relevant
ranges. True or false
8. Consider the following information
Number of units
130,000
Sales price per unit
$ 1,000
Variable cost per unit
400
Total fixed cost
720,000
Target Profit (operating income)
1,800,000
Calculate:
a) Contribution margin per unit
b) Contribution margin ratio
c) Breakeven points in units
d) Breakeven points in sales dollars
e) Units to achieve target profit (operating income)
9. Activity-based costing focuses on a single predetermined
overhead rate for cost analysis. True or false
10. Contribution margin ratio is equal to ________.

2. 11. --------------- is a method of assigning costs to inventories
backwards from Cost of Goods Sold to Finished Goods
Inventory and/or Work in Process Inventory accounts.
12. Brannon Company manufactures ceiling fans and uses an
activity-based costing system. Each ceiling fan consists of
twenty separate parts. The direct material cost is $95 and each
ceiling fan requires 2.5 hours of machine time to manufacture.
Additional information is as follows:
Activity
Allocation Base
Cost Allocation Rate $
Materials handling
Number of parts
0.08
Machining
Machine hours
7.20
Assembling
Number of parts
0.35
Packaging
Number of finished units
2.70
13. What is the cost of machining per ceiling fan?
Appraisal costs are costs incurred ________.
14. Modiste Inc. manufactures two kinds of bags—totes and
satchels. The company allocates manufacturing overhead using
a single plantwide rate with direct labor cost as the allocation
base. Estimated overhead costs for the year are $24,250.
Additional information is given below.

Totes
Satchels
Direct materials cost per unit
$35
$40

3. Direct labor cost per unit
$55
$60
Number of units
500
350
Calculate the predetermined overhead allocation rate.
15. Companies use balanced scorecard to measure how well one
is doing against performance levels either inside or outside of
the organization. True or false
16. ________ is a "what if" technique that estimates profit or
loss results if selling price, costs, volume, or underlying
assumptions change.
17. Agostino Inc. uses a just-in-time costing system. During the
month, Agostino Inc. incurred $300,000 as direct labor and
$9,000 as overhead. Which of the following is the correct
journal entry to record the conversion costs?
18. Just-in-time management systems use a combined account
for Raw Materials Inventory and Work-in-Process Inventory
known as the ________.
19. Venus Inc. has fixed costs of $300,000. Total costs, both
fixed and variable, are $450,000 when 30,000 units are
produced. Calculate the total costs if the volume increases to
60,000 units.
20. Young Guns Company, which sells tents, has provided the
following information:
Price per unit
$40
Variable cost per unit
12
Fixed costs per month
$12,600
What are the required sales in units for Young to break even?
21. Young Company has provided the following information:
Price per unit
$40

4. Variable cost per unit
12
Fixed costs per month
$10,000
Calculate the contribution margin per unit.
22. Which of the following is an example of internal failure
costs?
23. The Perfect Fit Company sells hand-sewn shirts for $40 per
shirt. It incurs monthly fixed costs of $5,000. The contribution
margin ratio is calculated to be 20%. What is the breakeven
point in units?
24. The dollar amount that provides for covering fixed costs and
then provides for operating income is called ________.
25. From the graph given below, identify the fixed costs line.

26. The activity-based costing system improves the allocation of
________.



Visa Inc.

Background: Visa Latin America, established in 1978, is a
regional division of Visa International. In addition to credit
cards, Visa offers check, debit and gift cards and traveler's
checks among other services to individuals, businesses,
corporate and government agencies. The Latin American
headquarters are located in Miami, Florida, with sub regional
offices in São Paulo, Brazil; Caracas, Venezuela; Mexico City,
Mexico; and Santiago, Chile.
Products: In 2005, Visa launched Finanzas Prácticas, an online
financial literacy program aimed at educating individuals about
personal finance matters such as: budgeting, saving, investing
and spending. Visa also provides Marketing

5. Solution

s, payment technologies, and processing solutions.
Workforce: Visa has offices in 35 countries and 10,000
employees worldwide. Visa has established Diversity and
Inclusion as a priority to ensure they continue to attract top
global talent from all backgrounds and leverage opportunities to
include their workforce in business decisions that accomplish
their goals.
Financials: According to their financial report for 2014, by
September 2014, their revenue reached 12,702 million dollars
and the revenue growth is 7.8%.
Factors and future: Financial Soccer has been played more than
700,000 times in Latin America since its launch. In addition, the
game has generated more than 30 strategic alliances with
different NGOs, banks, government agencies, universities,
media, and financial organizations in order to promote financial
literacy.

McDonald’s

Background: Arcos Dorados HoldingsInc.is McDonald’s largest
franchisee in the world in terms of system wide sales and

6. number of restaurants. Brazil was the Latin American country
with the largest number of McDonald's restaurants in 2014, with
865 units. Since then, McDonald’s expanded its presence across
the region, opening its first stores in Costa Rica in 1970, in
Brazil in 1979, in Mexico and Venezuela in 1985 and in
Argentina in 1986.
Products: hamburgers, fries, salads and chicken sandwiches,
flan-like dessert in Peru, dulce de leche sundaes in Argentina
and the McMollette (English muffin with refried beans, cheese
and salsa).
Workforce: Arcos Dorados is one of the largest employers in
Latin America with 94,000 employees. More than 52,000 people
from across Latin America have participated in McDonald’s
University courses and educational activities.
Financials: Arcos Dorados was able to deliver organic revenue
growth of 18.5% and organic EBITDA growth of 25.8% this
quarter over the same quarter last year.
Facts and future: Macroeconomic issues in Latin America have
been a real challenge for Arcos Dorados over the past two
years. The company's customers have been feeling the pressure,
and the devaluations of currencies in countries like Brazil -- its
largest market -- have certainly not helped matters. Driven by a
growing middle-class of consumers with money to spend on
discretionary purchases, and a restaurant industry made up
mostly of small, independent operators, the fight for fast-food

7. dominance in Latin America has only just begun. Despite the
problems recently, the country still presents a great opportunity
for these U.S. fast-food giants.

Starbucks
Background: More than 740 stores across 13 countries in Latin
America, Starbucks served more than 100 million customers in
Latin America in 2013. Starbucks has been purchasing coffee
from Latin America for more than 40 years and operating stores
in the region for more than 10 years.
Financial: Starbucks is excited to be part of the momentum of
coffeehouse growth in Latin America. Since entering Mexico in
2002, coffee consumption is estimated to have increased 100-
150%.
Products:
Hot and beverages
Coffee-related accessories and equipment
Complementary food items
Teas
Non-food products – coffee mugs
Workforce: Currently, Starbucks has over 10,000 partners
across Latin America. They operate more than 500 Starbucks
stores in Mexico, Argentina and Chile, employing a total of
more than 8,000 employees.
Factors and future: In 2012, they established their second

8. Farmer Support Center in Latin America in Manizales,
Colombia which has served over 10,000 farmers. These support
centers aim to provide local farmers with the resources and
expertise that help lower the cost of production, reduce fungus
infections, improve coffee quality and increase the yield of
premium coffees.
Cadbury
Background: Cadbury was founded almost 200 years ago.
Cadbury is a British multinational confectionery company
owned by Mondelēz International. It is the second largest
confectionery brand in the world after Wrigley's. Cadbury is
headquartered in Uxbridge, London, and operates in more than
fifty countries worldwide. It’s best known products include
Dairy Milk, 5 Star, and the Gems selection box.
Financials: The most recent annual income is $430 million in
South America. Latin America revenues grew by a double-digit
rate, paced by Tang powdered beverages.
Products: Bars (Almond, Brazil Nut, Curly Wurly, Hazel Nut,
Krisp, Mint, Starbar, Thick Dairy Milk)
Beverages
Biscuits
Ice cream.
Workforce: Cadbury Schweppes is laying off 5,500 workers
around the world and shutting a fifth of its factories as it tries
to save £400m a year. The job losses will affect 10% of the

9. company's global workforce and 20% of its 133 factories. In
Brazil the company closed down two of its five factories, laying
off 230 people, and instigated an efficiency drive across the
continent focused on cutting back office costs.
Factors and future: When Cadbury agreed a $4.2bn (£2.05bn)
deal to acquire Americas-based chewing gum and candy maker
Adams in late 2002, the UK company's shares fell more than
5pc in one day. Cadbury Adams in Latin America is a template
for growth in the emerging markets and a key driver of profits
for the global company.

Background: Nintendo Co., Ltd. is a Japanese multinational
consumer electronics company headquartered in Kyoto, Japan.
Nintendo is the world's largest video game company by revenue.
Nintendo has decided to leave the Brazilian games market,
citing high import duties.
Financials: The Wii Breakdown of Sales: 8,850,000 and the DS
Breakdown of Sales is 20,180,000 in North/South America.
Products: Color TV games, Entertainment system, GameCube,
Wii, WiiU.
Workforce: The number of employees is 5,213 in 2014 and
5,080 in 2013. Nintendo exits Brazil and The government wants
investment in Brazil but Nintendo don’t want to expend money
with employment (and other things like buildings marketing).
Facts and failure: Gaming do Brazil has distributed Nintendo

10. products in the country for the past four years. While it will no
longer sell Nintendo products in Brazil, parent company Juegos
de Video Latinoamérica will continue to be Nintendo’s
distributor for Latin America.
Nintendo will no longer distribute its games or hardware in the
region. Brazil is an important market for Nintendo and home to
many passionate fans, but unfortunately, challenges in the local
business environment have made our current distribution model
in the country unsustainable. Nintendo launched the Wii U in
Brazil in November 2013, but Reggie Fils-Aime had noted then
that the country's importing policies were making things
challenging. On top of that, banking regulations in Brazil also
gave Nintendo problems with digital purchases on the Wii U.


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