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MA – Management Accounting

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Showing 7–9 of 10 questions

Question 7

Quastir Co manufactures a single product which sells for $48.80 per unit. At this selling price, the profit per unit is $5.35, after apportionment of the $65,000 of fixed costs. The budgeted production and sales volume is 20,000 units.

What is the margin of safety, expressed in units (to the nearest unit)?

Select an option, then click Submit answer.

  • ○

    7,559
  • ○

    7,850
  • ○

    12,150
  • ○

    12,441
Question 8

Which of the following statements about transfer pricing is correct?

Select an option, then click Submit answer.

  • ○

    Head office managers should never be involved in transfer pricing decisions
  • ○

    The market price will always be the most appropriate transfer price
  • ○

    The transfer price will not affect divisional profits
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    The transfer price should promote goal congruence
Question 9

Essen Co’s policy is to value inventory using the periodic weighted average method. When the financial statements were drafted, First-in, First-out (FIFO) was incorrectly used to value the closing inventory. During the period the cost of items held in inventory has fallen.

What is the effect of this error on the valuation of closing inventory and profit?

Select an option, then click Submit answer.

  • ○

    Inventory value = Understated, Profit = Understated
  • ○

    Inventory value = Understated, Profit = Overstated
  • ○

    Inventory value = Overstated, Profit = Overstated
  • ○

    Inventory value = Overstated, Profit = Understated