Reference no: EM132468399

The following is data for the past three months for Red Duv Aviation Production

1. Units Produced 100
2. Direct Material $10 per unit
3. Direct Labor $25 per unit
4. Variable manufacturing overhead $10 per unit
5. Total fixed manufacturing overhead $10,000
6. Variable selling and administrative costs $5 per unit
7. Total fixed selling and administrative costs $7,500.

Using this data answer the following questions pertaining to Red Duv Aviation Production.

Question 1. Unit product cost under variable costing is

1. $40 per unit
2. $45 per unit
3. $55 per unit
4. $50 per unit

Question 2. Unit product cost under absorption costing is

1. $60 per unit
2. $70 per unit
3. $65 per unit
4. $55 per unit

Question 3. Red Duv Aviation is preparing financial statements for potential investors and creditors. Their best option is

1. Absorption costing because it follows GAAP
2. Variable costing because it follows GAAP
3. Absorption costing because it is better for planning purposes
4. Variable costing because it is better for controlling purposes

Question 4. Red Duv Aviation services small aircraft engines. The following is data from the small aircraft engine service department.

1. Expected customers 50
2. Actual customers 60
3. Hourly charge $55
4. Expected time to complete each job 3 hours
5. Actual time to complete each job 2.5 hours

Question 5. Based on the information above, compute the revenues for Red Duv Aviation's small engine repair division

1. $250 more than expected
2. $250 less than expected
3. $750 more than expected
4. The same as expected

Question 6. Based on the above information what would you recommend Red Duv Aviation do from a managerial accounting perspective? Check all that apply:

a. Nothing

b. Evaluate labor hours per job

c. Evaluate plant capacity

d. Evaluate hourly service rate

e. Evaluate Breakeven point

f. Evaluate target profit goal

g. Evaluate advertising budget