Question 1

We generally need ________ data points to get reliable regression results using the least-squares regression method.

Accepted Answer

A) at least 20 
B) six to eight 
C) as many as possible 
D) only two 
A) at least 20 
B) six to eight 
C) as many as possible 
D) only two A

Question 2

Which of the following statements is correct about relevant range?

Accepted Answer

A) The relevant range only applies to fixed costs in the context of "step costs." 
B) The relevant range determines production levels for the company. 
C) The relevant range helps managers make decisions based on normal operations,but the relevant range is not prescriptive beyond the range. 
D) The relevant range is useful for operations managers,but not necessarily for cost managers within a production facility. 
A) The relevant range only applies to fixed costs in the context of "step costs." 
B) The relevant range determines production levels for the company. 
C) The relevant range helps managers make decisions based on normal operations,but the relevant range is not prescriptive beyond the range. 
D) The relevant range is useful for operations managers,but not necessarily for cost managers within a production facility. C

Question 3

Carson,which uses the high-low method of estimating costs,reported total costs of $24 per unit when production was at its lowest level,at 10,000 units.When production doubled to its highest level,the total cost per unit dropped to $15.Carson would estimate its total fixed cost as:

Accepted Answer

A) $9 
B) $33 
C) $180,000 
D) $585,000 
A) $9 
B) $33 
C) $180,000 
D) $585,000 C

Question 4

Which of the following is a variable cost?

Accepted Answer

A) A cost that is $26,000 when production is 65,000,and $26,000 when production is 91,000. 
B) A cost that is $26,000 when production is 65,000,and $36,400 when production is 91,000. 
C) A cost that is $26,000 when production is 65,000,and $52,000 when production is 91,000. 
D) A cost that is $52,000 when production is 65,000,and $52,000 when production is 91,000. 
A) A cost that is $26,000 when production is 65,000,and $26,000 when production is 91,000. 
B) A cost that is $26,000 when production is 65,000,and $36,400 when production is 91,000. 
C) A cost that is $26,000 when production is 65,000,and $52,000 when production is 91,000. 
D) A cost that is $52,000 when production is 65,000,and $52,000 when production is 91,000.

Question 5

A company's normal operating activity is to produce 500 units per month.During its first two months of operations,it produced 100 units per month.Following a great article about the product,product sales spiked to 1,000 units per month,but the spike only lasted for one month.Which of the following best approximates the company's relevant range?

Accepted Answer

A) 450 - 510 units 
B) 100 - 1,000 units 
C) 500 - 1,000 units 
D) 100,500,or 1,000 units 
A) 450 - 510 units 
B) 100 - 1,000 units 
C) 500 - 1,000 units 
D) 100,500,or 1,000 units

Question 6

Total contribution margin is defined as:

Accepted Answer

A) selling price times units sold. 
B) cost to produce times units sold. 
C) total sales revenues less total variable costs. 
D) total variable costs less fixed costs. 
A) selling price times units sold. 
B) cost to produce times units sold. 
C) total sales revenues less total variable costs. 
D) total variable costs less fixed costs.

Question 7

Aspen Inc has the following information for its first year of operations:
   a.Prepare Aspen's full absorption costing income statement.
b.Prepare Aspen's variable costing income statement.

Accepted Answer

a.
 @#IMG-DLM& (Cost of goods sold per unit = $60.

Question 8

Laredo,Inc.has a contribution margin ratio of 45%.This month,sales revenue was $200,000,and profit was $40,000.If sales revenue increases by $20,000,by how much will profit increase?

Accepted Answer

A) $1,800 
B) $4,500 
C) $5,000 
D) $9,000 
A) $1,800 
B) $4,500 
C) $5,000 
D) $9,000

Question 9

Onini,Inc.produces one product with two production levels: 20,000 units and 80,000 units.At each production level,Onini's per-unit costs for Costs A,B,and C are:   What type of cost is each?

Accepted Answer

A) Cost A is fixed,Cost B is mixed,and Cost C is variable. 
B) Cost A is fixed,Cost B is variable,and Cost C is mixed. 
C) Cost A is variable,Cost B is mixed,and Cost C is fixed. 
D) Cost A is variable,Cost B is fixed,and Cost C is mixed. 
A) Cost A is fixed,Cost B is mixed,and Cost C is variable. 
B) Cost A is fixed,Cost B is variable,and Cost C is mixed. 
C) Cost A is variable,Cost B is mixed,and Cost C is fixed. 
D) Cost A is variable,Cost B is fixed,and Cost C is mixed.

Question 10

Rose Corp.has contribution margin of $65,000,variable costs of $10 per unit,and fixed costs of $25,000.If Rose sells 13,000 units,what was the selling price per unit?

Accepted Answer

A) $5.00 
B) $12.50 
C) $15.00 
D) $17.08 
A) $5.00 
B) $12.50 
C) $15.00 
D) $17.08

Question 11

Vaughn,Inc.sold 17,000 units last year for $50 each.Variable costs per unit were $15 for direct materials,$15 for direct labor,and $10 for variable overhead.Fixed costs were $10,000 in manufacturing overhead and $50,000 in nonmanufacturing costs.
a.What is the total contribution margin?
b.What is the unit contribution margin?
c.What is the contribution margin ratio?
d.If sales increase by 5,000 units,by how much will profits increase?

Accepted Answer

a.$170,000 = (17,000 × $50)- [17,000 × (

Question 12

The contribution margin income statement is appropriate for external users.

Accepted Answer

A) True 
 B)False

Question 13

Fremont,which uses the high-low method,reported total costs of $10 per unit at its lowest production level,5,000 units.When production tripled to its highest level,the total cost per unit dropped to $5.Fremont would estimate its variable cost per unit as:

Accepted Answer

A) $2.50 
B) $5.00 
C) $15.00 
D) ($5.00) 
A) $2.50 
B) $5.00 
C) $15.00 
D) ($5.00)

Question 14

Flint Enterprises had the following cost and production information for April:   Inventory increased by 4,000 units during April.What is Flint Enterprise's income under variable costing?

Accepted Answer

A) $1,285,000 
B) $1,365,000 
C) $1,745,000 
D) $1,785,000 
A) $1,285,000 
B) $1,365,000 
C) $1,745,000 
D) $1,785,000

Question 15

Meadow uses the high-low method.It had total costs of $500,000 at its lowest level of activity when 5,000 units were sold.When,at its highest level of activity,sales equaled 12,000 units,total costs were $780,000.Meadow would estimate fixed costs as:

Accepted Answer

A) $280,000 
B) $300,000 
C) $640,000 
D) $1,200,000 
A) $280,000 
B) $300,000 
C) $640,000 
D) $1,200,000

Question 16

Palm,which uses the high-low method,had an average cost per unit of $50 at its lowest level of activity when sales equaled 1,000 units and an average cost per unit of $32.50 at its highest level of activity when sales equaled 2,000 units.Palm would estimate fixed costs as:

Accepted Answer

A) $30.00 
B) $82.50 
C) $17,500 
D) $35,000 
A) $30.00 
B) $82.50 
C) $17,500 
D) $35,000

Question 17

Which of the following is a mixed cost?

Accepted Answer

A) A cost that is $32.00 per unit when production is 80,000,and $32.00 per unit when production is 128,000. 
B) A cost that is $32.00 per unit when production is 80,000,and $40.00 per unit when production is 128,000. 
C) A cost that is $32.00 per unit when production is 80,000,and $26.00 per unit when production is 128,000. 
D) A cost that is $64.00 per unit when production is 80,000,and $64.00 per unit when production is 128,000. 
A) A cost that is $32.00 per unit when production is 80,000,and $32.00 per unit when production is 128,000. 
B) A cost that is $32.00 per unit when production is 80,000,and $40.00 per unit when production is 128,000. 
C) A cost that is $32.00 per unit when production is 80,000,and $26.00 per unit when production is 128,000. 
D) A cost that is $64.00 per unit when production is 80,000,and $64.00 per unit when production is 128,000.

Question 18

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output:     How much of the variation in cost is explained by production?

Accepted Answer

A) It is impossible to determine. 
B) 92.13% 
C) 95.17% 
D) 97.55% 
A) It is impossible to determine. 
B) 92.13% 
C) 95.17% 
D) 97.55%

Question 19

Fixed costs are expressed ________ because that is the amount of cost that is truly fixed.

Accepted Answer

A) on a per unit basis 
B) in total 
C) on a per unit basis within the relevant range 
D) as a percentage of sales 
A) on a per unit basis 
B) in total 
C) on a per unit basis within the relevant range 
D) as a percentage of sales

Question 20

Kent Corp.has fixed costs of $25,000.Kent expects net operating income of $300,000 at its anticipated level of production,65,000 units.What is Kent's unit contribution margin?

Accepted Answer

A) $5.00 
B) $10.00 
C) $27.50 
D) $20.00 
A) $5.00 
B) $10.00 
C) $27.50 
D) $20.00

We generally need ________ data points to get reliable regression results using the least-squares regression method.

Which of the following statements is correct about relevant range?

Carson,which uses the high-low method of estimating costs,reported total costs of $24 per unit when production was at its lowest level,at 10,000 units.When production doubled to its highest level,the total cost per unit dropped to $15.Carson would estimate its total fixed cost as:

Which of the following is a variable cost?

Total contribution margin is defined as:

Aspen Inc has the following information for its first year of operations: a.Prepare Aspen's full absorption costing income statement. b.Prepare Aspen's variable costing income statement.

Laredo,Inc.has a contribution margin ratio of 45%.This month,sales revenue was $200,000,and profit was $40,000.If sales revenue increases by $20,000,by how much will profit increase?

Onini,Inc.produces one product with two production levels: 20,000 units and 80,000 units.At each production level,Onini's per-unit costs for Costs A,B,and C are: What type of cost is each?

Rose Corp.has contribution margin of $65,000,variable costs of $10 per unit,and fixed costs of $25,000.If Rose sells 13,000 units,what was the selling price per unit?

The contribution margin income statement is appropriate for external users.

Fremont,which uses the high-low method,reported total costs of $10 per unit at its lowest production level,5,000 units.When production tripled to its highest level,the total cost per unit dropped to $5.Fremont would estimate its variable cost per unit as:

Flint Enterprises had the following cost and production information for April: Inventory increased by 4,000 units during April.What is Flint Enterprise's income under variable costing?

Meadow uses the high-low method.It had total costs of $500,000 at its lowest level of activity when 5,000 units were sold.When,at its highest level of activity,sales equaled 12,000 units,total costs were $780,000.Meadow would estimate fixed costs as:

Palm,which uses the high-low method,had an average cost per unit of $50 at its lowest level of activity when sales equaled 1,000 units and an average cost per unit of $32.50 at its highest level of activity when sales equaled 2,000 units.Palm would estimate fixed costs as:

Which of the following is a mixed cost?

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: How much of the variation in cost is explained by production?

Fixed costs are expressed ________ because that is the amount of cost that is truly fixed.

Kent Corp.has fixed costs of $25,000.Kent expects net operating income of $300,000 at its anticipated level of production,65,000 units.What is Kent's unit contribution margin?

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing and Cost Management

Cost-Volume-Profit Analysis

Incremental Analysis for Short-Term Decision Making

Budgetary Planning

Standard Costing and Variance Analysis

Decentralized Performance Evaluation

Capital Budgeting

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 5: Cost Behavior

We generally need ________ data points to get reliable regression results using the least-squares regression method.

Which of the following statements is correct about relevant range?

Carson,which uses the high-low method of estimating costs,reported total costs of $24 per unit when production was at its lowest level,at 10,000 units.When production doubled to its highest level,the total cost per unit dropped to $15.Carson would estimate its total fixed cost as:

Which of the following is a variable cost?

Total contribution margin is defined as:

Aspen Inc has the following information for its first year of operations: a.Prepare Aspen's full absorption costing income statement. b.Prepare Aspen's variable costing income statement.

Laredo,Inc.has a contribution margin ratio of 45%.This month,sales revenue was $200,000,and profit was $40,000.If sales revenue increases by $20,000,by how much will profit increase?

Onini,Inc.produces one product with two production levels: 20,000 units and 80,000 units.At each production level,Onini's per-unit costs for Costs A,B,and C are: What type of cost is each?

Rose Corp.has contribution margin of $65,000,variable costs of $10 per unit,and fixed costs of $25,000.If Rose sells 13,000 units,what was the selling price per unit?

The contribution margin income statement is appropriate for external users.

Fremont,which uses the high-low method,reported total costs of $10 per unit at its lowest production level,5,000 units.When production tripled to its highest level,the total cost per unit dropped to $5.Fremont would estimate its variable cost per unit as:

Flint Enterprises had the following cost and production information for April: Inventory increased by 4,000 units during April.What is Flint Enterprise's income under variable costing?

Meadow uses the high-low method.It had total costs of $500,000 at its lowest level of activity when 5,000 units were sold.When,at its highest level of activity,sales equaled 12,000 units,total costs were $780,000.Meadow would estimate fixed costs as:

Palm,which uses the high-low method,had an average cost per unit of $50 at its lowest level of activity when sales equaled 1,000 units and an average cost per unit of $32.50 at its highest level of activity when sales equaled 2,000 units.Palm would estimate fixed costs as:

Which of the following is a mixed cost?

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: How much of the variation in cost is explained by production?

Fixed costs are expressed ________ because that is the amount of cost that is truly fixed.

Kent Corp.has fixed costs of $25,000.Kent expects net operating income of $300,000 at its anticipated level of production,65,000 units.What is Kent's unit contribution margin?

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing and Cost Management

Cost-Volume-Profit Analysis

Incremental Analysis for Short-Term Decision Making

Budgetary Planning

Standard Costing and Variance Analysis

Decentralized Performance Evaluation

Capital Budgeting

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters