Question 1

Which of the following is a fixed cost?

Accepted Answer

A) A cost that is $28.00 per unit when production is 70,000,and $28.00 per unit when production is 112,000. 
B) A cost that is $28.00 per unit when production is 70,000,and $17.50 per unit when production is 112,000. 
C) A cost that is $28.00 per unit when production is 70,000,and $56.00 per unit when production is 112,000. 
D) A cost that is $56.00 per unit when production is 70,000,and $56.00 per unit when production is 112,000. 
A) A cost that is $28.00 per unit when production is 70,000,and $28.00 per unit when production is 112,000. 
B) A cost that is $28.00 per unit when production is 70,000,and $17.50 per unit when production is 112,000. 
C) A cost that is $28.00 per unit when production is 70,000,and $56.00 per unit when production is 112,000. 
D) A cost that is $56.00 per unit when production is 70,000,and $56.00 per unit when production is 112,000.

Question 2

Georgia uses the high-low method of estimating costs.Georgia had total costs of $50,000 at its lowest level of activity,when 5,000 units were sold.When,at its highest level of activity,sales equaled 10,000 units,total costs were $78,000.Georgia would estimate variable cost per unit as:

Accepted Answer

A) $14.00 
B) $9.10 
C) $5.60 
D) $10.54 
A) $14.00 
B) $9.10 
C) $5.60 
D) $10.54

Question 3

Bayshore,Inc. ,has collected the following cost data for various levels of activity:
   Using the high-low method,determine the variable cost per client served and the total fixed cost.

Accepted Answer

High month: April;low month: June.Variab

Question 4

Silver Products has presented the following information for the past eight months operations:
   a.Using the high-low method,calculate the fixed cost per month and variable cost per unit.
b.What would total costs be for a month with 5,000 units produced?

Accepted Answer

a.High month: September;low month: June.

Question 5

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output:     What total cost would Star predict for a month in which production is 2,000 units?

Accepted Answer

A) $23,140 
B) $63,446 
C) $175,003 
D) $198,143 
A) $23,140 
B) $63,446 
C) $175,003 
D) $198,143

Question 6

The high-low method provides a reasonable estimate of the fixed and variable costs as long as:

Accepted Answer

A) it uses eight or more points (instead of simply two). 
B) at least one of the two points falls within the relevant range. 
C) the high and low points for both activity and total fixed costs are the same. 
D) the high and low points reflect the general trend of the data. 
A) it uses eight or more points (instead of simply two). 
B) at least one of the two points falls within the relevant range. 
C) the high and low points for both activity and total fixed costs are the same. 
D) the high and low points reflect the general trend of the data.

Question 7

A variable cost increases in total as the volume increases.

Accepted Answer

A) True 
 B)False

Question 8

Flint Enterprises had the following cost and production information for April:   Inventory increased by 4,000 units during April.How much greater will Flint Enterprises' income be under absorption costing than under variable costing?

Accepted Answer

A) $80,000 
B) $16,000 
C) $95,000 
D) $144,000 
A) $80,000 
B) $16,000 
C) $95,000 
D) $144,000

Question 9

Contribution margin is defined as sales revenue less variable costs.

Accepted Answer

A) True 
 B)False

Question 10

Cardinal uses the high-low method of estimating costs.Cardinal had total costs of $25,000 at its lowest level of activity,when 5,000 units were sold.When,at its highest level of activity,sales equaled 10,000 units,total costs were $39,000.Cardinal would estimate variable cost per unit as:

Accepted Answer

A) $7.00 
B) $4.55 
C) $2.80 
D) $5.26 
A) $7.00 
B) $4.55 
C) $2.80 
D) $5.26

Question 11

Ajax uses the high-low method of estimating costs.Ajax had total costs of $50,000 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 $78,000.Ajax would estimate fixed costs as:

Accepted Answer

A) $28,000 
B) $30,000 
C) $64,000 
D) $128,000 
A) $28,000 
B) $30,000 
C) $64,000 
D) $128,000

Question 12

Which of the following statements is true?

Accepted Answer

A) Fixed costs are constant on a per unit basis. 
B) Variable costs per unit decrease as activity volume increases. 
C) Variable costs are constant in total dollars. 
D) Fixed costs are constant in total dollars. 
A) Fixed costs are constant on a per unit basis. 
B) Variable costs per unit decrease as activity volume increases. 
C) Variable costs are constant in total dollars. 
D) Fixed costs are constant in total dollars.

Question 13

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

Accepted Answer

A) $9.00 
B) $6.00 
C) $11.00 
D) ($9.00) 
A) $9.00 
B) $6.00 
C) $11.00 
D) ($9.00)

Question 14

Mohave,Inc.produces approximately 4,000 units per month,and it places a quality assurance logo on each of its units.To use this logo,it must pay the quality assurance firm $5,000 per month plus $1 per unit.The cost to Mohave of using the quality assurance logo would be a:

Accepted Answer

A) fixed cost. 
B) mixed cost. 
C) variable cost. 
D) step cost. 
A) fixed cost. 
B) mixed cost. 
C) variable cost. 
D) step cost.

Question 15

A cost that remains the same,in total,regardless of changes in activity level is a:

Accepted Answer

A) variable cost. 
B) fixed cost. 
C) mixed cost. 
D) step cost. 
A) variable cost. 
B) fixed cost. 
C) mixed cost. 
D) step cost.

Question 16

Jasper Enterprises had the following cost and production information for April:   How much greater will Jasper Enterprises' income be under absorption costing than under variable costing?

Accepted Answer

A) $60,000 
B) $315,000 
C) $340,000 
D) $400,000 
A) $60,000 
B) $315,000 
C) $340,000 
D) $400,000

Question 17

Campbell,Inc.sold 100,000 units last year for $2.00 each.Variable costs per unit were $0.30 for direct materials,$0.50 for direct labor,and $0.30 for variable overhead.Fixed costs were $60,000 in manufacturing overhead and $40,000 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 20,000 units,by how much will profits increase?

Accepted Answer

a.$90,000 = (100,000 × $2)- [100,000 × (

Question 18

A cost driver:

Accepted Answer

A) is the same as a fixed cost. 
B) is an activity that causes total costs to change. 
C) is the same as margin of safety. 
D) is a method of calculating mixed costs. 
A) is the same as a fixed cost. 
B) is an activity that causes total costs to change. 
C) is the same as margin of safety. 
D) is a method of calculating mixed costs.

Question 19

The unit contribution margin tells how much each additional unit sold will contribute to covering variable costs.

Accepted Answer

A) True 
 B)False

Question 20

Cypress,which uses the high-low method,had an average cost per unit of $5 at its lowest level of activity when sales equaled 10,000 units and an average cost per unit of $3.25 at its highest level of activity when sales equaled 24,000 units.Cypress would estimate fixed costs as:

Accepted Answer

A) $30,000 
B) $6.25 
C) $1.75 
D) $50,000 
A) $30,000 
B) $6.25 
C) $1.75 
D) $50,000

Which of the following is a fixed cost?

Georgia uses the high-low method of estimating costs.Georgia had total costs of $50,000 at its lowest level of activity,when 5,000 units were sold.When,at its highest level of activity,sales equaled 10,000 units,total costs were $78,000.Georgia would estimate variable cost per unit as:

Bayshore,Inc. ,has collected the following cost data for various levels of activity: Using the high-low method,determine the variable cost per client served and the total fixed cost.

Silver Products has presented the following information for the past eight months operations: a.Using the high-low method,calculate the fixed cost per month and variable cost per unit. b.What would total costs be for a month with 5,000 units produced?

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: What total cost would Star predict for a month in which production is 2,000 units?

The high-low method provides a reasonable estimate of the fixed and variable costs as long as:

A variable cost increases in total as the volume increases.

Flint Enterprises had the following cost and production information for April: Inventory increased by 4,000 units during April.How much greater will Flint Enterprises' income be under absorption costing than under variable costing?

Contribution margin is defined as sales revenue less variable costs.

Cardinal uses the high-low method of estimating costs.Cardinal had total costs of $25,000 at its lowest level of activity,when 5,000 units were sold.When,at its highest level of activity,sales equaled 10,000 units,total costs were $39,000.Cardinal would estimate variable cost per unit as:

Ajax uses the high-low method of estimating costs.Ajax had total costs of $50,000 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 $78,000.Ajax would estimate fixed costs as:

Which of the following statements is true?

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

Mohave,Inc.produces approximately 4,000 units per month,and it places a quality assurance logo on each of its units.To use this logo,it must pay the quality assurance firm $5,000 per month plus $1 per unit.The cost to Mohave of using the quality assurance logo would be a:

A cost that remains the same,in total,regardless of changes in activity level is a:

Jasper Enterprises had the following cost and production information for April: How much greater will Jasper Enterprises' income be under absorption costing than under variable costing?

A cost driver:

The unit contribution margin tells how much each additional unit sold will contribute to covering variable costs.

Cypress,which uses the high-low method,had an average cost per unit of $5 at its lowest level of activity when sales equaled 10,000 units and an average cost per unit of $3.25 at its highest level of activity when sales equaled 24,000 units.Cypress would estimate fixed costs as:

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

Which of the following is a fixed cost?

Georgia uses the high-low method of estimating costs.Georgia had total costs of $50,000 at its lowest level of activity,when 5,000 units were sold.When,at its highest level of activity,sales equaled 10,000 units,total costs were $78,000.Georgia would estimate variable cost per unit as:

Bayshore,Inc. ,has collected the following cost data for various levels of activity: Using the high-low method,determine the variable cost per client served and the total fixed cost.

Silver Products has presented the following information for the past eight months operations: a.Using the high-low method,calculate the fixed cost per month and variable cost per unit. b.What would total costs be for a month with 5,000 units produced?

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: What total cost would Star predict for a month in which production is 2,000 units?

The high-low method provides a reasonable estimate of the fixed and variable costs as long as:

A variable cost increases in total as the volume increases.

Flint Enterprises had the following cost and production information for April: Inventory increased by 4,000 units during April.How much greater will Flint Enterprises' income be under absorption costing than under variable costing?

Contribution margin is defined as sales revenue less variable costs.

Cardinal uses the high-low method of estimating costs.Cardinal had total costs of $25,000 at its lowest level of activity,when 5,000 units were sold.When,at its highest level of activity,sales equaled 10,000 units,total costs were $39,000.Cardinal would estimate variable cost per unit as:

Ajax uses the high-low method of estimating costs.Ajax had total costs of $50,000 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 $78,000.Ajax would estimate fixed costs as:

Which of the following statements is true?

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

Mohave,Inc.produces approximately 4,000 units per month,and it places a quality assurance logo on each of its units.To use this logo,it must pay the quality assurance firm $5,000 per month plus $1 per unit.The cost to Mohave of using the quality assurance logo would be a:

A cost that remains the same,in total,regardless of changes in activity level is a:

Jasper Enterprises had the following cost and production information for April: How much greater will Jasper Enterprises' income be under absorption costing than under variable costing?

A cost driver:

The unit contribution margin tells how much each additional unit sold will contribute to covering variable costs.

Cypress,which uses the high-low method,had an average cost per unit of $5 at its lowest level of activity when sales equaled 10,000 units and an average cost per unit of $3.25 at its highest level of activity when sales equaled 24,000 units.Cypress would estimate fixed costs as:

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