Question 1

Cost behavior is:

Accepted Answer

A) the way in which costs change when the activity level changes. 
B) the difference between sales revenue and fixed costs. 
C) the same as absorption costing. 
D) the amount of sales necessary to achieve a specific profit. 
A) the way in which costs change when the activity level changes. 
B) the difference between sales revenue and fixed costs. 
C) the same as absorption costing. 
D) the amount of sales necessary to achieve a specific profit.

Question 2

Maple Corp.has a selling price of $20,variable costs of $15 per unit,and fixed costs of $25,000.Maple expects profit of $300,000 at its anticipated level of production.What is Maple'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

Question 3

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 not explained by production?

Accepted Answer

A) It is impossible to determine. 
B) 4.83% 
C) 7.87% 
D) 2.45% 
A) It is impossible to determine. 
B) 4.83% 
C) 7.87% 
D) 2.45%

Question 4

Which of the following is true about the visual fit method?

Accepted Answer

A) The visual fit method is the most objective way to fit a line to cost data using a scattergraph. 
B) Although a scattergraph can be created by hand,the visual fit method of determining total fixed costs and variable costs per unit must be completed by computer. 
C) Assuming the relationship between total cost and activity is (mostly)linear the visual fit method is an approximation of total fixed costs and variable costs per unit. 
D) If the scattergraph shows there is not a linear relationship between total costs and activity,the visual fit method can give a close approximation of total fixed costs and variable costs per unit. 
A) The visual fit method is the most objective way to fit a line to cost data using a scattergraph. 
B) Although a scattergraph can be created by hand,the visual fit method of determining total fixed costs and variable costs per unit must be completed by computer. 
C) Assuming the relationship between total cost and activity is (mostly)linear the visual fit method is an approximation of total fixed costs and variable costs per unit. 
D) If the scattergraph shows there is not a linear relationship between total costs and activity,the visual fit method can give a close approximation of total fixed costs and variable costs per unit.

Question 5

Harbor Images has collected the following cost data for various levels of activity:
   a.Using the high-low method,determine the variable cost per image created and the total fixed cost.
b.Estimate the total costs when 5,500 images are created.

Accepted Answer

a.High month: October;low month: Novembe

Question 6

If the number of units sold is the same every month,the profit from these units will be the same every month if:

Accepted Answer

A) absorption costing is used. 
B) variable costing is used. 
C) production is greater than sales. 
D) sales is greater than production. 
A) absorption costing is used. 
B) variable costing is used. 
C) production is greater than sales. 
D) sales is greater than production.

Question 7

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

Accepted Answer

a.
 @#IMG-DLM& (Cost of goods sold per unit = $25

Question 8

All else being equal,if sales revenue doubles,fixed costs will:

Accepted Answer

A) decrease in total. 
B) increase in total. 
C) decrease on a per unit basis. 
D) increase on a per unit basis. 
A) decrease in total. 
B) increase in total. 
C) decrease on a per unit basis. 
D) increase on a per unit basis.

Question 9

Acme Company sold 900 units for $110 each.Variable costs were $75 per unit and total fixed expenses were $22,000.Prepare a contribution margin income statement.

Accepted Answer

@#IMG-DLM& The contribution margin incom

Question 10

R-square tells managers how much of the variability in activity is caused by variability in cost.

Accepted Answer

A) True 
 B)False

Question 11

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output:     What is Star's formula for estimating costs?

Accepted Answer

A) Total cost = $175,003 + ($11.57 × Production) 
B) Total cost = $61,603 + ($0.92 × Production) 
C) Total cost = $175,003 + ($61,603 × Production) 
D) Total cost = $11.57 + ($0.9213 × Production) 
A) Total cost = $175,003 + ($11.57 × Production) 
B) Total cost = $61,603 + ($0.92 × Production) 
C) Total cost = $175,003 + ($61,603 × Production) 
D) Total cost = $11.57 + ($0.9213 × Production)

Question 12

The contribution margin ratio is calculated as total contribution margin divided by total sales revenue.

Accepted Answer

A) True 
 B)False

Question 13

If a firm uses absorption costing,which of the following actions taken by management would increase gross profit even if sales do not increase?

Accepted Answer

A) Decreasing production and using items from inventory for sales. 
B) Increasing production and building up inventory. 
C) Increasing fixed costs by investing in new production technology. 
D) Increasing variable costs by purchasing higher-quality materials. 
A) Decreasing production and using items from inventory for sales. 
B) Increasing production and building up inventory. 
C) Increasing fixed costs by investing in new production technology. 
D) Increasing variable costs by purchasing higher-quality materials.

Question 14

Gardenia Corp.has a selling price of $15,fixed costs of $25,000,and contribution margin of $65,000.If Gardenia sells 13,000 units,how much are variable costs per unit?

Accepted Answer

A) $2.00 
B) $5.00 
C) $7.00 
D) $10.00 
A) $2.00 
B) $5.00 
C) $7.00 
D) $10.00

Question 15

The slope of the cost line on a scattergraph represents:

Accepted Answer

A) fixed cost per unit. 
B) total fixed cost. 
C) variable cost per unit. 
D) sales price per unit. 
A) fixed cost per unit. 
B) total fixed cost. 
C) variable cost per unit. 
D) sales price per unit.

Question 16

Chill Out Novelties sells ice cream bars from a kiosk near campus.Fixed costs are $200 per week and the variable cost is $0.50 per ice cream bar.Complete the following table for the levels of ice cream bars sold per week.Round your answers to two decimal places.

Accepted Answer

@#IMG-DLM& Total fixed cost remains $200,but fixed

Question 17

Which of the following is the correct equation for total mixed costs under the linearity assumption?

Accepted Answer

A) Total Fixed Costs + (Variable Cost per Unit × Units of Activity) 
B) Total Variable Costs + (Fixed Cost per Unit × Units of Activity) 
C) (Total Fixed Costs × Units of Activity)+ Total Variable Costs 
D) (Total Fixed Costs × Units of Activity)+ (Total Variable Costs × Units of Activity) 
A) Total Fixed Costs + (Variable Cost per Unit × Units of Activity) 
B) Total Variable Costs + (Fixed Cost per Unit × Units of Activity) 
C) (Total Fixed Costs × Units of Activity)+ Total Variable Costs 
D) (Total Fixed Costs × Units of Activity)+ (Total Variable Costs × Units of Activity)

Question 18

The cost estimating approach that uses the two most extreme activity observations is the:

Accepted Answer

A) scattergraph method. 
B) high-low method. 
C) visual fit method. 
D) regression analysis. 
A) scattergraph method. 
B) high-low method. 
C) visual fit method. 
D) regression analysis.

Question 19

The contribution margin ratio is:

Accepted Answer

A) the contribution margin stated as a percentage of sales. 
B) the contribution margin stated as a percentage of profit. 
C) the contribution margin stated as a percentage of total costs. 
D) the contribution margin stated as a percentage of fixed costs. 
A) the contribution margin stated as a percentage of sales. 
B) the contribution margin stated as a percentage of profit. 
C) the contribution margin stated as a percentage of total costs. 
D) the contribution margin stated as a percentage of fixed costs.

Question 20

Jasper Enterprises had the following cost and production information for April:   What is Jasper Enterprise's income under variable costing?

Accepted Answer

A) $1,400,000 
B) $1,460,000 
C) $1,745,000 
D) $1,785,000 
A) $1,400,000 
B) $1,460,000 
C) $1,745,000 
D) $1,785,000

Cost behavior is:

Maple Corp.has a selling price of $20,variable costs of $15 per unit,and fixed costs of $25,000.Maple expects profit of $300,000 at its anticipated level of production.What is Maple's unit contribution margin?

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 not explained by production?

Which of the following is true about the visual fit method?

Harbor Images has collected the following cost data for various levels of activity: a.Using the high-low method,determine the variable cost per image created and the total fixed cost. b.Estimate the total costs when 5,500 images are created.

If the number of units sold is the same every month,the profit from these units will be the same every month if:

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

All else being equal,if sales revenue doubles,fixed costs will:

Acme Company sold 900 units for $110 each.Variable costs were $75 per unit and total fixed expenses were $22,000.Prepare a contribution margin income statement.

R-square tells managers how much of the variability in activity is caused by variability in cost.

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: What is Star's formula for estimating costs?

The contribution margin ratio is calculated as total contribution margin divided by total sales revenue.

If a firm uses absorption costing,which of the following actions taken by management would increase gross profit even if sales do not increase?

Gardenia Corp.has a selling price of $15,fixed costs of $25,000,and contribution margin of $65,000.If Gardenia sells 13,000 units,how much are variable costs per unit?

The slope of the cost line on a scattergraph represents:

Chill Out Novelties sells ice cream bars from a kiosk near campus.Fixed costs are $200 per week and the variable cost is $0.50 per ice cream bar.Complete the following table for the levels of ice cream bars sold per week.Round your answers to two decimal places.

Which of the following is the correct equation for total mixed costs under the linearity assumption?

The cost estimating approach that uses the two most extreme activity observations is the:

The contribution margin ratio is:

Jasper Enterprises had the following cost and production information for April: What is Jasper Enterprise's income under variable costing?

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

Cost behavior is:

Maple Corp.has a selling price of $20,variable costs of $15 per unit,and fixed costs of $25,000.Maple expects profit of $300,000 at its anticipated level of production.What is Maple's unit contribution margin?

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 not explained by production?

Which of the following is true about the visual fit method?

Harbor Images has collected the following cost data for various levels of activity: a.Using the high-low method,determine the variable cost per image created and the total fixed cost. b.Estimate the total costs when 5,500 images are created.

If the number of units sold is the same every month,the profit from these units will be the same every month if:

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

All else being equal,if sales revenue doubles,fixed costs will:

Acme Company sold 900 units for $110 each.Variable costs were $75 per unit and total fixed expenses were $22,000.Prepare a contribution margin income statement.

R-square tells managers how much of the variability in activity is caused by variability in cost.

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: What is Star's formula for estimating costs?

The contribution margin ratio is calculated as total contribution margin divided by total sales revenue.

If a firm uses absorption costing,which of the following actions taken by management would increase gross profit even if sales do not increase?

Gardenia Corp.has a selling price of $15,fixed costs of $25,000,and contribution margin of $65,000.If Gardenia sells 13,000 units,how much are variable costs per unit?

The slope of the cost line on a scattergraph represents:

Chill Out Novelties sells ice cream bars from a kiosk near campus.Fixed costs are $200 per week and the variable cost is $0.50 per ice cream bar.Complete the following table for the levels of ice cream bars sold per week.Round your answers to two decimal places.

Which of the following is the correct equation for total mixed costs under the linearity assumption?

The cost estimating approach that uses the two most extreme activity observations is the:

The contribution margin ratio is:

Jasper Enterprises had the following cost and production information for April: What is Jasper Enterprise's income under variable costing?

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