Question 1

The cost estimating approach that involves "eye-balling" the closest fitting line to the data 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 2

Lark,which uses the high-low method,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 12,000 units,total costs were $39,000.Lark would estimate fixed costs as:

Accepted Answer

A) $14,000 
B) $15,000 
C) $32,000 
D) $60,000 
A) $14,000 
B) $15,000 
C) $32,000 
D) $60,000

Question 3

Step costs are fixed over some range of activity and then increase like a variable cost.

Accepted Answer

A) True 
 B)False

Question 4

Orchid Corp.has a selling price of $15,variable costs of $10 per unit,and fixed costs of $25,000.If Orchid sells 13,000 units,contribution margin will equal:

Accepted Answer

A) $195,000 
B) $145,000 
C) $40,000 
D) $65,000 
A) $195,000 
B) $145,000 
C) $40,000 
D) $65,000

Question 5

Jasmine Corp.has a selling price of $15,variable costs of $10 per unit,and fixed costs of $25,000.Contribution margin is $85,000.How many units did Jasmine sell?

Accepted Answer

A) 7,000 
B) 10,000 
C) 13,000 
D) 17,000 
A) 7,000 
B) 10,000 
C) 13,000 
D) 17,000

Question 6

Profit will be the same under variable costing as under full absorption costing whenever:

Accepted Answer

A) the number of units produced is greater than the number of units sold. 
B) the number of units produced is the same as the number of units sold. 
C) the number of units produced is less than the number of units sold. 
D) variable costing is chosen for external reporting purposes. 
A) the number of units produced is greater than the number of units sold. 
B) the number of units produced is the same as the number of units sold. 
C) the number of units produced is less than the number of units sold. 
D) variable costing is chosen for external reporting purposes.

Question 7

Citrus,Inc.used the high-low method to estimate that its fixed costs are $210,000.At its low level of activity,100,000 units,average cost was $2.60 per unit.What would Citrus predict its average cost per unit to be when production is 200,000 units?

Accepted Answer

A) $1.05 
B) $1.55 
C) $2.60 
D) $5.20 
A) $1.05 
B) $1.55 
C) $2.60 
D) $5.20

Question 8

Boxwood Company sells wooden boxes from a kiosk in a mall.Fixed costs are $2,500 per month and the variable cost is $2.75 per item.Complete the following table for the levels of units sold.

Accepted Answer

@#IMG-DLM& Total fixed cost remains $2,500,but fix

Question 9

A scattergraph is a graph with:

Accepted Answer

A) total cost plotted on the vertical axis and activity on the horizontal axis. 
B) activity plotted on the vertical axis and contribution margin on the horizontal axis. 
C) contribution margin plotted on the vertical axis and sales revenues on the horizontal axis. 
D) the vertical axis measured in units and the horizontal axis measured in dollars. 
A) total cost plotted on the vertical axis and activity on the horizontal axis. 
B) activity plotted on the vertical axis and contribution margin on the horizontal axis. 
C) contribution margin plotted on the vertical axis and sales revenues on the horizontal axis. 
D) the vertical axis measured in units and the horizontal axis measured in dollars.

Question 10

Sparrow,Inc.used the high-low method to estimate that its fixed costs are $105,000.At its low level of activity,50,000 units,average cost was $2.60 per unit.What would Sparrow predict as its variable cost per unit?

Accepted Answer

A) $0.50 
B) $1.55 
C) $2.10 
D) $2.60 
A) $0.50 
B) $1.55 
C) $2.10 
D) $2.60

Question 11

Regression analysis is a cost-estimating approach that uses ________ to find the cost line.

Accepted Answer

A) only two data points 
B) all available data points 
C) only four data points 
D) personal intuition 
A) only two data points 
B) all available data points 
C) only four data points 
D) personal intuition

Question 12

The unit contribution margin:

Accepted Answer

A) equals total sales revenue minus total variable costs. 
B) equals total contribution margin times total units. 
C) tells us how much each additional unit sold above the break-even point will contribute to profit. 
D) equals overall profit per unit. 
A) equals total sales revenue minus total variable costs. 
B) equals total contribution margin times total units. 
C) tells us how much each additional unit sold above the break-even point will contribute to profit. 
D) equals overall profit per unit.

Question 13

Sugarloaf Enterprises has presented the following information for the past three 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 3,000 units produced?

Accepted Answer

a.High month: August;low month: June.Fix

Question 14

Flint Enterprises had the following cost and production information for May:   Inventory increased by 2,000 units during May.What is Flint Enterprise's income under absorption costing?

Accepted Answer

A) $4,620,000 
B) $4,652,000 
C) $5,070,000 
D) $5,132,000 
A) $4,620,000 
B) $4,652,000 
C) $5,070,000 
D) $5,132,000

Question 15

Chilton,Inc.sold 11,000 units last year for $20 each.Variable costs per unit were $4 for direct materials,$1.50 for direct labor,and $2.50 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 2,000 units,by how much will profits increase?

Accepted Answer

a.$132,000 = (11,000 × $20)- [11,000 × (

Question 16

A step cost:

Accepted Answer

A) is a fixed cost over the relevant range and a variable cost everywhere else. 
B) contains both fixed and variable components. 
C) increases in direct proportion to changes in activity. 
D) is fixed over some range of activity. 
A) is a fixed cost over the relevant range and a variable cost everywhere else. 
B) contains both fixed and variable components. 
C) increases in direct proportion to changes in activity. 
D) is fixed over some range of activity.

Question 17

Contribution margin plus variable cost per unit equals total sales revenue.

Accepted Answer

A) True 
 B)False

Question 18

The contribution margin ratio is:

Accepted Answer

A) the difference between sales revenue and variable costs. 
B) the difference between variable costs and fixed costs. 
C) variable costs divided by fixed costs. 
D) contribution margin per unit divided by sales price per unit. 
A) the difference between sales revenue and variable costs. 
B) the difference between variable costs and fixed costs. 
C) variable costs divided by fixed costs. 
D) contribution margin per unit divided by sales price per unit.

Question 19

Bronze 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 20

A fixed cost will stay constant on a per unit basis as the volume increases.

Accepted Answer

A) True 
 B)False

The cost estimating approach that involves "eye-balling" the closest fitting line to the data is the:

Lark,which uses the high-low method,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 12,000 units,total costs were $39,000.Lark would estimate fixed costs as:

Step costs are fixed over some range of activity and then increase like a variable cost.

Orchid Corp.has a selling price of $15,variable costs of $10 per unit,and fixed costs of $25,000.If Orchid sells 13,000 units,contribution margin will equal:

Jasmine Corp.has a selling price of $15,variable costs of $10 per unit,and fixed costs of $25,000.Contribution margin is $85,000.How many units did Jasmine sell?

Profit will be the same under variable costing as under full absorption costing whenever:

Citrus,Inc.used the high-low method to estimate that its fixed costs are $210,000.At its low level of activity,100,000 units,average cost was $2.60 per unit.What would Citrus predict its average cost per unit to be when production is 200,000 units?

Boxwood Company sells wooden boxes from a kiosk in a mall.Fixed costs are $2,500 per month and the variable cost is $2.75 per item.Complete the following table for the levels of units sold.

A scattergraph is a graph with:

Sparrow,Inc.used the high-low method to estimate that its fixed costs are $105,000.At its low level of activity,50,000 units,average cost was $2.60 per unit.What would Sparrow predict as its variable cost per unit?

Regression analysis is a cost-estimating approach that uses ________ to find the cost line.

The unit contribution margin:

Sugarloaf Enterprises has presented the following information for the past three 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 3,000 units produced?

Flint Enterprises had the following cost and production information for May: Inventory increased by 2,000 units during May.What is Flint Enterprise's income under absorption costing?

A step cost:

Contribution margin plus variable cost per unit equals total sales revenue.

The contribution margin ratio is:

Bronze 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?

A fixed cost will stay constant on a per unit basis as the volume increases.

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

The cost estimating approach that involves "eye-balling" the closest fitting line to the data is the:

Lark,which uses the high-low method,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 12,000 units,total costs were $39,000.Lark would estimate fixed costs as:

Step costs are fixed over some range of activity and then increase like a variable cost.

Orchid Corp.has a selling price of $15,variable costs of $10 per unit,and fixed costs of $25,000.If Orchid sells 13,000 units,contribution margin will equal:

Jasmine Corp.has a selling price of $15,variable costs of $10 per unit,and fixed costs of $25,000.Contribution margin is $85,000.How many units did Jasmine sell?

Profit will be the same under variable costing as under full absorption costing whenever:

Citrus,Inc.used the high-low method to estimate that its fixed costs are $210,000.At its low level of activity,100,000 units,average cost was $2.60 per unit.What would Citrus predict its average cost per unit to be when production is 200,000 units?

Boxwood Company sells wooden boxes from a kiosk in a mall.Fixed costs are $2,500 per month and the variable cost is $2.75 per item.Complete the following table for the levels of units sold.

A scattergraph is a graph with:

Sparrow,Inc.used the high-low method to estimate that its fixed costs are $105,000.At its low level of activity,50,000 units,average cost was $2.60 per unit.What would Sparrow predict as its variable cost per unit?

Regression analysis is a cost-estimating approach that uses ________ to find the cost line.

The unit contribution margin:

Sugarloaf Enterprises has presented the following information for the past three 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 3,000 units produced?

Flint Enterprises had the following cost and production information for May: Inventory increased by 2,000 units during May.What is Flint Enterprise's income under absorption costing?

A step cost:

Contribution margin plus variable cost per unit equals total sales revenue.

The contribution margin ratio is:

Bronze 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?

A fixed cost will stay constant on a per unit basis as the volume increases.

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