Question 1

Which of the following is not correct about "R Square" in regression analysis?

Accepted Answer

A) R Square is a measure of "goodness of fit" of the model. 
B) An R Square value of 1.0 indicates a perfect fit of the model. 
C) R Square explains how much of the variability in x is explained by y. 
D) R Square explains how much of the variability in y is explained by x. 
A) R Square is a measure of "goodness of fit" of the model. 
B) An R Square value of 1.0 indicates a perfect fit of the model. 
C) R Square explains how much of the variability in x is explained by y. 
D) R Square explains how much of the variability in y is explained by x.

Question 2

Royal 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 5,000 units produced?

Accepted Answer

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

Question 3

Using the results of the least-squares regression analysis,which value estimates total fixed costs?

Accepted Answer

A) R Square 
B) Intercept 
C) X Value 
D) Multiple R 
A) R Square 
B) Intercept 
C) X Value 
D) Multiple R

Question 4

Rodeo,Inc.has a contribution margin ratio of 45%.This month,profit was $40,000 and fixed costs were $50,000.How much was Laredo's sales revenue?

Accepted Answer

A) $40,500 
B) $90,000 
C) $111,111 
D) $200,000 
A) $40,500 
B) $90,000 
C) $111,111 
D) $200,000

Question 5

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

Accepted Answer

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

Question 6

Elm uses the high-low method of estimating costs.Elm had total costs of $250,000 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 $390,000.Elm would estimate variable cost per unit as:

Accepted Answer

A) $70.00 
B) $45.50 
C) $28.00 
D) $52.71 
A) $70.00 
B) $45.50 
C) $28.00 
D) $52.71

Question 7

A mixed cost:

Accepted Answer

A) is fixed over a wider range of activity than a step cost. 
B) is a fixed cost over the relevant range and a variable cost everywhere else. 
C) contains both fixed and variable components. 
D) always increases on a per unit basis. 
A) is fixed over a wider range of activity than a step cost. 
B) is a fixed cost over the relevant range and a variable cost everywhere else. 
C) contains both fixed and variable components. 
D) always increases on a per unit basis.

Question 8

Sugar Corp.has a selling price of $20,variable costs of $12 per unit,and fixed costs of $25,000.Maple expects profit of $300,000 at its anticipated level of production.If Sugar sells 5,000 units more than expected,how much higher will its profits be?

Accepted Answer

A) $40,000 
B) $100,000 
C) $60,000 
D) $300,000 
A) $40,000 
B) $100,000 
C) $60,000 
D) $300,000

Question 9

Booble,Inc.has a contribution margin ratio of 45%.This month,sales revenue was $200,000,and profit was $40,000.How much are Booble's fixed costs?

Accepted Answer

A) $18,000 
B) $45,000 
C) $50,000 
D) $90,000 
A) $18,000 
B) $45,000 
C) $50,000 
D) $90,000

Question 10

Winston uses the high-low method.It had an average cost per unit of $10 at its lowest level of activity when sales equaled 10,000 units and an average cost per unit of $6.50 at its highest level of activity when sales equaled 20,000 units.What would Winston estimate its total cost to be if sales equaled 8,000 units?

Accepted Answer

A) $24,000 
B) $52,000 
C) $70,000 
D) $94,000 
A) $24,000 
B) $52,000 
C) $70,000 
D) $94,000

Question 11

A grocery store wants to encourage its customers to bring their own shopping bags,thus saving the store money on purchasing plastic or paper bags and saving the environment in the process.For an Earth Day promotion,the store gives away free canvas bags and engages in a substantial advertising campaign to highlight the initiative.Then,the store rewards customers who bring their own bags with a 5% discount on all future shopping trips.Which of the following is not a way this initiative might be reflected in the grocery store's contribution margin income statement?

Accepted Answer

A) It wouldn't be.Contribution margin income statements do not currently support sustainability accounting. 
B) The store's fixed costs would increase to account for the promotional materials and the fixed costs of providing free bags to customers. 
C) The store's sales revenue would decrease to reflect the discounts given to customers who bring their own bags. 
D) The store's variable costs would decrease to reflect the reduced cost of providing paper or plastic bags to all customers. 
A) It wouldn't be.Contribution margin income statements do not currently support sustainability accounting. 
B) The store's fixed costs would increase to account for the promotional materials and the fixed costs of providing free bags to customers. 
C) The store's sales revenue would decrease to reflect the discounts given to customers who bring their own bags. 
D) The store's variable costs would decrease to reflect the reduced cost of providing paper or plastic bags to all customers.

Question 12

Newport,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output:
     a.What is Newport's total fixed cost?
b.What is Newport's variable cost per unit?
c.What total cost would Newport predict for a month in which they sold 5,000 units?
d.What proportion of variation in Newport's cost is explained by variation in production?

Accepted Answer

a.$38,000
b.$5.75
c.$66,750 = ($5.75 × 5

Question 13

What is the difference between full absorption costing and variable costing?

Accepted Answer

A) In full absorption costing,all of the non-manufacturing costs are expensed.In variable costing,all of the non-manufacturing expenses are included in the cost of the product. 
B) In full absorption costing,fixed manufacturing overhead is expensed.In variable costing,fixed manufacturing overhead is included in the cost of the product. 
C) In full absorption costing,fixed manufacturing overhead is included in the cost of the product.In variable costing,fixed manufacturing overhead is expensed. 
D) Variable costing must be used for external financial reports while full absorption costing can only be used for internal reporting. 
A) In full absorption costing,all of the non-manufacturing costs are expensed.In variable costing,all of the non-manufacturing expenses are included in the cost of the product. 
B) In full absorption costing,fixed manufacturing overhead is expensed.In variable costing,fixed manufacturing overhead is included in the cost of the product. 
C) In full absorption costing,fixed manufacturing overhead is included in the cost of the product.In variable costing,fixed manufacturing overhead is expensed. 
D) Variable costing must be used for external financial reports while full absorption costing can only be used for internal reporting.

Question 14

Sage,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output:
     a.What is Sage's total fixed cost?
b.What is Sage's variable cost per unit?
c.What total cost would Sage predict for a month in which they sold 10,000 units?

Accepted Answer

a.$28,764
b.$10.38
c.$132,564 = ($10.38

Question 15

Variable costing uses a contribution margin income statement.

Accepted Answer

A) True 
 B)False

Question 16

A cost that changes,in total,in direct proportion to changes in activity levels is a(n):

Accepted Answer

A) absorption cost. 
B) contribution margin. 
C) fixed cost. 
D) variable cost. 
A) absorption cost. 
B) contribution margin. 
C) fixed cost. 
D) variable cost.

Question 17

A statistical method for finding the best-fitting cost equation to a set of data is the:

Accepted Answer

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

Question 18

Island Enterprises 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 3,000 units produced?

Accepted Answer

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

Question 19

McNeil uses the high-low method of estimating costs.McNeil 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.What would McNeil estimate its total cost to be if sales equaled 8,000 units?

Accepted Answer

A) $32,000 
B) $52,000 
C) $62,000 
D) $80,000 
A) $32,000 
B) $52,000 
C) $62,000 
D) $80,000

Question 20

Flint Enterprises had the following cost and production information for May:   Inventory increased by 2,000 units during May.How much greater will Flint Enterprises' income be under absorption costing than under variable costing?

Accepted Answer

A) $16,000 
B) $32,000 
C) $368,000 
D) $400,000 
A) $16,000 
B) $32,000 
C) $368,000 
D) $400,000

Which of the following is not correct about "R Square" in regression analysis?

Royal 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 5,000 units produced?

Using the results of the least-squares regression analysis,which value estimates total fixed costs?

Rodeo,Inc.has a contribution margin ratio of 45%.This month,profit was $40,000 and fixed costs were $50,000.How much was Laredo's sales revenue?

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

Elm uses the high-low method of estimating costs.Elm had total costs of $250,000 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 $390,000.Elm would estimate variable cost per unit as:

A mixed cost:

Sugar Corp.has a selling price of $20,variable costs of $12 per unit,and fixed costs of $25,000.Maple expects profit of $300,000 at its anticipated level of production.If Sugar sells 5,000 units more than expected,how much higher will its profits be?

Booble,Inc.has a contribution margin ratio of 45%.This month,sales revenue was $200,000,and profit was $40,000.How much are Booble's fixed costs?

What is the difference between full absorption costing and variable costing?

Sage,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: a.What is Sage's total fixed cost? b.What is Sage's variable cost per unit? c.What total cost would Sage predict for a month in which they sold 10,000 units?

Variable costing uses a contribution margin income statement.

A cost that changes,in total,in direct proportion to changes in activity levels is a(n):

A statistical method for finding the best-fitting cost equation to a set of data is the:

Island Enterprises 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 3,000 units produced?

Flint Enterprises had the following cost and production information for May: Inventory increased by 2,000 units during May.How much greater will Flint Enterprises' income be under absorption costing than 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

Which of the following is not correct about "R Square" in regression analysis?

Royal 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 5,000 units produced?

Using the results of the least-squares regression analysis,which value estimates total fixed costs?

Rodeo,Inc.has a contribution margin ratio of 45%.This month,profit was $40,000 and fixed costs were $50,000.How much was Laredo's sales revenue?

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

Elm uses the high-low method of estimating costs.Elm had total costs of $250,000 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 $390,000.Elm would estimate variable cost per unit as:

A mixed cost:

Sugar Corp.has a selling price of $20,variable costs of $12 per unit,and fixed costs of $25,000.Maple expects profit of $300,000 at its anticipated level of production.If Sugar sells 5,000 units more than expected,how much higher will its profits be?

Booble,Inc.has a contribution margin ratio of 45%.This month,sales revenue was $200,000,and profit was $40,000.How much are Booble's fixed costs?

What is the difference between full absorption costing and variable costing?

Sage,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: a.What is Sage's total fixed cost? b.What is Sage's variable cost per unit? c.What total cost would Sage predict for a month in which they sold 10,000 units?

Variable costing uses a contribution margin income statement.

A cost that changes,in total,in direct proportion to changes in activity levels is a(n):

A statistical method for finding the best-fitting cost equation to a set of data is the:

Island Enterprises 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 3,000 units produced?

Flint Enterprises had the following cost and production information for May: Inventory increased by 2,000 units during May.How much greater will Flint Enterprises' income be under absorption costing than 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