Question 1

Firms may choose to use absorption costing or variable costing for external financial reporting purposes.

Accepted Answer

A) True 
 B)False

Question 2

Stella,Inc.must perform maintenance on its production machinery after every 10,000 units produced.Production varies between 12,000 and 30,000 units a year.The cost of this maintenance would be classified as a

Accepted Answer

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

Question 3

Which of the following statements is correct about the difference between contribution margin and gross margin?

Accepted Answer

A) Contribution margin and gross margin are equivalent. 
B) Contribution margin is the difference between sales revenue and cost of goods sold. 
C) Gross margin is the difference between sales revenue and variable costs. 
D) Gross margin is used for external reporting,while contribution margin is used for internal reporting. 
A) Contribution margin and gross margin are equivalent. 
B) Contribution margin is the difference between sales revenue and cost of goods sold. 
C) Gross margin is the difference between sales revenue and variable costs. 
D) Gross margin is used for external reporting,while contribution margin is used for internal reporting.

Question 4

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

Question 5

The per-unit amount of three different production costs for Thunderbird,Inc. ,are as follows:   What type of cost is each?

Accepted Answer

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

Question 6

Laurel Company sold 500 units for $450 each.Variable costs were $280 per unit,and total fixed expenses were $53,000.Prepare a contribution margin income statement.

Accepted Answer

@#IMG-DLM& The contribution margin incom

Question 7

The high-low method 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 8

If a scattergraph contains points that do not fall in a perfect line:

Accepted Answer

A) the relationship between the variables is not good enough to warrant fitting a line to the data. 
B) this is an indication that there is no relationship whatsoever between the variables. 
C) the visual fit method and high-low methods should not be used,but least-squares regression can be used. 
D) a straight line can still be used to approximate the relationship if a general linear trend can be discerned. 
A) the relationship between the variables is not good enough to warrant fitting a line to the data. 
B) this is an indication that there is no relationship whatsoever between the variables. 
C) the visual fit method and high-low methods should not be used,but least-squares regression can be used. 
D) a straight line can still be used to approximate the relationship if a general linear trend can be discerned.

Question 9

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

Accepted Answer

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

Question 10

A graph that provides a visual representation of the relationship between total cost and activity level is called a:

Accepted Answer

A) relevant range. 
B) scattergraph. 
C) contribution margin graph. 
D) dependent variable. 
A) relevant range. 
B) scattergraph. 
C) contribution margin graph. 
D) dependent variable.

Question 11

A scattergraph is useful in recognizing unusual patterns in the cost data.

Accepted Answer

A) True 
 B)False

Question 12

The relevant range is:

Accepted Answer

A) the range in which costs remain variable. 
B) the range of activity over which we expect our assumptions about cost behavior to hold true. 
C) the range of activity based on the volume-based cost driver. 
D) the range in which costs remain fixed. 
A) the range in which costs remain variable. 
B) the range of activity over which we expect our assumptions about cost behavior to hold true. 
C) the range of activity based on the volume-based cost driver. 
D) the range in which costs remain fixed.

Question 13

The y-intercept 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 14

When Carter,Inc.sells 48,000 units,its total variable cost is $115,200.What is its total variable cost when it sells 54,000 units?

Accepted Answer

A) $100,800 
B) $115,200 
C) $129,600 
D) $134,800 
A) $100,800 
B) $115,200 
C) $129,600 
D) $134,800

Question 15

Holly Co.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.Holly would estimate fixed costs as:

Accepted Answer

A) $70,000 
B) $16.50 
C) $8.25 
D) $100,000 
A) $70,000 
B) $16.50 
C) $8.25 
D) $100,000

Question 16

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output:     What is Star's variable cost per unit?

Accepted Answer

A) $0.92 
B) $2.84 
C) $11.57 
D) $12.55 
A) $0.92 
B) $2.84 
C) $11.57 
D) $12.55

Question 17

Total contribution margin is equal to:

Accepted Answer

A) total sales less fixed costs. 
B) fixed costs plus net operating income. 
C) variable costs plus net operating income. 
D) total sales less net operating income. 
A) total sales less fixed costs. 
B) fixed costs plus net operating income. 
C) variable costs plus net operating income. 
D) total sales less net operating income.

Question 18

Knox Corp.has a selling price of $20,variable costs of $14 per unit,and fixed costs of $25,000.If Knox sells 12,000 units,the contribution margin ratio will equal:

Accepted Answer

A) $60,000 
B) 30% 
C) 70% 
D) 10.4% 
A) $60,000 
B) 30% 
C) 70% 
D) 10.4%

Question 19

When Greenway,Inc.sells 48,000 units,its total fixed cost is $115,200.What is its total fixed cost when it sells 54,000 units?

Accepted Answer

A) $100,800 
B) $115,200 
C) $129,600 
D) $134,800 
A) $100,800 
B) $115,200 
C) $129,600 
D) $134,800

Question 20

Which of the following statements is correct about the high-low method?

Accepted Answer

A) The high-low method is complicated to apply. 
B) The high-low method is effective for periods in which activity is particularly high or low. 
C) Generally,managers can obtain more accurate information from other methods of cost analysis that use a larger number of data points. 
D) Generally,managers use the high-low method because it has no drawbacks or limitations. 
A) The high-low method is complicated to apply. 
B) The high-low method is effective for periods in which activity is particularly high or low. 
C) Generally,managers can obtain more accurate information from other methods of cost analysis that use a larger number of data points. 
D) Generally,managers use the high-low method because it has no drawbacks or limitations.

Firms may choose to use absorption costing or variable costing for external financial reporting purposes.

Stella,Inc.must perform maintenance on its production machinery after every 10,000 units produced.Production varies between 12,000 and 30,000 units a year.The cost of this maintenance would be classified as a

Which of the following statements is correct about the difference between contribution margin and gross margin?

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

The per-unit amount of three different production costs for Thunderbird,Inc. ,are as follows: What type of cost is each?

Laurel Company sold 500 units for $450 each.Variable costs were $280 per unit,and total fixed expenses were $53,000.Prepare a contribution margin income statement.

The high-low method is a cost estimating approach that uses ________ to find the cost line.

If a scattergraph contains points that do not fall in a perfect line:

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

A graph that provides a visual representation of the relationship between total cost and activity level is called a:

A scattergraph is useful in recognizing unusual patterns in the cost data.

The relevant range is:

The y-intercept of the cost line on a scattergraph represents:

When Carter,Inc.sells 48,000 units,its total variable cost is $115,200.What is its total variable cost when it sells 54,000 units?

Holly Co.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.Holly would estimate fixed costs as:

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: What is Star's variable cost per unit?

Total contribution margin is equal to:

Knox Corp.has a selling price of $20,variable costs of $14 per unit,and fixed costs of $25,000.If Knox sells 12,000 units,the contribution margin ratio will equal:

When Greenway,Inc.sells 48,000 units,its total fixed cost is $115,200.What is its total fixed cost when it sells 54,000 units?

Which of the following statements is correct about the high-low method?

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

Firms may choose to use absorption costing or variable costing for external financial reporting purposes.

Stella,Inc.must perform maintenance on its production machinery after every 10,000 units produced.Production varies between 12,000 and 30,000 units a year.The cost of this maintenance would be classified as a

Which of the following statements is correct about the difference between contribution margin and gross margin?

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

The per-unit amount of three different production costs for Thunderbird,Inc. ,are as follows: What type of cost is each?

Laurel Company sold 500 units for $450 each.Variable costs were $280 per unit,and total fixed expenses were $53,000.Prepare a contribution margin income statement.

The high-low method is a cost estimating approach that uses ________ to find the cost line.

If a scattergraph contains points that do not fall in a perfect line:

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

A graph that provides a visual representation of the relationship between total cost and activity level is called a:

A scattergraph is useful in recognizing unusual patterns in the cost data.

The relevant range is:

The y-intercept of the cost line on a scattergraph represents:

When Carter,Inc.sells 48,000 units,its total variable cost is $115,200.What is its total variable cost when it sells 54,000 units?

Holly Co.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.Holly would estimate fixed costs as:

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: What is Star's variable cost per unit?

Total contribution margin is equal to:

Knox Corp.has a selling price of $20,variable costs of $14 per unit,and fixed costs of $25,000.If Knox sells 12,000 units,the contribution margin ratio will equal:

When Greenway,Inc.sells 48,000 units,its total fixed cost is $115,200.What is its total fixed cost when it sells 54,000 units?

Which of the following statements is correct about the high-low method?

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