Exam 1: Managerial Accounting and Cost Concepts

Although the traditional format income statement is useful for external reporting purposes, it has serious limitations when used for internal purposes because it does not distinguish between fixed and variable costs.

At an activity level of 6,800 units, Henkes Corporation's total variable cost is $125,188 and its total fixed cost is $164,152. Required: For the activity level of 7,100 units, compute: (a)the total variable cost; (b)the total fixed cost; (c)the total cost; (d)the average variable cost per unit; (e)the average fixed cost per unit; and (f)the average total cost per unit.Assume that this activity level is within the relevant range.

In making the decision to invest in the model 240 machine, the opportunity cost was:

Marquess Corporation has provided the following partial listing of costs incurred during May: Required: a.What is the total amount of product cost listed above? Show your work. b.What is the total amount of period cost listed above? Show your work.

If 10,000 units are produced, the average fixed manufacturing cost per unit produced is closest to:

The cost formula for selling and administrative expenses with "X" equal to the number of books sold is:

If 5,000 units are sold, the variable cost per unit sold is closest to:

As activity decreases within the relevant range, fixed costs remain constant on a per unit basis.

The contribution margin for December is:

The incremental manufacturing cost that the company will incur if it increases production from 9,000 to 9,001 units is closest to:

Given the cost formula Y = $23,000 + $8X, total cost at an activity level of 7,000 units would be:

Differential costs can:

If 3,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

The contribution margin for Sam's Bookstore for the first quarter is:

The following costs were incurred in May: Prime costs during the month totaled:

Sparacino Corporation has provided the following information: If 5,000 units are produced, the total amount of manufacturing overhead cost is closest to:

In a traditional format income statement, the gross margin is sales minus cost of goods sold.

Advertising is not a considered a product cost even if it promotes a specific product.

Parlavecchio Corporation's relevant range of activity is 2,000 units to 6,000 units.When it produces and sells 4,000 units, its average costs per unit are as follows: Required: a.For financial reporting purposes, what is the total amount of product costs incurred to make 4,000 units? b.For financial reporting purposes, what is the total amount of period costs incurred to sell 4,000 units? c.If 5,000 units are sold, what is the variable cost per unit sold? d.If 5,000 units are sold, what is the total amount of variable costs related to the units sold? e.If 5,000 units are produced, what is the average fixed manufacturing cost per unit produced? f.If 5,000 units are produced, what is the total amount of fixed manufacturing cost incurred? g.If 5,000 units are produced, what is the total amount of manufacturing overhead cost incurred? What is this total amount expressed on a per unit basis?

A fixed cost is a cost whose cost per unit varies as the activity level rises and falls.