Question 1

Using account analysis,what type of cost is an electric bill that charges a flat monthly fee plus a charge for each kilowatt hour of electricity used?

Accepted Answer

A) Fixed 
B) Mixed 
C) Step 
D) Variable 
A) Fixed 
B) Mixed 
C) Step 
D) Variable

Question 2

To follow is information about the units produced and total manufacturing costs for Pine Enterprises for the past six months.
 
Using the high-low method,what is the variable cost per unit?

Accepted Answer

A) $1.44 
B) $1.04 
C) $0.50 
D) $2.00 
A) $1.44 
B) $1.04 
C) $0.50 
D) $2.00

Question 3

Scranton Printer Company would like to estimate its total manufacturing costs using regression analysis but is unsure whether machine hours or units produced would be a better predictor of total manufacturing costs.
Output from regression analysis using machine hours as the volume (cost driver)follows.Note: the results are excerpts so not all of the regression analysis results are presented.   
Output from a regression analysis using units produced as the volume (cost driver)follows.Again,the results are excerpts so not all of the regression analysis results are presented.   
Required:
a.What is the cost equation if machine hours is used as the volume (cost driver)?
b.Predict total manufacturing costs using machine hours as the volume (cost driver)if Scranton Paper Company uses 18,000 hours.
c.What is the cost equation if units produced is used as the volume (cost driver)?
d.Predict total manufacturing costs using units produced as the volume (cost driver)if Scranton Paper Company produces 65,000 units.
e.Which volume (cost driver)is a better predictor of total manufacturing costs? Why?

Accepted Answer

a.
y = $314,842.08 + $8.96x
b.
 @#IMG-DLM& c.
y =

Question 4

U.S.GAAP requires companies to use absorption costing for external reporting purposes.

Accepted Answer

A) True 
 B)False

Question 5

Jones Ice Cream Stand is operated by Mr.Jones and experiences different sales patterns throughout the year.To plan for the future,Mr.Jones wants to determine its cost behavior patterns.He has the following information available about the ice cream stand's operating costs and the number of soft serve cones served.
 
Using the high-low method,the monthly operating costs-if Mr.Jones sells 1,436 ice cream cones in a month-are

Accepted Answer

A) $750. 
B) $859. 
C) $1,109. 
D) $359. 
A) $750. 
B) $859. 
C) $1,109. 
D) $359.

Question 6

An expense such as advertising could be considered a discretionary fixed cost.

Accepted Answer

A) True 
 B)False

Question 7

A contribution margin income statement allows managers to see which costs will change with changes in volume and which costs will remain fixed.

Accepted Answer

A) True 
 B)False

Question 8

If a regression analysis shows an R factor of 0.15,it is safe to assume

Accepted Answer

A) a strong positive relationship between cost and volume. 
B) a strong negative relationship between cost and volume. 
C) a perfect positive relationship between cost and volume. 
D) a very weak relationship between cost and volume. 
A) a strong positive relationship between cost and volume. 
B) a strong negative relationship between cost and volume. 
C) a perfect positive relationship between cost and volume. 
D) a very weak relationship between cost and volume.

Question 9

Under absorption costing,fixed manufacturing costs are treated as period costs.

Accepted Answer

A) True 
 B)False

Question 10

It costs Homer's Manufacturing $0.75 to produce baseballs and Homer sells them for $4.00 a piece.Homer pays a sales commission of 5% of sales revenue to his sales staff.Homer also pays $12,000 a month rent for his factory and store,and also pays $75,000 a month to his staff in addition to the commissions.Homer sold 67,500 baseballs in June.If Homer prepares a traditional income statement for the month of June,what would be his gross profit?

Accepted Answer

A) $320,625 
B) $219,375 
C) $270,000 
D) $50,625 
A) $320,625 
B) $219,375 
C) $270,000 
D) $50,625

Question 11

On a traditional income statement,sales revenue less cost of goods sold equals

Accepted Answer

A) gross profit. 
B) contribution margin. 
C) operating income. 
D) operating expenses. 
A) gross profit. 
B) contribution margin. 
C) operating income. 
D) operating expenses.

Question 12

Mario Company has total fixed costs of $600,000.Total fixed and variable costs are $612,500 at a production level of 175,000 units.The fixed cost per unit at a production level of 300,000 units is

Accepted Answer

A) $1.75. 
B) $2.00. 
C) $2.04. 
D) $3.50. 
A) $1.75. 
B) $2.00. 
C) $2.04. 
D) $3.50.

Question 13

A scatter plot helps managers visualize the relationship between historical costs and volume.

Accepted Answer

A) True 
 B)False

Question 14

The contribution margin is equal to

Accepted Answer

A) sales minus cost of goods sold. 
B) sales minus operating expenses. 
C) sales minus fixed expenses. 
D) sales minus variable expenses. 
A) sales minus cost of goods sold. 
B) sales minus operating expenses. 
C) sales minus fixed expenses. 
D) sales minus variable expenses.

Question 15

What term represents the variable cost per unit of activity in the equation: y = vx + f? (Assume x represents the volume of activity. )

Accepted Answer

A) v 
B) f 
C) y 
D) vx 
A) v 
B) f 
C) y 
D) vx

Question 16

Johnson Trucking Company wants to determine a fuel surcharge to add to its customers' bills based on the number of miles driven to each area.It wants to separate the fixed and variable portion of the truck's operating costs so it has a better idea of how distance affects these costs.Johnson Trucking Company has the following data available.
 
Using the high-low method,the monthly operating costs if Johnson Trucking Company drives 20,000 miles in a month will be

Accepted Answer

A) $28,650. 
B) $10,500. 
C) $25,500. 
D) $15,000. 
A) $28,650. 
B) $10,500. 
C) $25,500. 
D) $15,000.

Question 17

A(n)________ cost is a cost whose total amount changes in direct proportion to a change in volume.

Accepted Answer

A) variable 
B) fixed 
C) mixed 
D) irrelevant 
A) variable 
B) fixed 
C) mixed 
D) irrelevant

Question 18

Jean's Fitness Club provides monthly memberships as well as personal training sessions.The personal trainers earn 50% of the revenue for all personal training sessions.The Fitness Club also sells nutrition products.Jean's general ledger accounts indicate the following for the year.The front desk staff wages expense remains the same throughout the year.
 
If a traditional income statement is prepared for the year,what is Gross Profit?

Accepted Answer

A) $280,000 
B) $245,000 
C) $315,000 
D) $207,500 
A) $280,000 
B) $245,000 
C) $315,000 
D) $207,500

Question 19

Traditional income statements do not distinguish fixed operating costs from variable operating costs.

Accepted Answer

A) True 
 B)False

Question 20

Total mixed cost graphs intersect the y-axis at the level of fixed costs.

Accepted Answer

A) True 
 B)False

Using account analysis,what type of cost is an electric bill that charges a flat monthly fee plus a charge for each kilowatt hour of electricity used?

To follow is information about the units produced and total manufacturing costs for Pine Enterprises for the past six months. Using the high-low method,what is the variable cost per unit?

U.S.GAAP requires companies to use absorption costing for external reporting purposes.

An expense such as advertising could be considered a discretionary fixed cost.

A contribution margin income statement allows managers to see which costs will change with changes in volume and which costs will remain fixed.

If a regression analysis shows an R factor of 0.15,it is safe to assume

Under absorption costing,fixed manufacturing costs are treated as period costs.

On a traditional income statement,sales revenue less cost of goods sold equals

Mario Company has total fixed costs of $600,000.Total fixed and variable costs are $612,500 at a production level of 175,000 units.The fixed cost per unit at a production level of 300,000 units is

A scatter plot helps managers visualize the relationship between historical costs and volume.

The contribution margin is equal to

What term represents the variable cost per unit of activity in the equation: y = vx + f? (Assume x represents the volume of activity. )

A(n)________ cost is a cost whose total amount changes in direct proportion to a change in volume.

Traditional income statements do not distinguish fixed operating costs from variable operating costs.

Total mixed cost graphs intersect the y-axis at the level of fixed costs.

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, lean Operations, and the Costs of Quality

Process Costing

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evaluation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters

Exam 6: Cost Behavior

Using account analysis,what type of cost is an electric bill that charges a flat monthly fee plus a charge for each kilowatt hour of electricity used?

To follow is information about the units produced and total manufacturing costs for Pine Enterprises for the past six months. Using the high-low method,what is the variable cost per unit?

U.S.GAAP requires companies to use absorption costing for external reporting purposes.

An expense such as advertising could be considered a discretionary fixed cost.

A contribution margin income statement allows managers to see which costs will change with changes in volume and which costs will remain fixed.

If a regression analysis shows an R factor of 0.15,it is safe to assume

Under absorption costing,fixed manufacturing costs are treated as period costs.

On a traditional income statement,sales revenue less cost of goods sold equals

Mario Company has total fixed costs of $600,000.Total fixed and variable costs are $612,500 at a production level of 175,000 units.The fixed cost per unit at a production level of 300,000 units is

A scatter plot helps managers visualize the relationship between historical costs and volume.

The contribution margin is equal to

What term represents the variable cost per unit of activity in the equation: y = vx + f? (Assume x represents the volume of activity. )

A(n)________ cost is a cost whose total amount changes in direct proportion to a change in volume.

Traditional income statements do not distinguish fixed operating costs from variable operating costs.

Total mixed cost graphs intersect the y-axis at the level of fixed costs.

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, lean Operations, and the Costs of Quality

Process Costing

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evaluation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters