The following information has been provided by the Evans Retail Stores, Inc., for the first quarter of the year: $\begin{array} { | l | r | } \hline \text { Sales } & \$ 350,000 \\ \hline \text { Variable Selling Expenses } & \$ 35,000 \\ \hline \text { Fixed Selling Expenses } & \$ 25,000 \\ \hline \text { Cost of Goods Sold } & \$ 160,000 \\ \hline \text { Fixed Administrative Expenses } & \$ 55,000 \\ \hline \text { Variable Administrative Expenses } & \$ 15,000 \\ \hline \end{array}$ -What is the contribution margin of Evans Retail Stores,Inc.,for the first quarter?

A) $140,000. B) $190,000. C) $210,000. D) $300,000. A) $140,000. B) $190,000. C) $210,000. D) $300,000.

The following is Allison Corporation's contribution format income statement for December 2013: $\begin{array}{|l|r|} \hline \text { Sales } & \$ 800,000 \\ \hline \text { Less: Variable expenses } & 300,000 \\ \hline \text { Contribution margin } & 500,000 \\ \hline \text { Less: Fixed expenses } & \$ 400,000 \\ \hline \text { Before-tax profits } & \$ 100,000 \\ \hline \end{array}$ The company had no beginning or ending inventories.The company produced and sold 10,000 units in December 2013. Required: Assuming no change in either the cost structure or the average selling price,prepare a contribution format income statement for a January,2014 assuming production and sales of 7,500 units for Allison Corporation.

Crucial step: Determining the required u

An income statement for Crandall's Bookstore for the first quarter of the current year is presented below: CRANDALL's BOOKSTORE Income Statement for the First Quarter of the Current Year $\begin{array}{|l|r|r|} \hline \text { Sales } && \$ 800,000 \\ \hline \begin{array}{l} \text { Less: Cost of Goods Sold - } \\ \text { all variable } \end{array} && \underline{560,000} \\\hline \text { Gross Margin } & & 240,000 \\ \hline \text { Less: Operating Expenses: } & & \\ \hline \text { Selling } & \$ 98,000 & \\\hline \text { Administrative } & 98,000 & \underline{196,000} \\ \hline \text { Operating Income } & & \underline{\$ 44,000} \\ \hline \end{array}$On average, a book sells for $50. Variable selling expenses are $5.50 per book, with the remaining selling expenses being fixed. The variable administrative expenses are 3% of sales, with the remainder being fixed. -What is the contribution margin for Crandall's Bookstore for the first quarter?

A) $128,000. B) $152,000. C) $240,000. D) $688,000. A) $128,000. B) $152,000. C) $240,000. D) $688,000.

The following data pertain to activity and utilities costs for two recent years: $\begin{array}{|l|r|r|} \hline & \text { Year 2 } & \text { Year 1 } \\ \hline \text { Activity Level in Units } & 10,000 & 6,000 \\ \hline \text { Utilities Cost } & \$ 12,000 & \$ 9,000 \\ \hline \end{array}$ Using the high-low method,what is the cost formula for utilities?

A) $1.20 per unit. B) $1.50 per unit. C) $3,000 plus $3.00 per unit. D) $4,500 plus $0.75 per unit. A) $1.20 per unit. B) $1.50 per unit. C) $3,000 plus $3.00 per unit. D) $4,500 plus $0.75 per unit.

Johnson Company has provided the following data for the first five months of the year: $\begin{array} {|l | r | r | } \hline & \text { Machine Hours } & \text { Lubrication Cost } \\ \hline \text { January } & 120 & \$ 750 \\ \hline \text { February } & 160 & 800 \\ \hline \text { March } & 200 & 870 \\ \hline \text { April } & 150 & 790 \\ \hline \text { May } & 170 & 840 \\ \hline \end{array}$ -Using the least squares regression method,the estimated monthly fixed component of lubrication cost is closest to which of the following?

A) $561. B) $565. C) $570. D) $585. A) $561. B) $565. C) $570. D) $585.

Stuart Manufacturing produces metal picture frames.The company's income statements for the last two years are presented below: $\begin{array}{|l|r|r|} \hline & \text { Last year } & \text { This year } \\ \hline \text { Units sold } & 50,000 & 70,000 \\ \hline \text { Sales } & \$ 800,000 & \$ 1,120,000 \\ \hline \text { Less: Cost of goods sold } & 550,000 & \underline{710,000} \\ \hline \text { Gross margin } & 250,000 & 410,000 \\ \hline \text { Less: Operating expenses } & 150,000 & \underline{190,000} \\ \hline \text { Net income } & \$ 100,000 & \$ 220,000 \\ \hline \end{array}$ The company has no beginning or ending inventories.All activity in this problem is in the relevant range. Required: a.Estimate the company's total variable cost per unit,and its total fixed costs per year.(Remember that this is a manufacturing firm.) b.Compute the company's contribution margin for this year.

a.Variable component of cost of goods so

Exam 3: Cost Behaviour: Analysis and Use

The following information has been provided by the Evans Retail Stores, Inc., for the first quarter of the year: Sales \ 350,000 Variable Selling Expenses \ 35,000 Fixed Selling Expenses \ 25,000 Cost of Goods Sold \ 160,000 Fixed Administrative Expenses \ 55,000 Variable Administrative Expenses \ 15,000 -What is the contribution margin of Evans Retail Stores,Inc.,for the first quarter?

(Multiple Choice)

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Question 101

The following is Allison Corporation's contribution format income statement for December 2013: Sales \ 800,000 Less: Variable expenses 300,000 Contribution margin 500,000 Less: Fixed expenses \ 400,000 Before-tax profits \ 100,000 The company had no beginning or ending inventories.The company produced and sold 10,000 units in December 2013. Required: Assuming no change in either the cost structure or the average selling price,prepare a contribution format income statement for a January,2014 assuming production and sales of 7,500 units for Allison Corporation.

(Essay)

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Question 102

Within the relevant range of activity,how will variable cost per unit behave?

(Multiple Choice)

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Question 103

An income statement for Crandall's Bookstore for the first quarter of the current year is presented below: CRANDALL's BOOKSTORE Income Statement for the First Quarter of the Current Year Sales \ 800,000 Less: Cost of Goods Sold - all variable Gross Margin 240,000 Less: Operating Expenses: Selling \ 98,000 Administrative 98,000 Operating Income On average, a book sells for $50. Variable selling expenses are $5.50 per book, with the remaining selling expenses being fixed. The variable administrative expenses are 3% of sales, with the remainder being fixed. -What is the contribution margin for Crandall's Bookstore for the first quarter?

(Multiple Choice)

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Question 104

The following data pertain to activity and utilities costs for two recent years: Year 2 Year 1 Activity Level in Units 10,000 6,000 Utilities Cost \ 12,000 \ 9,000 Using the high-low method,what is the cost formula for utilities?

(Multiple Choice)

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Question 105

Johnson Company has provided the following data for the first five months of the year: Machine Hours Lubrication Cost January 120 \ 750 February 160 800 March 200 870 April 150 790 May 170 840 -Using the least squares regression method,the estimated monthly fixed component of lubrication cost is closest to which of the following?

(Multiple Choice)

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Question 106

Indirect costs,such as manufacturing overhead,are always fixed costs.

(True/False)

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Question 107

Stuart Manufacturing produces metal picture frames.The company's income statements for the last two years are presented below: Last year This year Units sold 50,000 70,000 Sales \ 800,000 \ 1,120,000 Less: Cost of goods sold 550,000 Gross margin 250,000 410,000 Less: Operating expenses 150,000 Net income \ 100,000 \ 220,000 The company has no beginning or ending inventories.All activity in this problem is in the relevant range. Required: a.Estimate the company's total variable cost per unit,and its total fixed costs per year.(Remember that this is a manufacturing firm.) b.Compute the company's contribution margin for this year.

(Essay)

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Question 108

At an activity level of 6,000 units,the cost for maintenance is $7,200; at 10,000 units,the cost for maintenance is $11,600.Using the high-low method,what is the cost formula for maintenance?

(Multiple Choice)

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Question 109

A cost that is obtainable in large chunks and that increases or decreases only in response to fairly wide changes in the activity level is known as a step-variable cost.

(True/False)

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Question 110

The cost structure of Sackville Manufacturing Company (SMC)at two levels of production is as follows: Units 60,000 80,000 Costs: Direct materials \ 120,000 \ 160,000 Direct labour 90,000 120,000 Factory overhead 216,000 248,000 Total costs \ 426,000 \ 528,000 Average cost per unit \ 7.10 \ 6.60 Required: a.Classify and explain each production cost as either strictly variable or strictly fixed or mixed b.Determine the total production cost equation for SMC,using the units of production as the cost driver.(Be sure to identify clearly all the separate components of the equation.) c.Explain what causes the drop in average cost per unit from $7.10 to $6.60 when production is increased from 60,000 to 80,000 units.Show all supporting calculations.

(Essay)

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Question 111

Which of the following is an example of a committed fixed cost?

(Multiple Choice)

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Question 112

Within the relevant range of activity,how will variable cost per unit behave?

The following data pertain to activity and utilities costs for two recent years: Year 2 Year 1 Activity Level in Units 10,000 6,000 Utilities Cost \ 12,000 \ 9,000 Using the high-low method,what is the cost formula for utilities?

Indirect costs,such as manufacturing overhead,are always fixed costs.

At an activity level of 6,000 units,the cost for maintenance is $7,200; at 10,000 units,the cost for maintenance is $11,600.Using the high-low method,what is the cost formula for maintenance?

A cost that is obtainable in large chunks and that increases or decreases only in response to fairly wide changes in the activity level is known as a step-variable cost.

Which of the following is an example of a committed fixed cost?

Managerial Accounting and the Business Environment

Cost Terms,concepts,and Classifications

Cost-Volume-Profit Relationships

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: A Tool to Aid Decision Making

Variable Costing: A Tool for Management

Budgeting

Standard Costs and Overhead Analysis

Reporting for Control

Relevant Costs for Decision Making

Capital Budgeting Decisions

Financial Statement Analysis

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