Question 1

Under variable costing, fixed manufacturing overhead is expensed immediately as a period cost.

Accepted Answer

A) True 
 B)False

Question 2

Joe, Jeff and Jerry Frank own Frank Brothers Farm, a seed company specializing in seed corn. At their weekly meeting they tried to calculate the portion of the farm's overhead expenses that is fixed and the portion that is variable. Over the past twelve months, the number of bushels of seed corn that has been sold reached its peak in May, when the total monthly overhead costs totaled $255,000 for 100,000 bushels of seed corn sold. The lowest number of bushels sold in the last twelve months occurred in December, when total overhead costs were $75,000 for 4500 bushels sold. What was the variable cost per yard?

Accepted Answer

A) $0.53 
B) $1.88 
C) $16.67 
D) $2.55 
A) $0.53 
B) $1.88 
C) $16.67 
D) $2.55

Question 3

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 4

What are scatterplots useful for?

Accepted Answer

A) Determining the overall strength of the relationship between historical cost and volume 
B) Identifying potential outliers 
C) Both of the above 
D) Neither of the above 
A) Determining the overall strength of the relationship between historical cost and volume 
B) Identifying potential outliers 
C) Both of the above 
D) Neither of the above

Question 5

In a regression output, the "X variable 1 coefficient" represents the variable cost component of a mixed cost equation.

Accepted Answer

A) True 
 B)False

Question 6

Total fixed costs for Green Planes Inc. are $150,000. Total costs, including both fixed and variable, are $600,000 if 140,000 units are produced. The total variable costs at a level of 230,000 units would be (Round any intermediary calculations to the nearest cent.)

Accepted Answer

A) $273,913 
B) $246,429 
C) $985,714 
D) $738,300 
A) $273,913 
B) $246,429 
C) $985,714 
D) $738,300

Question 7

The line on a graph representing total fixed costs will be a horizontal line.

Accepted Answer

A) True 
 B)False

Question 8

Cost A is a _______________ cost.

Accepted Answer

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

Question 9

With respect to total variable costs, which of the following statements is true?

Accepted Answer

A) They will remain the same as production levels change within the relevant range. 
B) They will decrease as production decreases within the relevant range. 
C) They will decrease as production increases within the relevant range. 
D) They will increase as production decreases within the relevant range. 
A) They will remain the same as production levels change within the relevant range. 
B) They will decrease as production decreases within the relevant range. 
C) They will decrease as production increases within the relevant range. 
D) They will increase as production decreases within the relevant range.

Question 10

Regression analysis uses all data points, not just the highest and lowest volume data points.

Accepted Answer

A) True 
 B)False

Question 11

Which type of cost behavior is indicated by the following graph?

Accepted Answer

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

Question 12

Paula Corporation is trying to predict its manufacturing overhead costs for the upcoming year; they are debating the use of the high-low method versus the use of regression analysis. They have gathered information about their manufacturing overhead costs in each of the past six months. A table containing their cost data and the associated machine hours in each month (the cost driver)follows.
   The company performed a regression analysis using the above data and had the following results. (Note: the results are excerpts so not all of the regression analysis results are presented.)
   Required:
a. What is the cost equation if the high-low method is used to estimate costs?
b. Using the high-low method, predict total manufacturing overhead costs if Paula Corporation uses 12,000 hours.
c. What is the cost equation if regression analysis is used to estimate costs (use the results from the regression analysis provided)?
d. Using the results from the regression analysis provided, predict total manufacturing overhead costs if Paula Corporation uses 12,000 hours.
e. Which method (high-low or regression analysis)is a better predictor of total manufacturing overhead costs? Why?

Accepted Answer

a.
 @#IMG-DLM& y = $0.94x + $3,540
b.
 @#IMG-DLM& c. y = $0.

Question 13

If inventory has grown, operating income will be higher under absorption costing than it is under variable costing.

Accepted Answer

A) True 
 B)False

Question 14

Hyper Color Company manufactures widgets. The following data is related to sales and production of the widgets for last year.   Using absorption costing, what is operating income for last year? (Round any intermediary calculations to the nearest whole dollar.)

Accepted Answer

A) $50,000 
B) $232,000 
C) $216,000 
D) $150,000 
A) $50,000 
B) $232,000 
C) $216,000 
D) $150,000

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Total mixed cost graphs slope upward but do not begin at the origin.

Accepted Answer

A) True 
 B)False

Question 17

Hyper Color Company manufactures widgets. The following data is related to sales and production of the widgets for last year.   Using variable costing, what is the operating income for last year?

Accepted Answer

A) $126,000 
B) $26,800 
C) $64,800 
D) $102,800 
A) $126,000 
B) $26,800 
C) $64,800 
D) $102,800

Question 18

Under absorption costing, fixed manufacturing costs are not expensed until the units are sold.

Accepted Answer

A) True 
 B)False

Question 19

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 1440 ice cream cones in a month are (Round any intermediary calculations to the nearest cent.)

Accepted Answer

A) $1500 
B) $1200 
C) $2076 
D) $576 
A) $1500 
B) $1200 
C) $2076 
D) $576

Question 20

Board Games, Inc. makes board games. The following data pertains to the last six months:   Based on this data, what would the estimated manufacturing overhead be at a level of 48,000 direct labor hours?

Accepted Answer

A) $277,820 
B) $168,020 
C) $266,000 
D) Cannot be determined from information given. 
A) $277,820 
B) $168,020 
C) $266,000 
D) Cannot be determined from information given.

Under variable costing, fixed manufacturing overhead is expensed immediately as a period cost.

The contribution margin is equal to

What are scatterplots useful for?

In a regression output, the "X variable 1 coefficient" represents the variable cost component of a mixed cost equation.

Total fixed costs for Green Planes Inc. are $150,000. Total costs, including both fixed and variable, are $600,000 if 140,000 units are produced. The total variable costs at a level of 230,000 units would be (Round any intermediary calculations to the nearest cent.)

The line on a graph representing total fixed costs will be a horizontal line.

Cost A is a _______________ cost.

With respect to total variable costs, which of the following statements is true?

Regression analysis uses all data points, not just the highest and lowest volume data points.

Which type of cost behavior is indicated by the following graph?

If inventory has grown, operating income will be higher under absorption costing than it is under variable costing.

Hyper Color Company manufactures widgets. The following data is related to sales and production of the widgets for last year. Using absorption costing, what is operating income for last year? (Round any intermediary calculations to the nearest whole dollar.)

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

Total mixed cost graphs slope upward but do not begin at the origin.

Hyper Color Company manufactures widgets. The following data is related to sales and production of the widgets for last year. Using variable costing, what is the operating income for last year?

Under absorption costing, fixed manufacturing costs are not expensed until the units are sold.

Board Games, Inc. makes board games. The following data pertains to the last six months: Based on this data, what would the estimated manufacturing overhead be at a level of 48,000 direct labor hours?

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 Evalulation

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

Under variable costing, fixed manufacturing overhead is expensed immediately as a period cost.

The contribution margin is equal to

What are scatterplots useful for?

In a regression output, the "X variable 1 coefficient" represents the variable cost component of a mixed cost equation.

Total fixed costs for Green Planes Inc. are $150,000. Total costs, including both fixed and variable, are $600,000 if 140,000 units are produced. The total variable costs at a level of 230,000 units would be (Round any intermediary calculations to the nearest cent.)

The line on a graph representing total fixed costs will be a horizontal line.

Cost A is a _______________ cost.

With respect to total variable costs, which of the following statements is true?

Regression analysis uses all data points, not just the highest and lowest volume data points.

Which type of cost behavior is indicated by the following graph?

If inventory has grown, operating income will be higher under absorption costing than it is under variable costing.

Hyper Color Company manufactures widgets. The following data is related to sales and production of the widgets for last year. Using absorption costing, what is operating income for last year? (Round any intermediary calculations to the nearest whole dollar.)

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

Total mixed cost graphs slope upward but do not begin at the origin.

Hyper Color Company manufactures widgets. The following data is related to sales and production of the widgets for last year. Using variable costing, what is the operating income for last year?

Under absorption costing, fixed manufacturing costs are not expensed until the units are sold.

Board Games, Inc. makes board games. The following data pertains to the last six months: Based on this data, what would the estimated manufacturing overhead be at a level of 48,000 direct labor hours?

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 Evalulation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters