Question 1

What is the best estimate of the company's variable operating expenses per unit?

Accepted Answer

A)  $0.24 per unit. 
B)  $0.71 per unit. 
C)  $0.90 per unit. 
D)  $4.17 per unit. 
A)  $0.24 per unit. 
B)  $0.71 per unit. 
C)  $0.90 per unit. 
D)  $4.17 per unit.

Question 2

Using the least squares regression method,the estimated variable lubrication cost per machine hour is closest to which of the following?

Accepted Answer

A)  $0.67. 
B)  $1.56. 
C)  $1.40. 
D)  $1.50. 
A)  $0.67. 
B)  $1.56. 
C)  $1.40. 
D)  $1.50.

Question 3

Average maintenance costs are $1.50 per machine hour at an activity level of 8,000 machine hours and $1.20 per machine hour at an activity level of 13,000 machine hours.Assuming that this activity is within the relevant range,total expected maintenance cost for a budgeted activity level of 10,000 machine hours would be closest to which of the following?

Accepted Answer

A)  $11,433. 
B)  $13,440. 
C)  $15,000. 
D)  $16,128. 
A)  $11,433. 
B)  $13,440. 
C)  $15,000. 
D)  $16,128.

Question 4

In order for a cost to be variable,it must vary with either units produced or units sold.

Accepted Answer

A) True 
 B)False

Question 5

What is the variable cost for maintenance per machine hour?

Accepted Answer

A)  $0.75. 
B)  $1.30. 
C)  $1.35. 
D)  $1.44.VC/hr.= (130,000 - 115,000)/(100,000 - 80,000)= $.75 
A)  $0.75. 
B)  $1.30. 
C)  $1.35. 
D)  $1.44.VC/hr.= (130,000 - 115,000)/(100,000 - 80,000)= $.75

Question 6

Suppose the sales for the third quarter was the equivalent of 1,000 units and that the fixed manufacturing and non-manufacturing costs were valid between the relevant range of 800 and 1,200 units.If Sorter Company had sold 100 additional units,it would have reported what amount of additional operating income?

Accepted Answer

A)  $9,150. 
B)  $23,725. 
C)  $50,000. 
D)  $100,650. 
A)  $9,150. 
B)  $23,725. 
C)  $50,000. 
D)  $100,650.

Question 7

A mixed cost is partially variable and partially fixed.

Accepted Answer

A) True 
 B)False

Question 8

The contribution approach to the income statement classifies costs by behaviour rather than by function.

Accepted Answer

A) True 
 B)False

Question 9

Given the cost formula Y = $17,500 + $4X,at what level of activity will total cost be $42,500?

Accepted Answer

A)  4,375 units. 
B)  5,250 units. 
C)  6,250 units. 
D)  10,625 units. 
A)  4,375 units. 
B)  5,250 units. 
C)  6,250 units. 
D)  10,625 units.

Question 10

The contribution approach to constructing an income statement emphasizes the functions of production,administration and sales.

Accepted Answer

A) True 
 B)False

Question 11

What is the expected contribution margin next month?

Accepted Answer

A)  $11,200. 
B)  $14,400. 
C)  $16,000. 
D)  $17,600. 
A)  $11,200. 
B)  $14,400. 
C)  $16,000. 
D)  $17,600.

Question 12

Reddy Company has the following cost formulas for overhead:  
Based on these cost formulas,what is the expected total overhead cost at 600 machine hours?

Accepted Answer

A)  $4,500. 
B)  $5,200. 
C)  $5,620. 
D)  $5,340. 
A)  $4,500. 
B)  $5,200. 
C)  $5,620. 
D)  $5,340.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

(Appendix 3A)Below are cost and activity data for a particular cost over the last four periods.Your boss has asked you to analyze this cost so that management will have a better understanding of how this cost changes in response to changes in activity.   
Required:
Using the least-squares regression method and the equations for a and b,estimate the cost formula for this cost.

Accepted Answer

n = 4
ΣX = 183
ΣY = 1,110
ΣXY = 50,866
Σ

Question 15

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.

Accepted Answer

A) True 
 B)False

Question 16

The following information summarizes the company's cost structure   
Assume that all of the activity levels mentioned in this problem are within the relevant range.
Required:
Prepare a schedule showing predictions for the following items at the 40,000 unit level of activity:
a)Total variable cost.
b)Total fixed cost.
c)Variable cost per unit.
d)Fixed cost per unit.

Accepted Answer

The answer of The following information summarizes the company's cost...

Question 17

Which of the following assumptions is implicit in the simplified contribution approach income statement?

Accepted Answer

A)  There are two cost drivers,both units of production and units of sales. 
B)  The fixed expenses do vary with either units of production or units of sales. 
C)  Units of production and units of sales are equal. 
D)  Inventory levels in units do change. 
A)  There are two cost drivers,both units of production and units of sales. 
B)  The fixed expenses do vary with either units of production or units of sales. 
C)  Units of production and units of sales are equal. 
D)  Inventory levels in units do change.

Question 18

The planning horizons for committed fixed costs and discretionary fixed costs are generally the same.

Accepted Answer

A) True 
 B)False

Question 19

Anaconda Mining Company shipped 9,000 tons of copper concentrate for $450,000 in March and 11,000 tons for $549,000 in April.Use the high-low method to estimate the shipping costs for 12,000 tons to be shipped in May.

Accepted Answer

A)  $548,780. 
B)  $549,020. 
C)  $594,000. 
D)  $598,500.FC = 450,000 - 9,000 * 49.50 = $4,500 
A)  $548,780. 
B)  $549,020. 
C)  $594,000. 
D)  $598,500.FC = 450,000 - 9,000 * 49.50 = $4,500

Question 20

Which of the following should be the first step in the analysis of cost behaviour?

Accepted Answer

A)  Estimating the slope coefficient. 
B)  Estimating the intercept term. 
C)  Estimating the R-squared in the case of least-squares regression. 
D)  Scattergram plot. 
A)  Estimating the slope coefficient. 
B)  Estimating the intercept term. 
C)  Estimating the R-squared in the case of least-squares regression. 
D)  Scattergram plot.

What is the best estimate of the company's variable operating expenses per unit?

Using the least squares regression method,the estimated variable lubrication cost per machine hour is closest to which of the following?

In order for a cost to be variable,it must vary with either units produced or units sold.

What is the variable cost for maintenance per machine hour?

A mixed cost is partially variable and partially fixed.

The contribution approach to the income statement classifies costs by behaviour rather than by function.

Given the cost formula Y = $17,500 + $4X,at what level of activity will total cost be $42,500?

The contribution approach to constructing an income statement emphasizes the functions of production,administration and sales.

What is the expected contribution margin next month?

Reddy Company has the following cost formulas for overhead: Based on these cost formulas,what is the expected total overhead cost at 600 machine hours?

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

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 assumptions is implicit in the simplified contribution approach income statement?

The planning horizons for committed fixed costs and discretionary fixed costs are generally the same.

Anaconda Mining Company shipped 9,000 tons of copper concentrate for $450,000 in March and 11,000 tons for $549,000 in April.Use the high-low method to estimate the shipping costs for 12,000 tons to be shipped in May.

Which of the following should be the first step in the analysis of cost behaviour?

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 Online

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Exam 3: Cost Behaviour: Analysis and Use

What is the best estimate of the company's variable operating expenses per unit?

Using the least squares regression method,the estimated variable lubrication cost per machine hour is closest to which of the following?

In order for a cost to be variable,it must vary with either units produced or units sold.

What is the variable cost for maintenance per machine hour?

A mixed cost is partially variable and partially fixed.

The contribution approach to the income statement classifies costs by behaviour rather than by function.

Given the cost formula Y = $17,500 + $4X,at what level of activity will total cost be $42,500?

The contribution approach to constructing an income statement emphasizes the functions of production,administration and sales.

What is the expected contribution margin next month?

Reddy Company has the following cost formulas for overhead: Based on these cost formulas,what is the expected total overhead cost at 600 machine hours?

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

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 assumptions is implicit in the simplified contribution approach income statement?

The planning horizons for committed fixed costs and discretionary fixed costs are generally the same.

Anaconda Mining Company shipped 9,000 tons of copper concentrate for $450,000 in March and 11,000 tons for $549,000 in April.Use the high-low method to estimate the shipping costs for 12,000 tons to be shipped in May.

Which of the following should be the first step in the analysis of cost behaviour?

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 Online

Filters