Question 1

Significant reductions in committed fixed costs can usually be made on a temporary basis without seriously impairing the long-term goals of a firm.

Accepted Answer

A) True 
 B)False

Question 2

If sales are projected to be 8,000 units in September,what would be total operating expenses?

Accepted Answer

A)  $41,600. 
B)  $44,750. 
C)  $46,600. 
D)  $49,300.= $46,600 
A)  $41,600. 
B)  $44,750. 
C)  $46,600. 
D)  $49,300.= $46,600

Question 3

If 110,000 machine hours of activity are projected for next period,what would be total expected overhead cost?

Accepted Answer

A)  $242,500. 
B)  $256,000. 
C)  $263,500. 
D)  $306,625. 
A)  $242,500. 
B)  $256,000. 
C)  $263,500. 
D)  $306,625.

Question 4

ABC Company's total overhead costs at various levels of activity are presented below:   
Assume that the overhead costs above consist of utilities,supervisory salaries,and maintenance.At the 50,000-machine-hour level of activity,these costs are presented below:   
The company wants to break down the maintenance cost into its basic variable and fixed cost elements.
Required:
a)Estimate the maintenance cost for June.
b)Use the high-low method to estimate the cost formula for maintenance cost.
c)Estimate the total overhead cost at an activity level of 55,000 machine hours,using the separate estimates you obtained for its components.
d)Estimate the total overhead cost at an activity level of 55,000 machine hours,independent of the separate estimates you obtained for its components.

Accepted Answer

a)Maintenance cost for June: @#IMG-DLM& 
b)High-lo

Question 5

Discretionary fixed costs arise from annual decisions by management to spend in certain fixed cost areas.

Accepted Answer

A) True 
 B)False

Question 6

Using the least squares regression method,the estimated monthly fixed component of lubrication cost is closest to which of the following?

Accepted Answer

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

Question 7

The following data pertain to activity and utilities costs for two recent years:  
Using the high-low method,what is the variable cost per unit for utilities?

Accepted Answer

A)  $1.25 per unit. 
B)  $1.50 per unit. 
C)  $1.33 per unit. 
D)  $0.75 per unit. 
A)  $1.25 per unit. 
B)  $1.50 per unit. 
C)  $1.33 per unit. 
D)  $0.75 per unit.

Question 8

The graph below was produced after recording the processing costs of Oki Products observed over the last 10 months using the following data:   
   
Required:
a.Using the graph identify the monthly fixed costs.What additional information might you determine from the graph?
b.The chart above indicates total processing costs of $47,000 at a level of 9,000 units for month 5.Using this level of activity and your fixed costs determined in a,calculate the variable cost per unit to the nearest cent.Express your results in the form of a linear equation y = a + bx.
c.Use the high low method to determine the variable cost per unit and fixed cost per month.Express your results in the form of a linear equation y = a + bx.
d.Comment on the differences between the results in b and c.Which result would you consider more accurate and why?

Accepted Answer

a.From the graph it is clear from where

Question 9

Contribution margin is the excess of revenues over which of the following?

Accepted Answer

A)  Cost of goods sold. 
B)  Manufacturing cost. 
C)  All direct costs. 
D)  All variable costs. 
A)  Cost of goods sold. 
B)  Manufacturing cost. 
C)  All direct costs. 
D)  All variable costs.

Question 10

At an activity level of 10,000 units,total variable costs were $35,000 while total fixed costs were $20,800.If 16,000 units are produced and this activity is within the relevant range,which of the following statements is correct?

Accepted Answer

A)  Total costs would equal $89,280. 
B)  Total unit cost would equal $4.80. 
C)  Fixed cost per unit would equal $5.58. 
D)  Total costs would equal $55,800. 
A)  Total costs would equal $89,280. 
B)  Total unit cost would equal $4.80. 
C)  Fixed cost per unit would equal $5.58. 
D)  Total costs would equal $55,800.

Question 11

What is a cost driver?

Accepted Answer

A)  It is the largest single category of cost in a company. 
B)  It is a fixed cost that cannot be avoided. 
C)  It is a factor that causes variations in a cost. 
D)  It is an indirect cost that is essential to the business. 
A)  It is the largest single category of cost in a company. 
B)  It is a fixed cost that cannot be avoided. 
C)  It is a factor that causes variations in a cost. 
D)  It is an indirect cost that is essential to the business.

Question 12

What is the best estimate of the company's total fixed operating expense per year?

Accepted Answer

A)  $72,000. 
B)  $188,000. 
C)  $200,000. 
D)  $212,000. 
A)  $72,000. 
B)  $188,000. 
C)  $200,000. 
D)  $212,000.

Question 13

What is the contribution margin of Evans Retail Stores,Inc. ,for the first quarter?

Accepted Answer

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

Question 14

The cost structure of Sackville Manufacturing Company (SMC)at two levels of production is as follows:   
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.

Accepted Answer

a.The cost of both direct materials and

Question 15

Selected information about Buehler Corporation's operations at high and at low levels of activity follow:  
Using the high-low method,what is the total variable cost per unit of product?

Accepted Answer

A)  $11.05. 
B)  $21.00. 
C)  $32.00. 
D)  $35.00.Total cost of unit = $5 + 6 + 21 = $32 
A)  $11.05. 
B)  $21.00. 
C)  $32.00. 
D)  $35.00.Total cost of unit = $5 + 6 + 21 = $32

Question 16

What is the expected gross margin next month?

Accepted Answer

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

Question 17

Using the high-low method,what is the variable cost per machine hour?

Accepted Answer

A)  $0.40 per hour. 
B)  $0.60 per hour. 
C)  $0.64 per hour. 
D)  $0.67 per hour. 
A)  $0.40 per hour. 
B)  $0.60 per hour. 
C)  $0.64 per hour. 
D)  $0.67 per hour.

Question 18

Which of the following classifications best describes the behaviour of Cost B?

Accepted Answer

A)  Mixed. 
B)  Variable. 
C)  Fixed. 
D)  Opportunity cost. 
A)  Mixed. 
B)  Variable. 
C)  Fixed. 
D)  Opportunity cost.

Question 19

What is the best estimate of the variable cost per unit for Maxwell Company?

Accepted Answer

A)  $0.56. 
B)  $1.79. 
C)  $1.95. 
D)  $2.00. 
A)  $0.56. 
B)  $1.79. 
C)  $1.95. 
D)  $2.00.

Question 20

Using the high-low method,the estimated variable cost per machine hour for electricity is closest to which of the following?

Accepted Answer

A)  $0.40 per hour. 
B)  $0.98 per hour. 
C)  $1.68 per hour. 
D)  $2.50 per hour. 
A)  $0.40 per hour. 
B)  $0.98 per hour. 
C)  $1.68 per hour. 
D)  $2.50 per hour.

Significant reductions in committed fixed costs can usually be made on a temporary basis without seriously impairing the long-term goals of a firm.

If sales are projected to be 8,000 units in September,what would be total operating expenses?

If 110,000 machine hours of activity are projected for next period,what would be total expected overhead cost?

Discretionary fixed costs arise from annual decisions by management to spend in certain fixed cost areas.

Using the least squares regression method,the estimated monthly fixed component of lubrication cost is closest to which of the following?

The following data pertain to activity and utilities costs for two recent years: Using the high-low method,what is the variable cost per unit for utilities?

Contribution margin is the excess of revenues over which of the following?

At an activity level of 10,000 units,total variable costs were $35,000 while total fixed costs were $20,800.If 16,000 units are produced and this activity is within the relevant range,which of the following statements is correct?

What is a cost driver?

What is the best estimate of the company's total fixed operating expense per year?

What is the contribution margin of Evans Retail Stores,Inc. ,for the first quarter?

Selected information about Buehler Corporation's operations at high and at low levels of activity follow: Using the high-low method,what is the total variable cost per unit of product?

What is the expected gross margin next month?

Using the high-low method,what is the variable cost per machine hour?

Which of the following classifications best describes the behaviour of Cost B?

What is the best estimate of the variable cost per unit for Maxwell Company?

Using the high-low method,the estimated variable cost per machine hour for electricity is closest to which of the following?

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

Significant reductions in committed fixed costs can usually be made on a temporary basis without seriously impairing the long-term goals of a firm.

If sales are projected to be 8,000 units in September,what would be total operating expenses?

If 110,000 machine hours of activity are projected for next period,what would be total expected overhead cost?

Discretionary fixed costs arise from annual decisions by management to spend in certain fixed cost areas.

Using the least squares regression method,the estimated monthly fixed component of lubrication cost is closest to which of the following?

The following data pertain to activity and utilities costs for two recent years: Using the high-low method,what is the variable cost per unit for utilities?

Contribution margin is the excess of revenues over which of the following?

At an activity level of 10,000 units,total variable costs were $35,000 while total fixed costs were $20,800.If 16,000 units are produced and this activity is within the relevant range,which of the following statements is correct?

What is a cost driver?

What is the best estimate of the company's total fixed operating expense per year?

What is the contribution margin of Evans Retail Stores,Inc. ,for the first quarter?

Selected information about Buehler Corporation's operations at high and at low levels of activity follow: Using the high-low method,what is the total variable cost per unit of product?

What is the expected gross margin next month?

Using the high-low method,what is the variable cost per machine hour?

Which of the following classifications best describes the behaviour of Cost B?

What is the best estimate of the variable cost per unit for Maxwell Company?

Using the high-low method,the estimated variable cost per machine hour for electricity is closest to which of the following?

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