Question 1

Assume sales revenue of $50,000,variable costs of $22,000,and fixed costs of $25,000.Prepare a contribution format income statement.

Accepted Answer

The answer of Assume sales revenue of $50,000,variable costs of...

Question 2

An advantage of using regression analysis over the high-low and scattergraph methods is that

Accepted Answer

A) regression analysis is less costly to implement than high-low or scattergraph methods. 
B) regression analysis is a more precise approach than the high-low or scattergraph methods. 
C) both regression analysis is less costly to implement than high-low or scattergraph methods and is a more precise approach than the high-low or scattergraph methods. 
D) neither regression analysis is less costly to implement than high-low or scattergraph methods or is a more precise approach than the high-low or scattergraph methods. 
A) regression analysis is less costly to implement than high-low or scattergraph methods. 
B) regression analysis is a more precise approach than the high-low or scattergraph methods. 
C) both regression analysis is less costly to implement than high-low or scattergraph methods and is a more precise approach than the high-low or scattergraph methods. 
D) neither regression analysis is less costly to implement than high-low or scattergraph methods or is a more precise approach than the high-low or scattergraph methods.

Question 3

FastPrint Company leases a machine that stuffs,seals,and stamps envelopes in one process.FastPrint's lease agreement calls for a base charge of $4,000 per year plus $0.25 for every envelope over 1,000 the machine processes per month.
Required:
a.What is the firm's total annual cost for the lease if a total of 2,500 envelopes are processed each month?
b.What is the firm's total processing cost per envelope at a level of 2,500 envelopes processed each month?
c.What is the firm's processing cost per envelope if only 1,500 envelopes are processed each month?

Accepted Answer

a.$2,500-$1,000 x 12 = $18,000

Question 4

Vest Construction Company's cost of renting a crane for the last four months is as follows:
   Using the high-low method,what is the company's estimated variable and fixed component of operating expenses?

Accepted Answer

$1,400 - $1,200 ÷ 45 - 35 = $2

Question 5

A limitation of the high-low method is that

Accepted Answer

A) it is costly to use because it uses a statistical technique to estimate the cost components. 
B) it is complex to calculate. 
C) it can only be used if the levels of activity cover a wide range. 
D) because it is based on only two extreme points,the high and low activity levels,the cost equation may not be truly representative of the cost relationship. 
A) it is costly to use because it uses a statistical technique to estimate the cost components. 
B) it is complex to calculate. 
C) it can only be used if the levels of activity cover a wide range. 
D) because it is based on only two extreme points,the high and low activity levels,the cost equation may not be truly representative of the cost relationship.

Question 6

Pam's Puppy Parlor is a pet grooming parlor and boutique.Pam sells personalized puppy blankets at $20 each.Her contribution margin is $5.If Pam has an additional $80 in blanket sales,how much additional contribution margin will this produce?

Accepted Answer

A) $4 
B) $20 
C) $80 
D) $100 
A) $4 
B) $20 
C) $80 
D) $100

Question 7

Determine the fixed cost given the following information: Lowest level of activity - 200

Accepted Answer

A) $200 
B) $360 
C) $480 
D) $600 
A) $200 
B) $360 
C) $480 
D) $600

Question 8

An example of a variable cost for a cell phone manufacturer is

Accepted Answer

A) units sold. 
B) units produced. 
C) minutes talked. 
D) touch screens used in production. 
A) units sold. 
B) units produced. 
C) minutes talked. 
D) touch screens used in production.

Question 9

Nancy's Nursery provides and maintains live plants in office buildings.The company's 120 customers are charged $90 per month for this service,which includes weekly watering visits.The variable cost to service a customer's location is $22 per month.The company incurs $2,000 each month to maintain its equipment and service vans and $3,000 each month in salaries.Nancy pays a CPA firm $5 per customer for accounting services.
Required:
a.Prepare Nancy's contribution format income statement for the month.
b.What is the expected monthly operating income if 10 customers are added?

Accepted Answer

a. @#IMG-DLM& *$22 +

Question 10

Once you know how a particular cost behaves,estimating the total cost is relatively simple.

Accepted Answer

A) True 
 B)False

Question 11

Georgiana operates a nail salon.She is trying to plan her costs for the next month and is uncertain as to how to estimate those costs.Help her estimate next month's costs given the following information she collected,based on number of customers per month.   If Georgiana believes next month is going to be busier than the last few months and she expects 1,850 customers relevant range is 1,000 - 2,000 customers per month,what is the expected cost for electricity?

Accepted Answer

A) $390 
B) $378 
C) $410 
D) $373 
A) $390 
B) $378 
C) $410 
D) $373

Question 12

The relevant range is the normal level of operating activity.

Accepted Answer

A) True 
 B)False

Question 13

On a scattergraph,once the individual points have been plotted,

Accepted Answer

A) enter the information into a statistical calculator to calculate the total cost. 
B) count the points and divide by variable cost per unit. 
C) draw a line through them to estimate the cost relationship. 
D) multiply the high point by the variable cost per 
A) enter the information into a statistical calculator to calculate the total cost. 
B) count the points and divide by variable cost per unit. 
C) draw a line through them to estimate the cost relationship. 
D) multiply the high point by the variable cost per

Question 14

Assume a selling price of $20 per

Accepted Answer

The answer of Assume a selling price of $20 per...

Question 15

A fixed cost is a cost that does not change in total with the activity level.

Accepted Answer

A) True 
 B)False

Question 16

A scattergraph is simply a graph that shows total costs in relation to volume,or activity level.

Accepted Answer

A) True 
 B)False

Question 17

The contribution margin ratio can be used to

Accepted Answer

A) determine the increase in profits from a given dollar increase in sales revenue. 
B) determine the impact of fixed costs on contribution margin. 
C) both to determine the increase in profits from a given dollar increase in sales revenue and to determine the impact of fixed costs on contribution margin. 
D) neither to determine the increase in profits from a given dollar increase in sales revenue nor to determine the impact of fixed costs on contribution margin. 
A) determine the increase in profits from a given dollar increase in sales revenue. 
B) determine the impact of fixed costs on contribution margin. 
C) both to determine the increase in profits from a given dollar increase in sales revenue and to determine the impact of fixed costs on contribution margin. 
D) neither to determine the increase in profits from a given dollar increase in sales revenue nor to determine the impact of fixed costs on contribution margin.

Question 18

Data concerning Engel Company's activity for the first three months are shown below.
   Using the high-low method of analysis,determine the estimated variable cost per machine hour and the total fixed cost.

Accepted Answer

$3,500 - $2,900 ÷ 4,800 - 3,60

Question 19

If activity level decreases,what happens to the

Accepted Answer

A) It remains the same. 
B) It decreases. 
C) It increases. 
D) It depends on how much the activity level increases. 
A) It remains the same. 
B) It decreases. 
C) It increases. 
D) It depends on how much the activity level increases.

Question 20

A basic tool for making business decisions is the contribution margin.

Accepted Answer

A) True 
 B)False

Assume sales revenue of $50,000,variable costs of $22,000,and fixed costs of $25,000.Prepare a contribution format income statement.

An advantage of using regression analysis over the high-low and scattergraph methods is that

Vest Construction Company's cost of renting a crane for the last four months is as follows: Using the high-low method,what is the company's estimated variable and fixed component of operating expenses?

A limitation of the high-low method is that

Pam's Puppy Parlor is a pet grooming parlor and boutique.Pam sells personalized puppy blankets at $20 each.Her contribution margin is $5.If Pam has an additional $80 in blanket sales,how much additional contribution margin will this produce?

Determine the fixed cost given the following information: Lowest level of activity - 200

An example of a variable cost for a cell phone manufacturer is

Once you know how a particular cost behaves,estimating the total cost is relatively simple.

The relevant range is the normal level of operating activity.

On a scattergraph,once the individual points have been plotted,

Assume a selling price of $20 per

A fixed cost is a cost that does not change in total with the activity level.

A scattergraph is simply a graph that shows total costs in relation to volume,or activity level.

The contribution margin ratio can be used to

Data concerning Engel Company's activity for the first three months are shown below. Using the high-low method of analysis,determine the estimated variable cost per machine hour and the total fixed cost.

If activity level decreases,what happens to the

A basic tool for making business decisions is the contribution margin.

Accounting As a Tool for Management

Cost-Volume-Profit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting

Performance Evaluation: Variance Analysis

Activity-Based Costing and Activity Based Management

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Decentralizing and Performance Evaluation

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

Statement of Cash Flows

Topic Focus: Process Costing

Topic Focus Variable and Absorption Costing

Topic Focus Standard Costing Systems

Topic Focus Customer Profitability

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Exam 2: Cost Behavior and Cost Estimation

Assume sales revenue of $50,000,variable costs of $22,000,and fixed costs of $25,000.Prepare a contribution format income statement.

An advantage of using regression analysis over the high-low and scattergraph methods is that

Vest Construction Company's cost of renting a crane for the last four months is as follows: Using the high-low method,what is the company's estimated variable and fixed component of operating expenses?

A limitation of the high-low method is that

Pam's Puppy Parlor is a pet grooming parlor and boutique.Pam sells personalized puppy blankets at $20 each.Her contribution margin is $5.If Pam has an additional $80 in blanket sales,how much additional contribution margin will this produce?

Determine the fixed cost given the following information: Lowest level of activity - 200

An example of a variable cost for a cell phone manufacturer is

Once you know how a particular cost behaves,estimating the total cost is relatively simple.

The relevant range is the normal level of operating activity.

On a scattergraph,once the individual points have been plotted,

Assume a selling price of $20 per

A fixed cost is a cost that does not change in total with the activity level.

A scattergraph is simply a graph that shows total costs in relation to volume,or activity level.

The contribution margin ratio can be used to

Data concerning Engel Company's activity for the first three months are shown below. Using the high-low method of analysis,determine the estimated variable cost per machine hour and the total fixed cost.

If activity level decreases,what happens to the

A basic tool for making business decisions is the contribution margin.

Accounting As a Tool for Management

Cost-Volume-Profit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting

Performance Evaluation: Variance Analysis

Activity-Based Costing and Activity Based Management

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Decentralizing and Performance Evaluation

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

Statement of Cash Flows

Topic Focus: Process Costing

Topic Focus Variable and Absorption Costing

Topic Focus Standard Costing Systems

Topic Focus Customer Profitability

Filters