Exam 1: Managerial Accounting and Cost Concepts

Hadrana Corporation reports that at an activity level of 5,500 units, its total variable cost is $275,330 and its total fixed cost is $86,240. What would be the average fixed cost per unit at an activity level of 5,600 units? Assume that this level of activity is within the relevant range.

Inventoriable costs are also known as:

Data concerning Nelson Company's activity for the first six months of the year appear below: Using the high-low method of analysis, the estimated variable electrical cost per machine hour is:

Committed fixed costs represent organizational investments with a multi-year planning horizon that can't be significantly reduced even for short periods.

Comparative income statements for Tudor Retailing Company for the last two months are presented below: Which of the following classifications best describes the behavior of shipping expense?

Manufacturing salaries and wages incurred in the factory are period costs.

At an activity level of 8,800 units, Pember Corporation's total variable cost is $146,520 and its total fixed cost is $219,296. Required: For the activity level of 8,900 units, compute: (a) the total variable cost; (b) the total fixed cost; (c) the total cost; (d) the average variable cost per unit; (e) the average fixed cost per unit; and (f) the average total cost per unit. Assume that this activity level is within the relevant range.

The traditional format income statement provides managers with an income statement that clearly distinguishes between fixed and variable costs and therefore aids planning, control, and decision making.

Country Charm Restaurant is open 24 hours a day and always has a fire going in the fireplace in the middle of its dining area. The cost of the firewood for this fire is fixed with respect to the number of meals served at the restaurant.

Callis Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $141.60 per unit. The best estimate of the total monthly fixed cost is:

Given the cost formula, Y = $7,000 + $1.80X, total cost for an activity level of 4,000 units would be:

Data for Cost A and Cost B appear below: Which of the above best describes the behavior of Costs A and B?

Management of Childers Corporation is considering whether to purchase a new model 380 machine costing $278,000 or a new model 230 machine costing $207,000 to replace a machine that was purchased 3 years ago for $266,000. The old machine was used to make product R16K until it broke down last week. Unfortunately, the old machine cannot be repaired. Management has decided to buy the new model 230 machine. It has less capacity than the new model 380 machine, but its capacity is sufficient to continue making product R16K. Management also considered, but rejected, the alternative of simply dropping product R16K. If that were done, instead of investing $207,000 in the new machine, the money could be invested in a project that would return a total of $305,000. In making the decision to invest in the model 230 machine, the opportunity cost was:

Which of the following is classified as a direct labor cost?

Haab Inc. is a merchandising company. Last month the company's cost of goods sold was $66,000. The company's beginning merchandise inventory was $17,000 and its ending merchandise inventory was $11,000. What was the total amount of the company's merchandise purchases for the month?

Variable costs are costs that vary, in total, in direct proportion to changes in the volume or level of activity.

The costs of the Accounting Department at Central Hospital would be considered by the Surgery Department to be:

Which of the following would most likely be included as part of manufacturing overhead in the production of a wooden table?

Management of Lewallen Corporation has asked your help as an intern in preparing some key reports for September. Direct materials cost was $57,000, direct labor cost was $43,000, and manufacturing overhead was $71,000. Selling expense was $15,000 and administrative expense was $32,000. The prime cost for September was:

Callis Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $141.60 per unit. The best estimate of the total variable cost per unit is: