Question 1

Stott Company requires one full-time dock hand for every 500 packages loaded daily. The wages for these dock hands would be:

Accepted Answer

A) variable. 
B) mixed. 
C) step-variable. 
D) curvilinear. 
A) variable. 
B) mixed. 
C) step-variable. 
D) curvilinear.

Question 2

Harris 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 $84.40 per unit.   The best estimate of the total variable cost per unit is:

Accepted Answer

A) $77.00 
B) $57.00 
C) $69.50 
D) $78.50 
A) $77.00 
B) $57.00 
C) $69.50 
D) $78.50

Question 3

Discretionary fixed costs:

Accepted Answer

A) have a planning horizon that covers many years. 
B) may be reduced for short periods of time with minimal damage to the long-run goals of the organization. 
C) cannot be reduced for even short periods of time without making fundamental changes. 
D) are most effectively controlled through the effective utilization of facilities and organization. 
A) have a planning horizon that covers many years. 
B) may be reduced for short periods of time with minimal damage to the long-run goals of the organization. 
C) cannot be reduced for even short periods of time without making fundamental changes. 
D) are most effectively controlled through the effective utilization of facilities and organization.

Question 4

Cardiv Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product.   The best estimate of the total cost to manufacture 4,300 units is closest to:

Accepted Answer

A) $877,200 
B) $909,400 
C) $901,925 
D) $926,650 
A) $877,200 
B) $909,400 
C) $901,925 
D) $926,650

Question 5

The following costs were incurred in April: $$\begin{array} { | l | l | } 
\hline \text { Direct materials } & \$ 18,000 \
\text { Direct labor } & \$ 21,000 \
\hline \text { Mlanufacturing overhead } & \$ 33,000 \
\hline \text { Selling expenses } & \$ 14,000 \
\hline \text { Administrative expenses } & \$ 19,000 \
\hline
\end{array}$$ Conversion costs during the month totaled:

Accepted Answer

A) $39,000 
B) $54,000 
C) $105,000 
D) $51,000 
A) $39,000 
B) $54,000 
C) $105,000 
D) $51,000

Question 6

An example of a discretionary fixed cost would be:

Accepted Answer

A) taxes on the factory. 
B) depreciation on manufacturing equipment. 
C) insurance. 
D) research and development. 
A) taxes on the factory. 
B) depreciation on manufacturing equipment. 
C) insurance. 
D) research and development.

Question 7

The following data pertains to activity and costs for two months:   Assuming that these activity levels are within the relevant range, the manufacturing overhead for July was:

Accepted Answer

A) $10,000 
B) $11,700 
C) $19,000 
D) $9,300 
A) $10,000 
B) $11,700 
C) $19,000 
D) $9,300

Question 8

Iaci 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 $133.60 per unit. $$\begin{array} { | l | r | r | } 
\hline \text { Sales volume (units) } & 4,000 & 5,000 \
\hline \text { Cost of sales } & \$ 383,600 & \$ 479,500 \
\hline \text { Selling and administrative costs } & \$ 124,400 & \$ 136,000 \
\hline
\end{array}$$ The best estimate of the total contribution margin when 4,300 units are sold is:

Accepted Answer

A) $112,230 
B) $162,110 
C) $28,380 
D) $45,150 
A) $112,230 
B) $162,110 
C) $28,380 
D) $45,150

Question 9

Krimton Corporation's manufacturing costs last year consisted of $150,000 of direct materials, $200,000 of direct labor, $40,000 of variable manufacturing overhead, and $25,000 of fixed manufacturing overhead. Conversion cost was:

Accepted Answer

A) $200,000 
B) $240,000 
C) $265,000 
D) $415,000 
A) $200,000 
B) $240,000 
C) $265,000 
D) $415,000

Question 10

Maintenance costs at a Whetsel Corporation factory are listed below:   Management believes that maintenance cost is a mixed cost that depends on machine-hours. Use the high-low method to estimate the variable and fixed components of this cost. Compute the variable component first and round off to the nearest whole cent. Compute the fixed component second and round off to the nearest whole dollar. These estimates would be closest to:

Accepted Answer

A) $8.86 per machine-hour; $20,577 per month 
B) $0.11 per machine-hour; $48,192 per month 
C) $15.48 per machine-hour; $48,103 per month 
D) $8.81 per machine-hour; $20,718 per month 
A) $8.86 per machine-hour; $20,577 per month 
B) $0.11 per machine-hour; $48,192 per month 
C) $15.48 per machine-hour; $48,103 per month 
D) $8.81 per machine-hour; $20,718 per month

Question 11

Erkkila Inc. reports that at an activity level of 6,400 machine-hours in a month, its total variable inspection cost is $423,680 and its total fixed inspection cost is $154,368. What would be the total variable inspection cost at an activity level of 6,700 machine-hours in a month? Assume that this level of activity is within the relevant range.

Accepted Answer

A) $423,680 
B) $443,540 
C) $161,604 
D) $578,048 
A) $423,680 
B) $443,540 
C) $161,604 
D) $578,048

Question 12

The following cost data pertain to the operations of Bouffard Department Stores, Inc., for the month of May.   The Brentwood Store is just one of many stores owned and operated by the company. The Shoe Department is one of many departments at the Brentwood Store. The central warehouse serves all of the company's stores. What is the total amount of the costs listed above that are NOT direct costs of the Brentwood Store?

Accepted Answer

A) $161,000 
B) $86,000 
C) $32,000 
D) $38,000 
A) $161,000 
B) $86,000 
C) $32,000 
D) $38,000

Question 13

Dechico Corporation purchased a machine 3 years ago for $456,000 when it launched product G92L. Unfortunately, this machine has broken down and cannot be repaired. The machine could be replaced by a new model 330 machine costing $474,000 or by a new model 260 machine costing $418,000. Management has decided to buy the model 260 machine. It has less capacity than the model 330 machine, but its capacity is sufficient to continue making product G92L. Management also considered, but rejected, the alternative of dropping product G92L and not replacing the old machine. If that were done, the $418,000 invested in the new machine could instead have been invested in a project that would have returned a total of $496,000. In making the decision to invest in the model 260 machine, the opportunity cost was:

Accepted Answer

A) $418,000 
B) $456,000 
C) $474,000 
D) $496,000 
A) $418,000 
B) $456,000 
C) $474,000 
D) $496,000

Question 14

Tolden Marketing, Inc., a merchandising company, reported sales of $2,861,800 and cost of goods sold of $1,492,400 for December. The company's total variable selling expense was $77,900; its total fixed selling expense was $70,600; its total variable administrative expense was $98,400; and its total fixed administrative expense was $193,400. The cost of goods sold in this company is a variable cost. The contribution margin for December is:

Accepted Answer

A) $1,369,400 
B) $2,421,500 
C) $1,193,100 
D) $929,100 
A) $1,369,400 
B) $2,421,500 
C) $1,193,100 
D) $929,100

Question 15

Electrical costs at one of Reifel Corporation's factories are listed below:   Management believes that electrical cost is a mixed cost that depends on machine-hours. Using the high-low method, the estimate of the fixed component of electrical cost per month is closest to:

Accepted Answer

A) $7,371 
B) $5,731 
C) $5,875 
D) $5,840 
A) $7,371 
B) $5,731 
C) $5,875 
D) $5,840

Question 16

Thread that is used in the production of mattresses is an indirect material that is therefore classified as manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 17

Kaelker Corporation reports that at an activity level of 7,000 units, its total variable cost is $590,730 and its total fixed cost is $372,750. What would be the total cost, both fixed and variable, at an activity level of 7,100 units? Assume that this level of activity is within the relevant range.

Accepted Answer

A) $963,480 
B) $977,244 
C) $971,919 
D) $970,362 
A) $963,480 
B) $977,244 
C) $971,919 
D) $970,362

Question 18

The Plastechnics Company began operations several years ago. The company's product requires materials that cost $25 per unit. The company employs a production supervisor whose salary is $2,000 per month. Production line workers are paid $15 per hour to manufacture and assemble the product. The company rents the equipment needed to produce the product at a rental cost of $1,500 per month. The building is depreciated on the straight-line basis at $9,000 per year.
The company spends $40,000 per year to market the product. Shipping costs for each unit are $20 per unit.
The company plans to liquidate several investments in order to expand production. These investments currently earn a return of $8,000 per year.
Required:
Complete the answer sheet below by placing an "X" under each heading that identifies the cost involved. The "Xs" can be placed under more than one heading for a single cost, e.g., a cost might be a sunk cost, an overhead cost, and a product cost.

Accepted Answer

The answer of The Plastechnics Company began operations several years...

Question 19

Cardillo Inc., an escrow agent, has provided the following data concerning its office expenses:   Management believes that office expense is a mixed cost that depends on the number of escrows completed. Note: Real estate purchases usually involve the services of an escrow agent that holds funds and prepares documents to complete the transaction.
Using the high-low method, the estimate of the variable component of office expense per escrow completed is closest to:

Accepted Answer

A) $26.75 
B) $118.23 
C) $36.11 
D) $72.49 
A) $26.75 
B) $118.23 
C) $36.11 
D) $72.49

Question 20

At an activity level of 8,300 machine-hours in a month, Baudry Corporation's total variable maintenance cost is $220,448 and its total fixed maintenance cost is $556,764. What would be the average fixed maintenance cost per unit at an activity level of 8,600 machine-hours in a month? Assume that this level of activity is within the relevant range.

Accepted Answer

A) $93.64 
B) $67.08 
C) $64.74 
D) $75.15 
A) $93.64 
B) $67.08 
C) $64.74 
D) $75.15

Stott Company requires one full-time dock hand for every 500 packages loaded daily. The wages for these dock hands would be:

Harris 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 $84.40 per unit. The best estimate of the total variable cost per unit is:

Discretionary fixed costs:

Cardiv Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product. The best estimate of the total cost to manufacture 4,300 units is closest to:

The following costs were incurred in April: Direct materials \ 18,000 Direct labor \ 21,000 Mlanufacturing overhead \ 33,000 Selling expenses \ 14,000 Administrative expenses \ 19,000 Conversion costs during the month totaled:

An example of a discretionary fixed cost would be:

The following data pertains to activity and costs for two months: Assuming that these activity levels are within the relevant range, the manufacturing overhead for July was:

Krimton Corporation's manufacturing costs last year consisted of $150,000 of direct materials, $200,000 of direct labor, $40,000 of variable manufacturing overhead, and $25,000 of fixed manufacturing overhead. Conversion cost was:

Electrical costs at one of Reifel Corporation's factories are listed below: Management believes that electrical cost is a mixed cost that depends on machine-hours. Using the high-low method, the estimate of the fixed component of electrical cost per month is closest to:

Thread that is used in the production of mattresses is an indirect material that is therefore classified as manufacturing overhead.

Kaelker Corporation reports that at an activity level of 7,000 units, its total variable cost is $590,730 and its total fixed cost is $372,750. What would be the total cost, both fixed and variable, at an activity level of 7,100 units? Assume that this level of activity is within the relevant range.

Job-Order Costing

Activity-Based Costing

Process Costing

Cost-Volume-Profit Relationships

Variable Costing and Segment Reporting: Tools for Management

Master Budgeting

Flexible Budgets, Standard Costs, and Variance Analysis

Performance Measurement in Decentralized Organizations

Differential Analysis: the Key to Decision Making

Capital Budgeting Decisions

Statement of Cash Flows

Financial Statement Analysis

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

Journal Entries to Record Variances

The Concept of Present Value

The Direct Method of Determining the Net Cash Provided by Operating Activities

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Exam 1: Managerial Accounting and Cost Concepts

Stott Company requires one full-time dock hand for every 500 packages loaded daily. The wages for these dock hands would be:

Harris 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 $84.40 per unit. The best estimate of the total variable cost per unit is:

Discretionary fixed costs:

Cardiv Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product. The best estimate of the total cost to manufacture 4,300 units is closest to:

The following costs were incurred in April: Direct materials \ 18,000 Direct labor \ 21,000 Mlanufacturing overhead \ 33,000 Selling expenses \ 14,000 Administrative expenses \ 19,000 Conversion costs during the month totaled:

An example of a discretionary fixed cost would be:

The following data pertains to activity and costs for two months: Assuming that these activity levels are within the relevant range, the manufacturing overhead for July was:

Krimton Corporation's manufacturing costs last year consisted of $150,000 of direct materials, $200,000 of direct labor, $40,000 of variable manufacturing overhead, and $25,000 of fixed manufacturing overhead. Conversion cost was:

Electrical costs at one of Reifel Corporation's factories are listed below: Management believes that electrical cost is a mixed cost that depends on machine-hours. Using the high-low method, the estimate of the fixed component of electrical cost per month is closest to:

Thread that is used in the production of mattresses is an indirect material that is therefore classified as manufacturing overhead.

Job-Order Costing

Activity-Based Costing

Process Costing

Cost-Volume-Profit Relationships

Variable Costing and Segment Reporting: Tools for Management

Master Budgeting

Flexible Budgets, Standard Costs, and Variance Analysis

Performance Measurement in Decentralized Organizations

Differential Analysis: the Key to Decision Making

Capital Budgeting Decisions

Statement of Cash Flows

Financial Statement Analysis

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

Journal Entries to Record Variances

The Concept of Present Value

The Direct Method of Determining the Net Cash Provided by Operating Activities

Filters