Exam 1: Managerial Accounting and Cost Concepts

At a sales volume of 35, 000 units, Cly Corporation's sales commissions (a cost that is variable with respect to sales volume)total $525, 000. To the nearest whole dollar, what should be the total sales commissions at a sales volume of 36, 100 units? (Assume that this sales volume is within the relevant range. )

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:

Corcetti Company manufactures and sells prewashed denim jeans.Large rolls of denim cloth are purchased and are first washed in a giant washing machine.After the cloth is dried, it is cut up into jean pattern shapes and then sewn together.The completed jeans are sold to various retail chains. Which of the following terms could be used to correctly describe the cost of the thread used to sew the jeans together?

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 variable component of electrical cost per machine-hour is closest to:

Comco, Inc.has accumulated the following data for the cost of maintenance on its machinery for the last four months: Assume that the relevant range includes all of the activity levels mentioned in this problem. Assuming Comco uses the high-low method of analysis, the fixed cost of maintenance would be estimated to be:

All of the following would be classified as product costs except:

The engineering approach to the analysis of mixed costs involves a detailed analysis of what cost behavior should be, based on an industrial engineer's evaluation of the production methods to be used, the materials specifications, labor requirements, equipment usage, production efficiency, power consumption, and so on.

Property taxes on a manufacturing facility are classified as:

Searls Corporation, a merchandising company, reported the following results for July: Cost of goods sold is a variable cost in this company. The contribution margin for July is:

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.

Rent on a factory building used in the production process would be classified as a product cost and as a fixed cost.

A manufacturing company prepays its insurance coverage for a three-year period.The premium for the three years is $2, 400 and is paid at the beginning of the first year.Seventy percent of the premium applies to manufacturing operations and thirty percent applies to selling and administrative activities.What amounts should be considered product and period costs respectively for the first year of coverage?

Cosgrove, Inc. , is a wholesaler that distributes a single product.The company's revenues and expenses for the last three months are given below: Required: a.Determine which expenses are mixed and, by use of the high-low method, separate each mixed expense into variable and fixed elements.(Use unit sales as the activity measure. )State the cost formula for each mixed expense. b.Compute the company's contribution margin for May.

Direct material costs are generally fixed costs.

In a traditional format income statement for a merchandising company, the selling and administrative expenses report all period costs that have been expensed as incurred.

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 contribution margin when 5, 300 units are sold is:

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

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 buy the model 260 machine rather than the model 330 machine, the differential cost was:

Product costs are recorded as expenses in the period in which the related products are sold.

A partial listing of costs incurred at Gilhooly Corporation during September appears below: The total of the manufacturing overhead costs listed above for September is: