Exam 1: Managerial Accounting and Cost Concepts

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 average fixed inspection cost per unit at an activity level of 6, 700 machine-hours in a month? Assume that this level of activity is within the relevant range.

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:

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:

Discretionary fixed costs:

Emerton Corporation leases its corporate headquarters building.This lease cost is fixed with respect to the company's sales volume.In a recent month in which the sales volume was 32, 000 units, the lease cost was $716, 800. To the nearest whole dollar, what should be the total lease cost at a sales volume of 30, 900 units in a month? (Assume that this sales volume is within the relevant range. )

Property taxes and insurance premiums paid on a factory building are examples of period costs.

Frank Company operates a cafeteria for its employees.The number of meals served each week over the last seven weeks, along with the total costs of operating the cafeteria are given below: Assume that the relevant range includes all of the activity levels mentioned in this problem. Using the high-low method of analysis, the variable cost per meal served in the cafeteria would be estimated to be:

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.

Farnor, Inc. , would like to estimate the variable and fixed components of its electrical costs and has compiled the following data for the last four months of operations. Using the high-low method of analysis, the estimated variable cost per machine hour for electricity is closest to:

A partial listing of costs incurred at Falkenberg Corporation during October appears below: Required: a.What is the total amount of product cost listed above? Show your work. b.What is the total amount of period cost listed above? Show your work.

The planning horizon for a committed fixed cost usually encompasses many years.

When the level of activity decreases, variable costs will:

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

When the activity level declines within the relevant range, what should happen with respect to the following?

Which of the following is an example of a cost that is variable with respect to the number of units produced?

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 soap used to wash the denim cloth?

In a manufacturing company, direct labor costs combined with direct materials costs are known as:

The following costs were incurred in April: Conversion costs during the month totaled:

At an activity level of 4, 000 machine-hours in a month, Curt Corporation's total variable production engineering cost is $154, 200 and its total fixed production engineering cost is $129, 000.What would be the total production engineering cost per unit, both fixed and variable, at an activity level of 4, 300 machine-hours in a month? Assume that this level of activity is within the relevant range.

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