Exam 1: Managerial Accounting and Cost Concepts

Baker Corporation has provided the following production and total cost data for two levels of monthly production volume.The company produces a single product. The best estimate of the total monthly fixed manufacturing cost is:

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 gross margin for July is:

Electrical costs at one of Kantola Corporation's factories are listed below: Management believes that electrical 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,rounding off to the nearest whole cent.Then compute the fixed component,rounding off to the nearest whole dollar.Those estimates are closest to:

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:

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:

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

For planning,control,and decision-making purposes:

Direct material costs are generally fixed costs.

Ricwy Corporation uses the cost formula Y = $4,800 + $0.40X for the maintenance cost,where X is machine-hours.The August budget is based on 9,000 hours of planned machine time.Maintenance cost expected to be incurred during August is:

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.

Abare Corporation reported the following data for the month of December: The conversion cost for December was:

At a sales volume of 37,000 units,Maks Corporation's property taxes (a cost that is fixed with respect to sales volume)total $802,900. To the nearest whole dollar,what should be the total property taxes at a sales volume of 39,700 units? (Assume that this sales volume is within the relevant range. )

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 direct costs of the Shoe Department?

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 total variable maintenance cost at an activity level of 8,600 machine-hours in a month? Assume that this level of activity is within the relevant range.

Within the relevant range:

In April direct labor was 70% of conversion cost.If the manufacturing overhead for the month was $42,000 and the direct materials cost was $28,000,the direct labor cost was:

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 sunk cost was:

Younger Corporation reports that at an activity level of 8,700 units,its total variable cost is $653,109 and its total fixed cost is $658,416. Required: For the activity level of 8,800 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.

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.