Exam 1: Managerial Accounting and Cost Concepts

Temblador Corporation purchased a machine 7 years ago for $319,000 when it launched product E26T. Unfortunately, this machine has broken down and cannot be repaired. The machine could be replaced by a new model 330 machine costing $323,000 or by a new model 230 machine costing $285,000. Management has decided to buy the model 230 machine. It has less capacity than the model 330 machine, but its capacity is sufficient to continue making product E26T. Management also considered, but rejected, the alternative of dropping product E26T and not replacing the old machine. If that were done, the $285,000 invested in the new machine could instead have been invested in a project that would have returned a total of $386,000. -In making the decision to buy the model 230 machine rather than the model 330 machine,the sunk cost was:

The management of Harrigill Corporation would like to have a better understanding of the behavior of its inspection costs.The company has provided the following data: Management believes that inspection cost is a mixed cost that depends on direct labor-hours. Required: Estimate the variable cost per direct labor-hour and the fixed cost per month using the high-low method.Show your work! Round off all calculations to the nearest whole cent.

Inspection costs at one of Krivanek Corporation's factories are listed below: Management believes that inspection cost is a mixed cost that depends on units produced. -Using the high-low method,the estimate of the variable component of inspection cost per unit produced is closest to:

Manufacturing overhead combined with direct materials is known as conversion cost.

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:

Which of the following would be considered a product cost for external financial reporting purposes?

Erkkila Inc. reports that at an activity level of 7,900 machine-hours in a month, its total variable inspection cost is $210,061 and its total fixed inspection cost is $191,970. -What would be the average fixed inspection cost per unit at an activity level of 8,100 machine-hours in a month? Assume that this level of activity is within the relevant range.

Emilio Corporation reports that at an activity level of 3,400 units, its total variable cost is $59,058 and its total fixed cost is $101,150. -What would be the average fixed cost per unit at an activity level of 3,500 units? Assume that this level of activity is within the relevant range.

A soft drink bottler incurred the following plant utility costs: 1,800 units bottled with utility costs of $5,750,and 1,500 units bottled with utility costs of $5,200.What is the variable cost per unit bottled (Use the High-low method.Round to the nearest cent. )

Committed fixed costs are fixed costs that are not controllable.

Corio Corporation reports that at an activity level of 3,800 units,its total variable cost is $221,464 and its total fixed cost is $94,848. Required: For the activity level of 3,900 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.

At a sales volume of 35,000 units, Thoma Corporation's sales commissions (a cost that is variable with respect to sales volume) total $448,000. -To the nearest whole cent,what should be the average sales commission per unit at a sales volume of 36,800 units? (Assume that this sales volume is within the relevant range. )

At a sales volume of 27,000 units, Danielle Corporation's property taxes (a cost that is fixed with respect to sales volume) total $207,900. -To the nearest whole dollar,what should be the total property taxes at a sales volume of 30,900 units? (Assume that this sales volume is within the relevant range. )

Callander 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 $151.60 per unit. -The best estimate of the total monthly fixed cost is:

Honey Corporation,a merchandising company,reported the following results for January: Cost of goods sold is a variable cost in this company. Required: a.Prepare a traditional format income statement for January. b.Prepare a contribution format income statement for January.

The term differential cost refers to:

Holzhauer Corporation, a merchandising company, reported the following results for March: Cost of goods sold is a variable cost in this company. -The gross margin for March is:

Direct material costs are generally variable costs.

Carbaugh 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 3,300 units is closest to:

Iadanza 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 $195.70 per unit. Sales volume (units) 6,000 7,000 Cost of sales \ 457,800 \ 534,100 Selling and administrative costs \ 621,000 \ 639,100 The best estimate of the total contribution margin when 6,300 units are sold is: