Question 1

The contribution approach to the income statement:

Accepted Answer

A)  organizes costs on a functional basis. 
B)  is useful to managers in planning and decision making. 
C)  shows a contribution margin rather than a net operating income figure at the bottom of the statement. 
D)  can be used only by manufacturing companies. 
A)  organizes costs on a functional basis. 
B)  is useful to managers in planning and decision making. 
C)  shows a contribution margin rather than a net operating income figure at the bottom of the statement. 
D)  can be used only by manufacturing companies. B

Question 2

Pfalzgraf Corporation, a manufacturing company, has provided the following financial data for January:   The company had no beginning or ending inventories.
-The contribution margin for January was:

Accepted Answer

A)  $14,000 
B)  $151,000 
C)  $91,000 
D)  $163,000 
A)  $14,000 
B)  $151,000 
C)  $91,000 
D)  $163,000 D

Question 3

The controller of JoyCo has requested a quick estimate of the manufacturing supplies needed for the month of July when production is expected to be 470,000 units. Below are actual data from the prior three months of operations.  
Using these data and the high-low method, what is the best estimate of the cost of manufacturing supplies that would be needed for July? (Assume that this activity is within the relevant range.)

Accepted Answer

A)  $805,284 
B)  $1,188,756 
C)  $755,196 
D)  $752,060 
A)  $805,284 
B)  $1,188,756 
C)  $755,196 
D)  $752,060 D

Question 4

Inspection costs at one of Pulley 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 fixed component of inspection cost per month is closest to:

Accepted Answer

A)  $2,749 
B)  $10,519 
C)  $9,980 
D)  $10,597 
A)  $2,749 
B)  $10,519 
C)  $9,980 
D)  $10,597

Question 5

Maxwell Company has a total expense per unit of $2.00 per unit at the 16,000 level of activity and total expense per unit of $1.95 at the 21,000 unit level of activity.
-The best estimate of the total fixed cost per period for Maxwell Company is:

Accepted Answer

A)  $40,950 
B)  $32,000 
C)  $3,360 
D)  $29,190 
A)  $40,950 
B)  $32,000 
C)  $3,360 
D)  $29,190

Question 6

Expense A is a fixed cost; expense B is a variable cost. During the current year the activity level has increased, but is still within the relevant range. In terms of cost per unit of activity, we would expect that:

Accepted Answer

A)  expense A has remained unchanged. 
B)  expense B has decreased. 
C)  expense A has decreased. 
D)  expense B has increased. 
A)  expense A has remained unchanged. 
B)  expense B has decreased. 
C)  expense A has decreased. 
D)  expense B has increased.

Question 7

The following production and average cost data for two levels of monthly production volume have been supplied by a company that produces a single product:  
-The best estimate of the total monthly fixed manufacturing cost is:

Accepted Answer

A)  $222,000 
B)  $284,400 
C)  $305,200 
D)  $633,600 
A)  $222,000 
B)  $284,400 
C)  $305,200 
D)  $633,600

Question 8

Contribution margin is the excess of revenues over:

Accepted Answer

A)  cost of goods sold. 
B)  manufacturing cost. 
C)  all direct costs. 
D)  all variable costs. 
A)  cost of goods sold. 
B)  manufacturing cost. 
C)  all direct costs. 
D)  all variable costs.

Question 9

Economists correctly point out that many costs that the accountant classifies as variable are actually curvilinear.

Accepted Answer

A) True 
 B)False

Question 10

Iacopi 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 $172.50 per unit.  
The best estimate of the total contribution margin when 4,300 units are sold is:

Accepted Answer

A)  $343,140 
B)  $65,790 
C)  $121,260 
D)  $411,080 
A)  $343,140 
B)  $65,790 
C)  $121,260 
D)  $411,080

Question 11

The contribution approach to the income statement classifies costs by behavior rather than by function.

Accepted Answer

A) True 
 B)False

Question 12

Mateo Company's average cost per unit is $1.425 at the 16,000 unit level of activity and $1.38 at the 20,000 unit level of activity. Assume that all of the activity levels mentioned in this problem are within the relevant range.
Required:
Predict the following items for Mateo Company:
a. Variable cost per unit.
b. Total fixed cost per period.
c. Total expected costs at the 18,000 unit level of activity.

Accepted Answer

The answer of Mateo Company's average cost per unit is...

Question 13

Baaca 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 variable manufacturing cost per unit is:

Accepted Answer

A)  $82.00 
B)  $70.20 
C)  $56.70 
D)  $11.80 
A)  $82.00 
B)  $70.20 
C)  $56.70 
D)  $11.80

Question 14

Hiss Company's activity for the last six months is as follows:  
-Using the high-low method, the estimated variable electrical cost per machine hour is:

Accepted Answer

A)  $0.40 
B)  $0.65 
C)  $0.70 
D)  $0.67 
A)  $0.40 
B)  $0.65 
C)  $0.70 
D)  $0.67

Question 15

At an activity level of 7,900 machine-hours in a month, Manchester Corporation's total variable maintenance cost is $430,550 and its total fixed maintenance cost is $417,120.
-What would be the average fixed maintenance cost per unit at an activity level of 8,000 units in a month? Assume that this level of activity is within the relevant range.

Accepted Answer

A)  $52.14 
B)  $70.75 
C)  $52.80 
D)  $107.30 
A)  $52.14 
B)  $70.75 
C)  $52.80 
D)  $107.30

Question 16

At an activity level of 7,900 machine-hours in a month, Manchester Corporation's total variable maintenance cost is $430,550 and its total fixed maintenance cost is $417,120.
-What would be the total variable maintenance cost at an activity level of 8,000 machine-hours in a month? Assume that this level of activity is within the relevant range.

Accepted Answer

A)  $847,670 
B)  $422,400 
C)  $430,550 
D)  $436,000 
A)  $847,670 
B)  $422,400 
C)  $430,550 
D)  $436,000

Question 17

Kalbach Corporation, a manufacturing company, has provided the following financial data for November:  
The company had no beginning or ending inventories. The contribution margin for November was:

Accepted Answer

A)  $285,000 
B)  $166,000 
C)  $310,000 
D)  $36,000 
A)  $285,000 
B)  $166,000 
C)  $310,000 
D)  $36,000

Question 18

Buffo Company fabricates metal folding chairs. Data concerning the company's revenue and cost structure follow:  
-If Buffo plans to produce and sell 3,000 units next month, the expected contribution margin would be:

Accepted Answer

A)  $30,750 
B)  $74,250 
C)  $26,750 
D)  $96,500 
A)  $30,750 
B)  $74,250 
C)  $26,750 
D)  $96,500

Question 19

Supply costs at Rupard Corporation's chain of gyms are listed below:  
Management believes that supply cost is a mixed cost that depends on client-visits. Using the high-low method to estimate the variable and fixed components of this cost, those estimates would be closest to:

Accepted Answer

A)  $0.76 per client-visit; $18,152 per month 
B)  $1.31 per client-visit; $10,462 per month 
C)  $2.08 per client-visit; $28,489 per month 
D)  $0.77 per client-visit; $17,952 per month 
A)  $0.76 per client-visit; $18,152 per month 
B)  $1.31 per client-visit; $10,462 per month 
C)  $2.08 per client-visit; $28,489 per month 
D)  $0.77 per client-visit; $17,952 per month

Question 20

At an activity level of 10,000 units, variable costs totaled $35,000 and fixed costs totaled $20,800. If 16,000 units are produced and this activity is within the relevant range, then:

Accepted Answer

A)  total cost would equal $89,280. 
B)  total unit cost would equal $4.80. 
C)  fixed cost per unit would equal $5.58. 
D)  total costs would equal $55,800. 
A)  total cost would equal $89,280. 
B)  total unit cost would equal $4.80. 
C)  fixed cost per unit would equal $5.58. 
D)  total costs would equal $55,800.

Exam 5: Cost Behavior Analysis and Use

The contribution approach to the income statement:

Pfalzgraf Corporation, a manufacturing company, has provided the following financial data for January: The company had no beginning or ending inventories. -The contribution margin for January was:

Inspection costs at one of Pulley 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 fixed component of inspection cost per month is closest to:

Maxwell Company has a total expense per unit of $2.00 per unit at the 16,000 level of activity and total expense per unit of $1.95 at the 21,000 unit level of activity. -The best estimate of the total fixed cost per period for Maxwell Company is:

Expense A is a fixed cost; expense B is a variable cost. During the current year the activity level has increased, but is still within the relevant range. In terms of cost per unit of activity, we would expect that:

The following production and average cost data for two levels of monthly production volume have been supplied by a company that produces a single product: -The best estimate of the total monthly fixed manufacturing cost is:

Contribution margin is the excess of revenues over:

Economists correctly point out that many costs that the accountant classifies as variable are actually curvilinear.

Iacopi 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 $172.50 per unit. The best estimate of the total contribution margin when 4,300 units are sold is:

The contribution approach to the income statement classifies costs by behavior rather than by function.

Baaca 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 variable manufacturing cost per unit is:

Hiss Company's activity for the last six months is as follows: -Using the high-low method, the estimated variable electrical cost per machine hour is:

Kalbach Corporation, a manufacturing company, has provided the following financial data for November: The company had no beginning or ending inventories. The contribution margin for November was:

Buffo Company fabricates metal folding chairs. Data concerning the company's revenue and cost structure follow: -If Buffo plans to produce and sell 3,000 units next month, the expected contribution margin would be:

Supply costs at Rupard Corporation's chain of gyms are listed below: Management believes that supply cost is a mixed cost that depends on client-visits. Using the high-low method to estimate the variable and fixed components of this cost, those estimates would be closest to:

At an activity level of 10,000 units, variable costs totaled $35,000 and fixed costs totaled $20,800. If 16,000 units are produced and this activity is within the relevant range, then:

Managerial Accounting and the Business Environment

Managerial Accounting and Cost Concepts

Systems Design: Job-Order Costing

Systems Design: Process Costing

Cost-Volume-Profit Relationship

Variable Costing: a Tool for Management

Activity Based Costing: a Tool to Aid Decision-Making

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Operating Performance Measures

Segment Reporting, Decentralization, and the Balanced Scorecard

Relevant Costs for Decision Making

Capital Budgeting Decisions

How Well Am I Doing Statement of Cash Flows

How Well Am I Doing Financial Statement Analysis

Pricing Products and Services

Profitability Analysis

Further Classification of Labor Costs

Cost of Quality

the Predetermined Overhead Rate and Capacity

Fifo Method

Service Department Allocations

Least-Squares Regression Computations

Abc Action Analysis

Using a Modified Form of Activity-Based Costing to

Predetermined Overhead Rates and Overhead Analysis

Journal Entries to Record Variances

Transfer Pricing

Service Department Charges

The Concept of Present Value

Income Taxes in Capital Budgeting Decisions

The Direct Method of Determining the Net Cash Provided by

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