Question 1

The high/low method:

Accepted Answer

A)  considers only the highest and lowest costs for a given time period. 
B)  is superior to regression analysis. 
C)  considers all data points available. 
D)  uses the data points for only the high and low levels of activity. 
A)  considers only the highest and lowest costs for a given time period. 
B)  is superior to regression analysis. 
C)  considers all data points available. 
D)  uses the data points for only the high and low levels of activity.

Question 2

Beauregard Imports has pretax income of $75,000. If their tax rate is 35%, what will be their after-tax income?

Accepted Answer

A)  $ 48,750 
B)  $123,750 
C)  $ 26,250 
D)  $101,250 
A)  $ 48,750 
B)  $123,750 
C)  $ 26,250 
D)  $101,250

Question 3

After-tax income can be calculated as follows:

Accepted Answer

A)  After-tax income = Pretax income ´ tax rate 
B)  After-tax income = Pretax income ¸ (1 - tax rate) 
C)  After-tax income = Pretax income ´ (1 + tax rate) 
D)  After-tax income = Pretax income ´ (1 - tax rate) 
A)  After-tax income = Pretax income ´ tax rate 
B)  After-tax income = Pretax income ¸ (1 - tax rate) 
C)  After-tax income = Pretax income ´ (1 + tax rate) 
D)  After-tax income = Pretax income ´ (1 - tax rate)

Question 4

Cornell Products has the following information available for 2012:   During 2012, Cornell produced 6,000 units out of which 5,400 units were sold for $20 each.
Refer to the information provided for Cornell Products. What is the net operating income under variable costing?

Accepted Answer

A)  $35,000 
B)  $29,000 
C)  $26,000 
D)  $23,000 
A)  $35,000 
B)  $29,000 
C)  $26,000 
D)  $23,000

Question 5

Which of the following line descriptions would not be found on an income statement prepared using absorption costing?

Accepted Answer

A)  Sales 
B)  Contribution margin 
C)  Cost of goods sold 
D)  Net operating income 
A)  Sales 
B)  Contribution margin 
C)  Cost of goods sold 
D)  Net operating income

Question 6

The cost equation, y = $500 + $5.40x, x represents:

Accepted Answer

A)  variable cost. 
B)  step cost. 
C)  units produced. 
D)  mixed cost. 
A)  variable cost. 
B)  step cost. 
C)  units produced. 
D)  mixed cost.

Question 7

Lockhart Products produces a single product. During 2012 the company incurred the following costs:   Lockhart had no units in beginning inventory. During 2012, 6,000 units were produced and 5,000 units were sold. Which of the following statements is true when comparing net operating income using absorption versus variable costing?

Accepted Answer

A)  Net operating income will be $3,500 higher using absorption costing than using variable costing. 
B)  Net operating income will be $3,500 lower using absorption costing than using variable costing. 
C)  Net operating income will be $4,200 higher using absorption costing than using variable costing. 
D)  Net operating income will be $4,200 lower using absorption costing than using variable costing. 
A)  Net operating income will be $3,500 higher using absorption costing than using variable costing. 
B)  Net operating income will be $3,500 lower using absorption costing than using variable costing. 
C)  Net operating income will be $4,200 higher using absorption costing than using variable costing. 
D)  Net operating income will be $4,200 lower using absorption costing than using variable costing.

Question 8

When using regression analysis to predict mixed cost behavior, which of the following would be the dependent variable?

Accepted Answer

A)  The highest level of activity. 
B)  The lowest level of activity. 
C)  The mixed cost at a given level of production. 
D)  The variable cost per unit. 
A)  The highest level of activity. 
B)  The lowest level of activity. 
C)  The mixed cost at a given level of production. 
D)  The variable cost per unit.

Question 9

Pearson Products believes one of its costs is a mixed cost and has run a regression analysis which shows the following:
   Required:

Accepted Answer

The answer of Pearson Products believes one of its costs...

Question 10

Putnam Distributors is contemplating whether or not to accept a special order. Putnam wishes to have after-tax cash receipts of $54,000 if they accept the order. If Putnam has a tax rate of 40%, what is the price the customer should be charged for their order?

Accepted Answer

A)  $32,400 
B)  $21,600 
C)  $90,000 
D)  $54,000 
A)  $32,400 
B)  $21,600 
C)  $90,000 
D)  $54,000

Question 11

Regression analysis is a technique used to:

Accepted Answer

A)  estimate the step and mixed components of total cost. 
B)  estimate the fixed and variable components of a mixed cost. 
C)  estimate the fixed and variable components of a step cost. 
D)  estimate the fixed and mixed components of step cost. 
A)  estimate the step and mixed components of total cost. 
B)  estimate the fixed and variable components of a mixed cost. 
C)  estimate the fixed and variable components of a step cost. 
D)  estimate the fixed and mixed components of step cost.

Question 12

Quality Products Inc. incurred total costs of $50,000 to produce 1,400 units. Variable costs are $15 per unit. What are estimated fixed costs?

Accepted Answer

A)  $21,000 
B)  $71,000 
C)  $48,600 
D)  $29,000 
A)  $21,000 
B)  $71,000 
C)  $48,600 
D)  $29,000

Question 13

Which of the following statements is true regarding regression analysis?

Accepted Answer

A)  It is often less accurate than the high/low method. 
B)  It is a better predictor of fixed costs than variable costs. 
C)  It can not be used to predict the effect that a change in volume of production has on net income. 
D)  It uses statistical methods to fit a cost line through a number of data points. 
A)  It is often less accurate than the high/low method. 
B)  It is a better predictor of fixed costs than variable costs. 
C)  It can not be used to predict the effect that a change in volume of production has on net income. 
D)  It uses statistical methods to fit a cost line through a number of data points.

Question 14

Which of the following statements is false regarding absorption costing?

Accepted Answer

A)  Variable overhead is treated as a product cost. 
B)  Absorption costing is required for external financial statements prepared in accordance with generally accepted accounting principles (GAAP). 
C)  Fixed manufacturing overhead is treated as a product cost. 
D)  Fixed manufacturing overhead is expensed in the period incurred. 
A)  Variable overhead is treated as a product cost. 
B)  Absorption costing is required for external financial statements prepared in accordance with generally accepted accounting principles (GAAP). 
C)  Fixed manufacturing overhead is treated as a product cost. 
D)  Fixed manufacturing overhead is expensed in the period incurred.

Question 15

Assuming that the number of units produced is greater than the number of units sold, which of the following statements is true when comparing net operating income using absorption and variable costing?

Accepted Answer

A)  Absorption costing will yield a higher net operating income. 
B)  Variable costing will yield a higher net operating income. 
C)  Net operating income will be the same under both methods. 
D)  Sales revenue will be less using absorption costing. 
A)  Absorption costing will yield a higher net operating income. 
B)  Variable costing will yield a higher net operating income. 
C)  Net operating income will be the same under both methods. 
D)  Sales revenue will be less using absorption costing.

Question 16

Cardinal Cleaners Cardinal Cleaners documented the gallons of cleaning solvent it used as well as total overhead costs for the past five months as follows:
  Refer to the Cardinal Cleaners information above. Using the high/low method, what is equation to predict total overhead costs?

Accepted Answer

A)  Y = $700 + $36x 
B)  Y = $900 + $25x 
C)  Y = $175 + $41x 
D)  Y = $100 + $40x 
A)  Y = $700 + $36x 
B)  Y = $900 + $25x 
C)  Y = $175 + $41x 
D)  Y = $100 + $40x

Question 17

Which of the following is least likely to be classified as a variable cost?

Accepted Answer

A)  Direct materials 
B)  Factory supplies 
C)  Direct labor 
D)  Administrative building rent 
A)  Direct materials 
B)  Factory supplies 
C)  Direct labor 
D)  Administrative building rent

Question 18

B & B Manufacturing produces a single product. Last year, the company produced 10,000 units out of which 9,500 were sold. There were no units in beginning inventory. The company had the following costs:   Refer to the information provided for B & B Manufacturing. What is the unit product cost using absorption costing?

Accepted Answer

A)  $ 8.00 
B)  $ 6.00 
C)  $ 7.50 
D)  $10.50 
A)  $ 8.00 
B)  $ 6.00 
C)  $ 7.50 
D)  $10.50

Question 19

Cornell Products has the following information available for 2012:   During 2012, Cornell produced 6,000 units out of which 5,400 units were sold for $20 each.
Refer to the information provided for Cornell Products. What is the net operating income under absorption costing?

Accepted Answer

A)  $23,000 
B)  $29,000 
C)  $26,000 
D)  $35,000 
A)  $23,000 
B)  $29,000 
C)  $26,000 
D)  $35,000

Question 20

You are given the following cost and volume information:   Which type of cost is given?

Accepted Answer

A)  Variable 
B)  Fixed 
C)  Step 
D)  Mixed 
A)  Variable 
B)  Fixed 
C)  Step 
D)  Mixed

The high/low method:

Beauregard Imports has pretax income of $75,000. If their tax rate is 35%, what will be their after-tax income?

After-tax income can be calculated as follows:

Cornell Products has the following information available for 2012: During 2012, Cornell produced 6,000 units out of which 5,400 units were sold for $20 each. Refer to the information provided for Cornell Products. What is the net operating income under variable costing?

Which of the following line descriptions would not be found on an income statement prepared using absorption costing?

The cost equation, y = $500 + $5.40x, x represents:

When using regression analysis to predict mixed cost behavior, which of the following would be the dependent variable?

Pearson Products believes one of its costs is a mixed cost and has run a regression analysis which shows the following: Required:

Putnam Distributors is contemplating whether or not to accept a special order. Putnam wishes to have after-tax cash receipts of $54,000 if they accept the order. If Putnam has a tax rate of 40%, what is the price the customer should be charged for their order?

Regression analysis is a technique used to:

Quality Products Inc. incurred total costs of $50,000 to produce 1,400 units. Variable costs are $15 per unit. What are estimated fixed costs?

Which of the following statements is true regarding regression analysis?

Which of the following statements is false regarding absorption costing?

Assuming that the number of units produced is greater than the number of units sold, which of the following statements is true when comparing net operating income using absorption and variable costing?

Cardinal Cleaners Cardinal Cleaners documented the gallons of cleaning solvent it used as well as total overhead costs for the past five months as follows: Refer to the Cardinal Cleaners information above. Using the high/low method, what is equation to predict total overhead costs?

Which of the following is least likely to be classified as a variable cost?

Cornell Products has the following information available for 2012: During 2012, Cornell produced 6,000 units out of which 5,400 units were sold for $20 each. Refer to the information provided for Cornell Products. What is the net operating income under absorption costing?

You are given the following cost and volume information: Which type of cost is given?

Introduction to Managerial Accounting

Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows

Job Costing, Process Costing, and Operations Costing

Activity-Based Costing

Cost-Volume-Profit Analysis

Relevant Costs and Product Planning Decisions

Long-Term Capital Investment Decisions

The Use of Budgets in Planning and Decision Making

Variance Analysis A Tool for Cost Control and Performance Evaluation

Decentralization, Performance Evaluation, and the Balanced Scorecard

Financial Statement Analysis

The Statement of Cash Flows

Filters

Exam 5: Cost Behavior

The high/low method:

Beauregard Imports has pretax income of $75,000. If their tax rate is 35%, what will be their after-tax income?

After-tax income can be calculated as follows:

Cornell Products has the following information available for 2012: During 2012, Cornell produced 6,000 units out of which 5,400 units were sold for $20 each. Refer to the information provided for Cornell Products. What is the net operating income under variable costing?

Which of the following line descriptions would not be found on an income statement prepared using absorption costing?

The cost equation, y = $500 + $5.40x, x represents:

When using regression analysis to predict mixed cost behavior, which of the following would be the dependent variable?

Pearson Products believes one of its costs is a mixed cost and has run a regression analysis which shows the following: Required:

Putnam Distributors is contemplating whether or not to accept a special order. Putnam wishes to have after-tax cash receipts of $54,000 if they accept the order. If Putnam has a tax rate of 40%, what is the price the customer should be charged for their order?

Regression analysis is a technique used to:

Quality Products Inc. incurred total costs of $50,000 to produce 1,400 units. Variable costs are $15 per unit. What are estimated fixed costs?

Which of the following statements is true regarding regression analysis?

Which of the following statements is false regarding absorption costing?

Assuming that the number of units produced is greater than the number of units sold, which of the following statements is true when comparing net operating income using absorption and variable costing?

Cardinal Cleaners Cardinal Cleaners documented the gallons of cleaning solvent it used as well as total overhead costs for the past five months as follows: Refer to the Cardinal Cleaners information above. Using the high/low method, what is equation to predict total overhead costs?

Which of the following is least likely to be classified as a variable cost?

Cornell Products has the following information available for 2012: During 2012, Cornell produced 6,000 units out of which 5,400 units were sold for $20 each. Refer to the information provided for Cornell Products. What is the net operating income under absorption costing?

You are given the following cost and volume information: Which type of cost is given?

Introduction to Managerial Accounting

Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows

Job Costing, Process Costing, and Operations Costing

Activity-Based Costing

Cost-Volume-Profit Analysis

Relevant Costs and Product Planning Decisions

Long-Term Capital Investment Decisions

The Use of Budgets in Planning and Decision Making

Variance Analysis A Tool for Cost Control and Performance Evaluation

Decentralization, Performance Evaluation, and the Balanced Scorecard

Financial Statement Analysis

The Statement of Cash Flows

Filters