Question 1

The contribution format is widely used for preparing external financial statements.

Accepted Answer

A) True 
 B)False

Question 2

Comco,Inc.has accumulated the following data for the cost of maintenance on its machinery for the last four months:  Assume that the relevant range includes all of the activity levels mentioned in this problem. Assuming Comco uses the high-low method of analysis,if machine hours are budgeted to be 20,000 hours then the budgeted total maintenance cost would be expected to be:

Accepted Answer

A) $25,400 
B) $25,560 
C) $23,700 
D) $24,720

Question 3

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

Accepted Answer

A) $39,000 
B) $54,000 
C) $105,000 
D) $51,000

Question 4

A partial listing of costs incurred during December at Rooks Corporation appears below:  The total of the product costs listed above for December is:

Accepted Answer

A) $340,000 
B) $82,000 
C) $647,000 
D) $307,000

Question 5

Fresh Wreath Corporation manufactures wreaths according to customer specifications and ships them to customers using United Parcel Service (UPS).Which two terms below describe the cost of shipping these wreaths?

Accepted Answer

A) variable cost and product cost 
B) variable cost and period cost 
C) fixed cost and product cost 
D) fixed cost and period cost

Question 6

A sunk cost is:

Accepted Answer

A) a cost which may be saved by not adopting an alternative. 
B) a cost which may be shifted to the future with little or no effect on current operations. 
C) a cost which cannot be avoided because it has already been incurred. 
D) a cost which does not entail any dollar outlay but which is relevant to the decision-making process.

Question 7

The costs of the Accounting Department at Central Hospital would be considered by the Surgery Department to be:

Accepted Answer

A) direct costs. 
B) indirect costs. 
C) incremental costs. 
D) opportunity costs.

Question 8

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:

Accepted Answer

A) $3.40 
B) $2.14 
C) $1.00 
D) $0.87

Question 9

The Plastechnics Company began operations several years ago.The company's product requires materials that cost $25 per unit.The company employs a production supervisor whose salary is $2,000 per month.Production line workers are paid $15 per hour to manufacture and assemble the product.The company rents the equipment needed to produce the product at a rental cost of $1,500 per month.The building is depreciated on the straight-line basis at $9,000 per year.
The company spends $40,000 per year to market the product.Shipping costs for each unit are $20 per unit.
The company plans to liquidate several investments in order to expand production.These investments currently earn a return of $8,000 per year.
Required:
Complete the answer sheet below by placing an "X" under each heading that identifies the cost involved.The "Xs" can be placed under more than one heading for a single cost,e.g. ,a cost might be a sunk cost,an overhead cost,and a product cost.

Accepted Answer

The answer of The Plastechnics Company began operations several years...

Question 10

Hadrana Corporation reports that at an activity level of 5,500 units,its total variable cost is $275,330 and its total fixed cost is $86,240. What would be the average fixed cost per unit at an activity level of 5,600 units? Assume that this level of activity is within the relevant range.

Accepted Answer

A) $32.27 
B) $15.68 
C) $65.74 
D) $15.40

Question 11

Kodama Corporation staffs a helpline to answer questions from customers.The costs of operating the helpline are variable with respect to the number of calls in a month.At a volume of 30,000 calls in a month,the costs of operating the helpline total $369,000. To the nearest whole cent,what should be the average cost of operating the helpline per call at a volume of 31,300 calls in a month? (Assume that this call volume is within the relevant range. )

Accepted Answer

A) $12.30 
B) $11.79 
C) $10.92 
D) $12.05

Question 12

Indirect labor is a(n):

Accepted Answer

A) Prime cost. 
B) Conversion cost. 
C) Period cost. 
D) Opportunity cost.

Question 13

Tolden Marketing,Inc. ,a merchandising company,reported sales of $2,861,800 and cost of goods sold of $1,492,400 for December.The company's total variable selling expense was $77,900;its total fixed selling expense was $70,600;its total variable administrative expense was $98,400;and its total fixed administrative expense was $193,400.The cost of goods sold in this company is a variable cost. The gross margin for December is:

Accepted Answer

A) $1,193,100 
B) $929,100 
C) $1,369,400 
D) $2,597,800

Question 14

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

Accepted Answer

A) $53,000 
B) $67,000 
C) $38,000 
D) $103,000

Question 15

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.

Accepted Answer

A) $68.33 
B) $68.55 
C) $70.80 
D) $65.86

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

At a sales volume of 35,000 units,Cly Corporation's sales commissions (a cost that is variable with respect to sales volume)total $525,000. To the nearest whole cent,what should be the average sales commission per unit at a sales volume of 33,600 units? (Assume that this sales volume is within the relevant range. )

Accepted Answer

A) $14.54 
B) $15.00 
C) $15.63 
D) $15.32

Question 18

The property taxes on a factory building would be an example of:

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 19

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. )

Accepted Answer

A) $742,317 
B) $692,160 
C) $704,480 
D) $716,800

Question 20

The potential benefit that is given up when one alternative is selected over another is called an opportunity cost.

Accepted Answer

A) True 
 B)False

Exam 1: Managerial Accounting and Cost Concepts

The contribution format is widely used for preparing external financial statements.

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

A partial listing of costs incurred during December at Rooks Corporation appears below: The total of the product costs listed above for December is:

Fresh Wreath Corporation manufactures wreaths according to customer specifications and ships them to customers using United Parcel Service (UPS) .Which two terms below describe the cost of shipping these wreaths?

A sunk cost is:

The costs of the Accounting Department at Central Hospital would be considered by the Surgery Department to be:

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:

Hadrana Corporation reports that at an activity level of 5,500 units,its total variable cost is $275,330 and its total fixed cost is $86,240. What would be the average fixed cost per unit at an activity level of 5,600 units? Assume that this level of activity is within the relevant range.

Indirect labor is a(n) :

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

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

The property taxes on a factory building would be an example of:

The potential benefit that is given up when one alternative is selected over another is called an opportunity cost.