Question 1

Under absorption costing, fixed manufacturing costs are not expensed until the units are sold.

Accepted Answer

A) True 
 B)False

Question 2

Jean's Fitness Club provides monthly memberships as well as personal training sessions. The personal trainers earn 50% of the revenue for all personal training sessions. The Fitness Club also sells nutrition products. Jean's general ledger accounts indicate the following for the year. The front desk staff wages expense remains the same throughout the year.   If a contribution margin income statement is prepared for the year, what is operating income?

Accepted Answer

A) $207,500 
B) $280,000 
C) $175,500 
D) $384,500 
A) $207,500 
B) $280,000 
C) $175,500 
D) $384,500

Question 3

Jean's Fitness Club provides monthly memberships as well as personal training sessions. The personal trainers earn 50% of the revenue for all personal training sessions. The Fitness Club also sells nutrition products. Jean's general ledger accounts indicate the following for the year. The front desk staff wages expense remains the same throughout the year.   If a traditional income statement is prepared for the year, what is operating income?

Accepted Answer

A) $175,500 
B) $280,000 
C) $207,500 
D) $245,500 
A) $175,500 
B) $280,000 
C) $207,500 
D) $245,500

Question 4

If a scatter plot reveals a fairly weak relationship between cost and volume, the cost equation based on that data would not be very useful for predicting future costs.

Accepted Answer

A) True 
 B)False

Question 5

Which is true about a scatter plot?

Accepted Answer

A) If there is a strong relationship between cost and volume, the points will fall in a linear pattern. 
B) If there is a strong relationship between cost and volume, the points will fall in a scattered pattern. 
C) Cost and volume have no effect on the pattern of the points on a scatter plot. 
D) A strong relationship between production and inventory is shown by a linear pattern. 
A) If there is a strong relationship between cost and volume, the points will fall in a linear pattern. 
B) If there is a strong relationship between cost and volume, the points will fall in a scattered pattern. 
C) Cost and volume have no effect on the pattern of the points on a scatter plot. 
D) A strong relationship between production and inventory is shown by a linear pattern.

Question 6

Using account analysis, what type of cost is the fee the airline company charges for your bags? A typical policy is $25 if the bag weighs between 0 and 50 lbs; $75 if the bag weighs between 50 and 75 lbs and $125 if the bag weighs between 75 and 100 lbs.

Accepted Answer

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

Question 7

The Akron Slugger Company produces various types of wooden baseball bats. It has calculated the average cost per unit of a production level of 7,500 bats to be $10.00. If $22,500 of the costs are fixed, and the plant manager uses the cost equation to predict total costs, her forecast for 8,500 bats will be

Accepted Answer

A) $10,000. 
B) $75,000. 
C) $85,000. 
D) $82,000. 
A) $10,000. 
B) $75,000. 
C) $85,000. 
D) $82,000.

Question 8

The equation for a straight line is y = fx + v, where y is the total cost, f is the fixed cost per unit, x is the volume of activity, and v is the variable cost per unit.

Accepted Answer

A) True 
 B)False

Question 9

When using the high-low method, what is the correct order of the following three steps? i. write the cost equation
Ii) find the vertical intercept
Iii) find the slope

Accepted Answer

A) i, ii, iii 
B) ii, iii, i 
C) iii, ii, i 
D) iii, i, ii 
A) i, ii, iii 
B) ii, iii, i 
C) iii, ii, i 
D) iii, i, ii

Question 10

Which of the following costs is an example of a fixed cost?

Accepted Answer

A) Sales commissions 
B) Salary of plant manager 
C) Direct materials 
D) Delivery costs 
A) Sales commissions 
B) Salary of plant manager 
C) Direct materials 
D) Delivery costs

Question 11

In the equation y = $11.75x + $550,

Accepted Answer

A) $550 are the total step costs. 
B) $550 are the total overhead costs. 
C) $550 are the total variable costs. 
D) $550 are the total fixed costs. 
A) $550 are the total step costs. 
B) $550 are the total overhead costs. 
C) $550 are the total variable costs. 
D) $550 are the total fixed costs.

Question 12

Pablo was reviewing the water bill for his carwash business and determined that the highest bill, $5,000, occurred in July when 2,200 cars were washed and the lowest bill, $3,200, occurred in February when 1,400 cars were washed. What was the variable cost per carwash?

Accepted Answer

A) $2.25 
B) $2.27 
C) $0.44 
D) $2.29 
A) $2.25 
B) $2.27 
C) $0.44 
D) $2.29

Question 13

Using account analysis, what type of cost is the local phone service which charges a flat fee for unlimited local calls?

Accepted Answer

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

Question 14

Neon Company manufactures widgets. The following data is related to sales and production of the widgets for last year.   Using absorption costing, what is gross profit for last month?

Accepted Answer

A) $233,200 
B) $143,000 
C) $104,800 
D) $52,800 
A) $233,200 
B) $143,000 
C) $104,800 
D) $52,800

Question 15

Under variable costing, fixed manufacturing costs are treated as inventoriable product costs.

Accepted Answer

A) True 
 B)False

Question 16

The data points with the ________ should be selected for use in calculating the variable cost per unit and the total fixed costs when using the high-low method.

Accepted Answer

A) highest cost and the lowest cost 
B) highest volume and the lowest volume 
C) highest volume and the lowest cost 
D) highest cost and the lowest volume 
A) highest cost and the lowest cost 
B) highest volume and the lowest volume 
C) highest volume and the lowest cost 
D) highest cost and the lowest volume

Question 17

Jean's Fitness Club provides monthly memberships as well as personal training sessions. The personal trainers earn 50% of the revenue for all personal training sessions. The Fitness Club also sells nutrition products. Jean's general ledger accounts indicate the following for the year. The front desk staff wages expense remains the same throughout the year.   If a contribution margin income statement is prepared for the year, what is the amount of total revenue?

Accepted Answer

A) $280,000 
B) $215,000 
C) $315,000 
D) $140,000 
A) $280,000 
B) $215,000 
C) $315,000 
D) $140,000

Question 18

It costs Homer's Manufacturing $0.75 to produce baseballs and Homer sells them for $4.00 a piece. Homer pays a sales commission of 5% of sales revenue to his sales staff. Homer also pays $12,000 a month rent for his factory and store, and also pays $75,000 a month to his staff in addition to the commissions. Homer sold 67,500 baseballs in June. If Homer prepares a traditional income statement for the month of June, what would be his operating income?

Accepted Answer

A) $ 270,000 
B) $ 319,875 
C) $ 219,375 
D) $118,875 
A) $ 270,000 
B) $ 319,875 
C) $ 219,375 
D) $118,875

Question 19

Regression analysis uses all data points, not just the highest and lowest volume data points.

Accepted Answer

A) True 
 B)False

Question 20

Under variable costing, all nonmanufacturing costs are treated as inventoriable product costs.

Accepted Answer

A) True 
 B)False

Under absorption costing, fixed manufacturing costs are not expensed until the units are sold.

If a scatter plot reveals a fairly weak relationship between cost and volume, the cost equation based on that data would not be very useful for predicting future costs.

Which is true about a scatter plot?

Using account analysis, what type of cost is the fee the airline company charges for your bags? A typical policy is $25 if the bag weighs between 0 and 50 lbs; $75 if the bag weighs between 50 and 75 lbs and $125 if the bag weighs between 75 and 100 lbs.

The equation for a straight line is y = fx + v, where y is the total cost, f is the fixed cost per unit, x is the volume of activity, and v is the variable cost per unit.

When using the high-low method, what is the correct order of the following three steps? i. write the cost equation Ii) find the vertical intercept Iii) find the slope

Which of the following costs is an example of a fixed cost?

In the equation y = $11.75x + $550,

Pablo was reviewing the water bill for his carwash business and determined that the highest bill, $5,000, occurred in July when 2,200 cars were washed and the lowest bill, $3,200, occurred in February when 1,400 cars were washed. What was the variable cost per carwash?

Using account analysis, what type of cost is the local phone service which charges a flat fee for unlimited local calls?

Neon Company manufactures widgets. The following data is related to sales and production of the widgets for last year. Using absorption costing, what is gross profit for last month?

Under variable costing, fixed manufacturing costs are treated as inventoriable product costs.

The data points with the ________ should be selected for use in calculating the variable cost per unit and the total fixed costs when using the high-low method.

Regression analysis uses all data points, not just the highest and lowest volume data points.

Under variable costing, all nonmanufacturing costs are treated as inventoriable product costs.

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, Lean Operations, and the Costs of Quality

Process Costing

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evaluation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters

Exam 6: Cost Behavior

Under absorption costing, fixed manufacturing costs are not expensed until the units are sold.

If a scatter plot reveals a fairly weak relationship between cost and volume, the cost equation based on that data would not be very useful for predicting future costs.

Which is true about a scatter plot?

Using account analysis, what type of cost is the fee the airline company charges for your bags? A typical policy is $25 if the bag weighs between 0 and 50 lbs; $75 if the bag weighs between 50 and 75 lbs and $125 if the bag weighs between 75 and 100 lbs.

The equation for a straight line is y = fx + v, where y is the total cost, f is the fixed cost per unit, x is the volume of activity, and v is the variable cost per unit.

When using the high-low method, what is the correct order of the following three steps? i. write the cost equation Ii) find the vertical intercept Iii) find the slope

Which of the following costs is an example of a fixed cost?

In the equation y = $11.75x + $550,

Pablo was reviewing the water bill for his carwash business and determined that the highest bill, $5,000, occurred in July when 2,200 cars were washed and the lowest bill, $3,200, occurred in February when 1,400 cars were washed. What was the variable cost per carwash?

Using account analysis, what type of cost is the local phone service which charges a flat fee for unlimited local calls?

Neon Company manufactures widgets. The following data is related to sales and production of the widgets for last year. Using absorption costing, what is gross profit for last month?

Under variable costing, fixed manufacturing costs are treated as inventoriable product costs.

The data points with the ________ should be selected for use in calculating the variable cost per unit and the total fixed costs when using the high-low method.

Regression analysis uses all data points, not just the highest and lowest volume data points.

Under variable costing, all nonmanufacturing costs are treated as inventoriable product costs.

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, Lean Operations, and the Costs of Quality

Process Costing

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evaluation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters