Exam 5: Planning Budgeting and Behaviour

Compton Company is a wholesale distributor of educational CD-ROMs. The company's records indicate the following: This Year Last Year Units Sold 250,000 200,000 Sales Revenue £1,250,000 £1,000,000 Less: Cost of Goods Sold Gross Margin 375,000 300,000 Less: Operating Expenses Net Operating Income £153,000 £90,000 -Using the high-low method of analysis, what are the company's estimated total fixed operating expenses per year?

When the activity level is expected to decline within the relevant range, what effects would be anticipated with respect to each of the following?

A disadvantage of the high-low method of cost analysis is that

Marger, Inc., provided the following data for two recent months: April May Sales in Units. 3,200 4,500 Cost: Cost T 5,600 5,600 Cost U 4,480 6,300 Cost 'W 3,950 5,250 - Which of the following classifications best describes the behavior of Cost U

One difference between a step variable cost and a fixed cost is the width of the step

When the level of activity increases within the relevant range, how does each of the following change

Marger, Inc., provided the following data for two recent months: April May Sales in Units. 3,200 4,500 Cost: Cost T 5,600 5,600 Cost U 4,480 6,300 Cost 'W 3,950 5,250 -Which of the following classifications best describes the behavior of Cost W?

Contribution margin is defined as sales less discretionary fixed costs

Within a relevant range, the amount of variable cost per unit

The relative proportion of variable, fixed, and mixed costs in a firm is known as the firm's

Discretionary fixed costs

Bee Company is a honey wholesaler. An income statement and other data for the second quarter of the year are given below: -Bee Company's contribution margin for the second quarter is

Bee Company is a honey wholesaler. An income statement and other data for the second quarter of the year are given below: -Bee Company's cost formula for total operating expenses, with 'X' equal to the number of units sold would be

European International has 3 separate business units in the following countries. Data for each of the business units is given below: France 5pin italy Selling price per unit £35 £38 £42 Manufacturing cost £4,000 per month plus £17 per £3,500 per month plus £18 per £5,000 per month plus £20 per unit unit unit Administrative £2,500 per month plus £2.50 £2,900 per month plus £2.90 £3,500 per month plus £3.50 expense per unit per unit per unit Sales commissions 15\% of sales 16\% of sales 20\% of sales Advertising expense £2,000 per month £3,000 per month £2,000 per month -If the business unit in Spain expects to produce and sell 5,000 units next month, the expected net operating income would be

Bee Company is a honey wholesaler. An income statement and other data for the second quarter of the year are given below: -If 24,000 units are sold during the third quarter and this activity is within the relevant range, Bee Company's expected contribution margin would be

European International has 3 separate business units in the following countries. Data for each of the business units is given below: France 5pin italy Selling price per unit £35 £38 £42 Manufacturing cost £4,000 per month plus £17 per £3,500 per month plus £18 per £5,000 per month plus £20 per unit unit unit Administrative £2,500 per month plus £2.50 £2,900 per month plus £2.90 £3,500 per month plus £3.50 expense per unit per unit per unit Sales commissions 15\% of sales 16\% of sales 20\% of sales Advertising expense £2,000 per month £3,000 per month £2,000 per month -If the business unit in Italy expects to produce and sell 2,000 units next month, the total expected manufacturing cost would be

European International has 3 separate business units in the following countries. Data for each of the business units is given below: France 5pin italy Selling price per unit £35 £38 £42 Manufacturing cost £4,000 per month plus £17 per £3,500 per month plus £18 per £5,000 per month plus £20 per unit unit unit Administrative £2,500 per month plus £2.50 £2,900 per month plus £2.90 £3,500 per month plus £3.50 expense per unit per unit per unit Sales commissions 15\% of sales 16\% of sales 20\% of sales Advertising expense £2,000 per month £3,000 per month £2,000 per month -If the business unit in Spain expects to produce and sell 2,000 units next month, the total expected manufacturing cost would be

On an income statement prepared by the traditional approach, costs are organised and presented according to function.

Which of the following costs, if expressed on a per unit basis, would be expected to vary inversely with the level of production and sales?

European International has 3 separate business units in the following countries. Data for each of the business units is given below: France 5pin italy Selling price per unit £35 £38 £42 Manufacturing cost £4,000 per month plus £17 per £3,500 per month plus £18 per £5,000 per month plus £20 per unit unit unit Administrative £2,500 per month plus £2.50 £2,900 per month plus £2.90 £3,500 per month plus £3.50 expense per unit per unit per unit Sales commissions 15\% of sales 16\% of sales 20\% of sales Advertising expense £2,000 per month £3,000 per month £2,000 per month - If the business unit in Italy plans to produce sell 3,000 units next month, the expected contribution margin would be