Question 1

The following data pertains to activity and maintenance costs for two recent years:  Using the high-low method,the cost formula for maintenance would be:

Accepted Answer

A) $1.50 per unit 
B) $1.25 per unit 
C) $3,000 plus $1.50 per unit 
D) $6,000 plus $0.75 per unit

Question 2

Callander 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 $151.60 per unit.  
-The best estimate of the total contribution margin when 6,300 units are sold is:

Accepted Answer

A) $450,450 
B) $518,490 
C) $121,590 
D) $66,780

Question 3

Fiene Sales, Inc., a merchandising company, reported sales of 2,200 units in June at a selling price of $600 per unit. Cost of goods sold, which is a variable cost, was $364 per unit. Variable selling expenses were $23 per unit and variable administrative expenses were $33 per unit. The total fixed selling expenses were $30,500 and the total administrative expenses were $55,300.
-The contribution margin for June was:

Accepted Answer

A) $1,111,000 
B) $396,000 
C) $310,200 
D) $519,200

Question 4

Depreciation is always considered a product cost for external financial reporting purposes in a manufacturing firm.

Accepted Answer

A) True 
 B)False

Question 5

Slonaker Inc.has provided the following data concerning its maintenance costs:  
 Management believes that maintenance cost is a mixed cost that depends on machine-hours.
Required:
Estimate the variable cost per machine-hour and the fixed cost per month using the high-low method.Show your work!

Accepted Answer

The answer of Slonaker Inc.has provided the following data concerning...

Question 6

The concept of the relevant range does not apply to fixed costs.

Accepted Answer

A) True 
 B)False

Question 7

Within the relevant range,variable cost per unit will:

Accepted Answer

A) increase as the level of activity increases. 
B) remain constant. 
C) decrease as the level of activity increases. 
D) none of these.

Question 8

Glatt Inc., an escrow agent, has provided the following data concerning its office expenses:   
Management believes that office expense is a mixed cost that depends on the number of escrows completed. Note: Real estate purchases usually involve the services of an escrow agent that holds funds and prepares documents to complete the transaction.
-Using the high-low method,the estimate of the variable component of office expense per escrow completed is closest to:

Accepted Answer

A) $101.08 
B) $59.12 
C) $17.11 
D) $17.15

Question 9

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

Accepted Answer

A) $77,000 
B) $348,000 
C) $592,000 
D) $244,000

Question 10

Bill Pope has developed a new device that is so exciting he is considering quitting his job in order to produce and market it on a large-scale basis.Bill will rent a garage for $300 per month for production purposes.Utilities will cost $40 per month.Bill has already taken an industrial design course at the local community college to help prepare for this venture.The course cost $300.Bill will rent production equipment at a monthly cost of $800.He estimates the material cost per unit will be $5,and the labor cost will be $3.He will hire workers and spend his time promoting the product.To do this he will quit his job which pays $3,000 per month.Advertising and promotion will cost $900 per month.
Required:
Complete the chart below by placing an "X" under each heading that helps to identify the cost involved.There can be "Xs" 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;there would be an "X" placed under each of these headings opposite the cost.  * Between the alternatives of going into business to make the device or not going into business to make the device.

Accepted Answer

The answer of Bill Pope has developed a new device...

Question 11

Which of the following would NOT be treated as a product cost for external financial reporting purposes?

Accepted Answer

A) Depreciation on a factory building. 
B) Salaries of factory workers. 
C) Indirect labor in the factory. 
D) Advertising expenses.

Question 12

The following cost data pertain to the operations of Mancia Department Stores, Inc., for the month of February.  
The Brentwood Store is just one of many stores owned and operated by the company. The Shoe Department is one of many departments at the Brentwood Store. The central warehouse serves all of the company's stores. 
-What is the total amount of the costs listed above that are NOT direct costs of the Brentwood Store?

Accepted Answer

A) $152,000 
B) $92,000 
C) $79,000 
D) $38,000

Question 13

Haras 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 $141.30 per unit.  The best estimate of the total variable cost per unit is:

Accepted Answer

A) $123.40 
B) $79.60 
C) $57.90 
D) $130.70

Question 14

Jumpst Corporation uses the cost formula Y = $3,600 + $0.30X for the maintenance cost in Department B,where X is machine-hours.The August budget is based on 20,000 hours of planned machine time.Maintenance cost expected to be incurred during August is:

Accepted Answer

A) $3,600 
B) $6,000 
C) $6,300 
D) $9,600

Question 15

Bakker Corporation has provided the following production and average cost data for two levels of monthly production volume.The company produces a single product. $\begin{array}{lrr}
\text {Production volume }&4,000 \text { units } & 5,000 \text { units } \
\text {Direct materials }&\$ 89.70 \text { per unit } & \$ 89.70 \text { per unit } \
\text {Direct labor }&\$ 22.60 \text { per unit } & \$ 22.60 \text { per unit } \
\text { Manufacturing overhead}&\$ 70.50 \text { per unit } & \$ 60.30 \text { per unit }
\end{array}$ The best estimate of the total variable manufacturing cost per unit is:

Accepted Answer

A) $89.70 
B) $131.80 
C) $19.50 
D) $112.30

Question 16

During the month of September,direct labor cost totaled $11,000 and direct labor cost was 40% of prime cost.If total manufacturing costs during September were $73,000,the manufacturing overhead was:

Accepted Answer

A) $16,500 
B) $27,500 
C) $62,000 
D) $45,500

Question 17

Electrical costs at one of Reifel Corporation's factories are listed below: Management believes that electrical cost is a mixed cost that depends on machine-hours. 
-Using the high-low method,the estimate of the variable component of electrical cost per machine-hour is closest to:

Accepted Answer

A) $0.12 
B) $20.38 
C) $7.98 
D) $8.22

Question 18

Given the cost formula,Y = $9,000 + $2.50X,total cost for an activity level of 3,000 units would be:

Accepted Answer

A) $9,750 
B) $12,000 
C) $16,500 
D) $7,500

Question 19

Although the contribution format income statement is useful for external reporting purposes,it has serious limitations when used for internal purposes because it does not distinguish between fixed and variable costs.

Accepted Answer

A) True 
 B)False

Question 20

A partial listing of costs incurred during December at Gagnier Corporation appears below:  
-The total of the manufacturing overhead costs listed above for December is:

Accepted Answer

A) $325,000 
B) $635,000 
C) $89,000 
D) $40,000

Exam 1: Managerial Accounting and Cost Concepts

The following data pertains to activity and maintenance costs for two recent years: Using the high-low method,the cost formula for maintenance would be:

Callander 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 $151.60 per unit. -The best estimate of the total contribution margin when 6,300 units are sold is:

Depreciation is always considered a product cost for external financial reporting purposes in a manufacturing firm.

Slonaker Inc.has provided the following data concerning its maintenance costs: Management believes that maintenance cost is a mixed cost that depends on machine-hours. Required: Estimate the variable cost per machine-hour and the fixed cost per month using the high-low method.Show your work!

The concept of the relevant range does not apply to fixed costs.

Within the relevant range,variable cost per unit will:

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

Which of the following would NOT be treated as a product cost for external financial reporting purposes?

Haras 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 $141.30 per unit. The best estimate of the total variable cost per unit is:

Jumpst Corporation uses the cost formula Y = $3,600 + $0.30X for the maintenance cost in Department B,where X is machine-hours.The August budget is based on 20,000 hours of planned machine time.Maintenance cost expected to be incurred during August is:

During the month of September,direct labor cost totaled $11,000 and direct labor cost was 40% of prime cost.If total manufacturing costs during September were $73,000,the manufacturing overhead was:

Electrical costs at one of Reifel Corporation's factories are listed below: Management believes that electrical cost is a mixed cost that depends on machine-hours. -Using the high-low method,the estimate of the variable component of electrical cost per machine-hour is closest to:

Given the cost formula,Y = $9,000 + $2.50X,total cost for an activity level of 3,000 units would be:

Although the contribution format income statement is useful for external reporting purposes,it has serious limitations when used for internal purposes because it does not distinguish between fixed and variable costs.

A partial listing of costs incurred during December at Gagnier Corporation appears below: -The total of the manufacturing overhead costs listed above for December is: