Question 1

Jasper Enterprises had the following cost and production information for April:  What is Jasper Enterprise's income under absorption costing?

Accepted Answer

A)  $1,400,000
B)  $1,460,000
C)  $1,745,000
D)  $1,785,000E) A) and B)
F) All of the above

Question 2

The per-unit amount of three different production costs for Thunderbird,Inc. ,are as follows:  What type of cost is each?

Accepted Answer

A)  Cost A is fixed,Cost B is mixed,Cost C is variable.
B)  Cost A is fixed,Cost B is variable,Cost C is mixed.
C)  Cost A is variable,Cost B is mixed,Cost C is fixed.
D)  Cost A is variable,Cost B is fixed,Cost C is mixed.E) All of the above
F) A) and B)

Question 3

Knox Corp.has a selling price of $20,variable costs of $14 per unit,and fixed costs of $25,000.If Knox sells 12,000 units,the contribution margin ratio will equal:

Accepted Answer

A)  $60,000
B)  30%
C)  70%
D)  10.4%E) C) and D)
F) B) and C)

Question 4

If a scattergraph contains points that do not fall in a perfect line:

Accepted Answer

A)  the relationship between the variables is not good enough to warrant fitting a line to the data.
B)  this is an indication that there is no relationship whatsoever between the variables.
C)  the visual fit method and high-low methods should not be used,but least-squares regression can be used.
D)  a straight line can still be used to approximate the relationship if a general linear trend can be discerned.E) A) and B)
F) A) and C)

Question 5

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output:   What is Star's variable cost per unit?

Accepted Answer

A)  $0.92
B)  $2.84
C)  $11.57
D)  $12.55E) A) and B)
F) A) and C)

Question 6

Which of the following statements is correct about the difference between contribution margin and gross margin?

Accepted Answer

A)  Contribution margin and gross margin are equivalent.
B)  Contribution margin is the difference between sales revenue and cost of goods sold.
C)  Gross margin is the difference between sales revenue and variable costs.
D)  Gross margin is used for external reporting,while contribution margin is used for internal reporting.E) None of the above
F) B) and D)

Question 7

Firms may choose to use absorption costing or variable costing for external financial reporting purposes.

Accepted Answer

A) True 
 B)False

Question 8

A graph that provides a visual representation of the relationship between total cost and activity level is called a:

Accepted Answer

A)  relevant range.
B)  scattergraph.
C)  contribution margin graph.
D)  dependent variable.E) None of the above
F) C) and D)

Question 9

A scattergraph is useful in recognizing unusual patterns in the cost data.

Accepted Answer

A) True 
 B)False

Question 10

Laurel Company sold 500 units for $450 each.Variable costs were $280 per unit,and total fixed expenses were $53,000.Prepare a contribution margin income statement.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> The contribution margin incom...

Question 11

Stella,Inc.must perform maintenance on its production machinery after every 10,000 units produced.Production varies between 12,000 and 30,000 units a year.The cost of this maintenance would be classified as a

Accepted Answer

A)  variable cost.
B)  fixed cost.
C)  step cost.
D)  mixed cost.E) B) and C)
F) A) and D)

Question 12

Total contribution margin is equal to:

Accepted Answer

A)  total sales less fixed costs.
B)  fixed costs plus net operating income.
C)  variable costs plus net operating income.
D)  total sales less net operating income.E) All of the above
F) C) and D)

Question 13

The relevant range is:

Accepted Answer

A)  the range in which costs remain variable.
B)  the range of activity over which we expect our assumptions about cost behavior to hold true.
C)  the range of activity based on the volume-based cost driver.
D)  the range in which costs remain fixed.E) None of the above
F) A) and B)

Question 14

When Carter,Inc.sells 48,000 units,its total variable cost is $115,200.What is its total variable cost when it sells 54,000 units?

Accepted Answer

A)  $100,800
B)  $115,200
C)  $129,600
D)  $134,800E) B) and C)
F) A) and B)

Question 15

When Greenway,Inc.sells 48,000 units,its total fixed cost is $115,200.What is its total fixed cost when it sells 54,000 units?

Accepted Answer

A)  $100,800
B)  $115,200
C)  $129,600
D)  $134,800E) A) and B)
F) B) and D)

Question 16

Heather Inc has the following information for its first year of operations:
  a.Prepare Heather's full absorption costing income statement.
b.Prepare Heather's variable costing income statement.

Accepted Answer

a.

(Cost of goods sold per unit = $25 ...

Question 17

The y-intercept of the cost line on a scattergraph represents:

Accepted Answer

A)  fixed cost per unit.
B)  total fixed cost.
C)  variable cost per unit.
D)  sales price per unit.E) All of the above
F) None of the above

Question 18

Which of the following statements is correct about the high-low method?

Accepted Answer

A)  The high-low method is complicated to apply.
B)  The high-low method is effective for periods in which activity is particularly high or low.
C)  Generally,managers can obtain more accurate information from other methods of cost analysis that use a larger number of data points.
D)  Generally,managers use the high-low method because it has no drawbacks or limitations.E) A) and B)
F) None of the above

Question 19

Holly Co.uses the high-low method.It had an average cost per unit of $10 at its lowest level of activity when sales equaled 10,000 units and an average cost per unit of $6.50 at its highest level of activity when sales equaled 20,000 units.Holly would estimate fixed costs as:

Accepted Answer

A)  $70,000
B)  $16.50
C)  $8.25
D)  $100,000E) A) and B)
F) A) and C)

Question 20

The high-low method is a cost estimating approach that uses ________ to find the cost line.

Accepted Answer

A)  only two data points
B)  all available data points
C)  only four data points
D)  personal intuitionE) None of the above
F) A) and B)

Exam 5: Cost Behavior

A graph that provides a visual representation of the relationship between total cost and activity level is called a:

Correct AnswerverifiedShow Answer

Knox Corp.has a selling price of $20,variable costs of $14 per unit,and fixed costs of $25,000.If Knox sells 12,000 units,the contribution margin ratio will equal:

Correct AnswerverifiedShow Answer

When Carter,Inc.sells 48,000 units,its total variable cost is $115,200.What is its total variable cost when it sells 54,000 units?

Correct AnswerverifiedShow Answer

The relevant range is:

Correct AnswerverifiedShow Answer

If a scattergraph contains points that do not fall in a perfect line:

Correct AnswerverifiedShow Answer

A scattergraph is useful in recognizing unusual patterns in the cost data.

Correct AnswerverifiedShow Answer

Firms may choose to use absorption costing or variable costing for external financial reporting purposes.

Correct AnswerverifiedShow Answer

Total contribution margin is equal to:

Correct AnswerverifiedShow Answer

Holly Co.uses the high-low method.It had an average cost per unit of $10 at its lowest level of activity when sales equaled 10,000 units and an average cost per unit of $6.50 at its highest level of activity when sales equaled 20,000 units.Holly would estimate fixed costs as:

Correct AnswerverifiedShow Answer

The high-low method is a cost estimating approach that uses ________ to find the cost line.

Correct AnswerverifiedShow Answer

When Greenway,Inc.sells 48,000 units,its total fixed cost is $115,200.What is its total fixed cost when it sells 54,000 units?

Correct AnswerverifiedShow Answer

Which of the following statements is correct about the high-low method?

Correct AnswerverifiedShow Answer

Which of the following statements is correct about the difference between contribution margin and gross margin?

Correct AnswerverifiedShow Answer

The per-unit amount of three different production costs for Thunderbird,Inc. ,are as follows: What type of cost is each?

Correct AnswerverifiedShow Answer

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: What is Star's variable cost per unit?

Correct AnswerverifiedShow Answer

Heather Inc has the following information for its first year of operations: a.Prepare Heather's full absorption costing income statement. b.Prepare Heather's variable costing income statement.

Correct Answerverifieda. (Cost of goods sold per unit = $25 ...View AnswerShow Answer

The y-intercept of the cost line on a scattergraph represents:

Correct AnswerverifiedShow Answer

Laurel Company sold 500 units for $450 each.Variable costs were $280 per unit,and total fixed expenses were $53,000.Prepare a contribution margin income statement.

Correct Answerverified The contribution margin incom...View AnswerShow Answer

Stella,Inc.must perform maintenance on its production machinery after every 10,000 units produced.Production varies between 12,000 and 30,000 units a year.The cost of this maintenance would be classified as a

Correct AnswerverifiedShow Answer

Jasper Enterprises had the following cost and production information for April: What is Jasper Enterprise's income under absorption costing?

Correct AnswerverifiedShow Answer

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(Cost of goods sold per unit = $25 ...
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The contribution margin incom...
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