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Exam 1: Managerial Accounting and Cost Concepts

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Question 121

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Dizzy Amusement Park is open from 8:00 am till midnight every day of the year. Dizzy charges its patrons a daily entrance fee of $30 per person which gives them unlimited access to all of the park's 35 rides. For liability insurance, Dizzy pays a set monthly fee plus a small additional amount for every patron entering the park. The cost of liability insurance would best be described as a:

A) fixed cost
B) mixed cost
C) step-variable cost
D) true variable cost

E) A) and B)
F) B) and C)

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Question 122

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Sparacino Corporation has provided the following information: If 5,000 units are produced, the total amount of manufacturing overhead cost is closest to:

A) $24,750
B) $42,650
C) $33,700
D) $29,225

E) All of the above
F) C) and D)

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Question 123

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As the level of activity increases, how will a mixed cost in total and per unit behave?

Varela Corporation's relevant range of activity is 2,000 units to 6,000 units. When it produces and sells 4,000 units, its average costs per unit are as follows: For financial reporting purposes, the total amount of product costs incurred to make 4,000 units is closest to:

In the standard cost formula Y = a + bX, what does the "X" represent?

Conversion cost is the sum of direct labor cost and manufacturing overhead cost.

Schonhardt Corporation's relevant range of activity is 2,000 units to 6,000 units. When it produces and sells 4,000 units, its average costs per unit are as follows: If 5,000 units are produced, the total amount of fixed manufacturing cost incurred is closest to:

The costs of direct materials are classified as:

The following data pertains to activity and costs for two months: Assuming that these activity levels are within the relevant range, the other production costs for July were: (Round intermediate calculations to 2 decimal places.)

At a sales volume of 20,000 units, Choice Corporation's sales commissions (a cost that is variable with respect to sales volume) total $132,000. To the nearest whole cent, what should be the average sales commission per unit at a sales volume of 18,500 units? (Assume that this sales volume is within the relevant range.)

Batterson 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 28,000 units, the lease cost was $697,200. To the nearest whole cent, what should be the average lease cost per unit at a sales volume of 26,400 units in a month? (Assume that this sales volume is within the relevant range.)

Administrative costs are indirect costs.

A factory supervisor's wages are classified as:

Bolka Corporation, a merchandising company, reported the following results for October: The gross margin for October is:

Boersma Sales, Inc., a merchandising company, reported sales of 7,100 units in September at a selling price of $682 per unit. Cost of goods sold, which is a variable cost, was $317 per unit. Variable selling expenses were $44 per unit and variable administrative expenses were $22 per unit. The total fixed selling expenses were $157,200 and the total administrative expenses were $338,000. The gross margin for September was:

Which of the following is NOT a period cost?

Balerio Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows: Required: a. For financial reporting purposes, what is the total amount of product costs incurred to make 9,000 units? b. If 10,000 units are sold, what is the variable cost per unit sold? c. If 10,000 units are sold, what is the total amount of variable costs related to the units sold? d. If the selling price is $18.20 per unit, what is the contribution margin per unit sold? e. What incremental manufacturing cost will the company incur if it increases production from 9,000 to 9,001 units?

A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $2,100 and is paid at the beginning of the first year. Sixty percent of the premium applies to manufacturing operations and forty percent applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage?

Bolka Corporation, a merchandising company, reported the following results for October: The contribution margin for October is:

Which costs will change with a decrease in activity within the relevant range?