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Exam 1: Managerial Accounting and Cost Concepts

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Question 1

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To the nearest whole dollar, what should be the total cost of operating the helpline costs at a volume of 23,900 calls in a month? (Assume that this call volume is within the relevant range.)

A) $442,545
B) $452,500
C) $473,326
D) $432,590

E) B) and D)
F) None of the above

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D

Question 2

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Kneeland Corporation has provided the following information: If 10,000 units are produced, the total amount of manufacturing overhead cost is closest to:

A) $186,000
B) $138,000
C) $162,000
D) $150,000

E) B) and D)
F) C) and D)

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Question 3

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Mary Tappin, an assistant Vice President at Galaxy Toys, was disturbed to find on her desk a memo from her boss, Gary Resnick, to the controller of the company.The memo appears below: GALAXY TOYS INTERNAL MEMO Sept 15 To: Harry Wilson, Controller Fm: Gary Resnick, Executive Vice President As you know, we won't start recording many sales until October when stores start accepting shipments from us for the Christmas season.Meanwhile, we are producing flat-out and are building up our finished goods inventories so that we will be ready to ship next month. Unfortunately, we are in a bind right now since it looks like the net income for the quarter ending on Sept 30 is going to be pretty awful.This may get us in trouble with the bank since they always review the quarterly financial reports and may call in our loan if they don't like what they see.Is there any possibility that we could change the classification of some of our period costs to product costs--such as the rent on the finished goods warehouse? Please let me know as soon as possible.The President is pushing for results. Mary didn't know what to do about the memo.It wasn't intended for her, but its contents were alarming. Required: a.Why has Gary Resnick suggested reclassifying some period costs as product costs? b.Why do you think Mary was alarmed about the memo?

Hinrichs Corporation reports that at an activity level of 2,400 units, its total variable cost is $174,504 and its total fixed cost is $55,080. Required: For the activity level of 2,700 units, compute: (a)the total variable cost; (b)the total fixed cost; (c)the total cost; (d)the average variable cost per unit; (e)the average fixed cost per unit; and (f)the average total cost per unit.Assume that this activity level is within the relevant range.

If 10,000 units are produced, the total amount of manufacturing overhead cost is closest to:

Bressette Corporation has provided the following information: For financial reporting purposes, the total amount of product costs incurred to make 5,000 units is closest to:

If 5,000 units are produced, the average fixed manufacturing cost per unit produced is closest to:

Skolnick Corporation has provided the following information: Required: a.If 8,000 units are produced, what is the total amount of direct manufacturing cost incurred? b.If 8,000 units are produced, what is the total amount of indirect manufacturing costs incurred?

The salary paid to the president of a company would be classified on the income statement as a(n) :

For financial reporting purposes, the total amount of product costs incurred to make 4,000 units is closest to:

For financial reporting purposes, the total amount of period costs incurred to sell 4,000 units is closest to:

If 6,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:

Glisan Corporation's relevant range of activity is 4,000 units to 8,000 units.When it produces and sells 6,000 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 6,000 units? b.For financial reporting purposes, what is the total amount of period costs incurred to sell 6,000 units? c.If 5,000 units are sold, what is the total amount of variable costs related to the units sold? d.If the selling price is $19.10 per unit, what is the contribution margin per unit sold? e.What incremental manufacturing cost will the company incur if it increases production from 6,000 to 6,001 units?

Conversion cost is the same thing as manufacturing overhead.

The cost of the raw materials that will be used in manufacturing the computer board is:

A factory supervisor's wages are classified as:

At an activity level of 7,200 machine-hours in a month, Falks Corporation's total variable production engineering cost is $556,416 and its total fixed production engineering cost is $226,008.What would be the total production engineering cost per machine-hour, both fixed and variable, at an activity level of 7,300 machine-hours in a month? Assume that this level of activity is within the relevant range.

In making the decision to buy the model 220 machine rather than the model 370 machine, the differential cost was:

Waldhauser Corporation's relevant range of activity is 3,000 units to 7,000 units.When it produces and sells 5,000 units, its average costs per unit are as follows: If 6,000 units are sold, the total variable cost is closest to:

For financial reporting purposes, the total amount of period costs incurred to sell 4,000 units is closest to: