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Exam 1: Managerial Accounting and Cost Concepts

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Question 41

Multiple Choice

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Using the high-low method, the estimate of the fixed component of inspection cost per month is closest to:

A) $8,743
B) $8,887
C) $8,683
D) $6,869

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

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Question 42

Multiple Choice

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Electrical costs at one of Vanartsdalen 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 to estimate the variable and fixed components of this cost, these estimates would be closest to:

A) $14.41 per machine-hour; $33,832 per month
B) $0.11 per machine-hour; $33,957 per month
C) $9.35 per machine-hour; $11,885 per month
D) $11.30 per machine-hour; $7,229 per month

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

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Question 43

Multiple Choice

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Given the cost formula Y = $15,000 + $5X, total cost at an activity level of 8,000 units would be:

Using the high-low method, the estimate of the fixed component of electrical cost per month is closest to:

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:

The best estimate of the total variable cost per unit is:

The term "relevant range" means the range of activity over which:

A mixed cost is partially variable and partially fixed.

The gross margin for June was:

Last month, when 10,000 units of a product were manufactured, the cost per unit was $60. At this level of activity, variable costs are 50% of total unit costs. If 10,500 units are manufactured next month and cost behavior patterns remain unchanged the:

Donmoyer Sales Corporation, a merchandising company, reported total sales of $2,230,200 for May. The cost of goods sold (all variable) was $1,518,300, the total variable selling expense was $214,200, the total fixed selling expense was $86,700, the total variable administrative expense was $119,700, and the total fixed administrative expense was $138,400. Required: a. Prepare a contribution format income statement for May. b. Prepare a traditional format income statement for May.

Selling and administrative expenses are product costs under generally accepted accounting principles.

In making the decision to invest in the model 230 machine, the opportunity cost was:

Advertising costs are considered product costs for external financial reports because they are incurred in order to promote specific products.

To the nearest whole dollar, what should be the total cost of operating the helpline costs at a volume of 34,800 calls in a month? (Assume that this call volume is within the relevant range.)

Manufacturing overhead consists of:

Using the high-low method, the estimate of the variable component of office expense per escrow completed is closest to:

Even if operations are interrupted or cut back, committed fixed costs remain largely unchanged in the short term because the costs of restoring them later are likely to be far greater than any short-run savings that might be realized.

The cost of leasing production equipment is classified as:

Edeen Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. The best estimate of the total variable manufacturing cost per unit is: