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    Cost accounting questions.

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    Question 1 5 points Save
    Fixed costs expressed on a PER UNIT BASIS vary inversely with changes in activity.
    True
    False

    Question 2 5 points Save
    Committed fixed costs cannot be reduced to zero without seriously impairing the company's long term goals.
    True
    False

    Question 3 5 points
    A traditional functional income statement organizes costs on the basis of behavior.

    True
    False

    Question 4 5 points
    The contribution margin represents the amount available to contribute toward covering fixed expenses and toward profits for the period.

    True
    False

    Question 5 5 points
    Most companies use the contribution approach in preparing financial statements for external reporting purposes.
    True
    False

    Question 6 5 points
    Since Anytime Pizza is open 24 hours a day, its pizza oven is constantly on and is, therefore, always using natural gas. However, when there is no pizza in the oven, the oven automatically lowers its flame and reduces its natural gas usage by 70%. The cost of natural gas would best be described as a:

    fixed cost.
    mixed cost.
    step-variable cost.
    true variable cost.

    Question 7 5 points Save
    Within the relevant range, VARIABLE costs can be expected to:

    vary in total in direct proportion to changes in the activity level.
    remain constant in total as the activity level changes.
    increase on a per unit basis as the activity level increases.
    increase on a per unit basis as the activity level decreases.

    Question 8 5 points Save
    An example of a committed fixed cost is:
    management training seminars.
    a long-term equipment lease.
    research and development.
    advertising.

    Question 9 5 points Save
    The following data have been collected for four different cost items.

    Cost Item Cost at 100 units Cost at 140 units
    W $8,000 $10,560
    X $5,000 $5,000
    Y $6,500 $9,100
    Z $6,700 $8,580

    Which of the following classifications of these cost items by cost behavior is correct?

    Cost W Cost X Cost Y Cost Z
    variable fixed mixed variable

    Cost W Cost X Cost Y Cost Z
    mixed fixed variable mixed

    Cost W Cost X Cost Y Cost Z
    variable fixed variable variable

    Cost W Cost X Cost Y Cost Z
    mixed fixed mixed mixed

    Question 10 5 points Save
    The high-low method is used with which of the following types of costs?

    Variable.
    Mixed.
    Fixed.
    Step-variable.

    Question 11 5 points Save
    Iaci 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 $133.60 per unit.

    Sales volume (units) 4,000 5,000
    Cost of sales $383,600 $479,500
    Selling, general, and administrative costs $124,400 $136,000
    The best estimate of the total contribution margin when 4,300 units are sold is:

    $112,230
    $162,110
    $28,380
    $45,150

    Question 12 5 points Save
    Davis Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product.

    Production volume 1,000 units 2,000 units
    Direct materials $44,200 $88,400
    Direct labor $37,300 $74,600
    Manufacturing overhead $48,500 $62,200

    The best estimate of the total monthly FIXED manufacturing cost is:
    (*Hint: Add up your total manufacturing costs (DM + DL + OH) at each production volume level. Then use the high-low method.)

    $130,000
    $177,600
    $34,800
    $225,200

    Question 13 5 points Save
    Eddy Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product.

    Production volume 6,000 units 7,000 units
    Direct materials $582,600 $679,700
    Direct labor $136,200 $158,900
    Manufacturing overhead $691,800 $714,700

    The best estimate of the total VARIABLE manufacturing cost per unit is:

    $22.90
    $119.80
    $142.70
    $97.10

    Question 14 5 points Save
    Farmington Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product.

    Production volume 6,000 units 7,000 units
    Direct materials $195,000 $227,500
    Direct labor $113,400 $132,300
    Manufacturing overhead $913,200 $931,700

    The best estimate of the TOTAL cost to manufacture 6,300 units is closest to:

    $1,162,350
    $1,242,570
    $1,222,515
    $1,282,680

    Question 15 5 points Save
    Gambino 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 $138.80 per unit.

    Sales volume (units) 6,000 7,000
    Cost of sales $369,000 $430,500
    Selling, general, and administrative costs $407,400 $418,600

    The best estimate of the total monthly FIXED cost is:
    *Another hint: Add up total costs (Cost of sales + Selling, general, and administrative costs) for each sales volume level. Then use the high-low method.

    $776,400
    $340,200
    $812,750
    $849,100

    Question 16 5 points Save
    Harris 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 $84.40 per unit.

    Sales volume (units) 5,000 6,000
    Cost of sales $285,000 $342,000
    Selling, general, and administrative costs $107,500 $120,000

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

    $77.00
    $57.00
    $69.50
    $78.50

    Question 17 5 points Save
    Given the cost formula Y = $12,500 + $5.00X, total cost for an activity level of 4,000 units would be:

    $20,000
    $12,500
    $16,000
    $32,500

    Question 18 5 points Save
    Use the following to answer questions 18 - 20:

    Babson Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product.

    Production volume 5,000 units 6,000 units
    Direct materials $103,500 $124,200
    Direct labor $282,500 $339,000
    Manufacturing overhead $667,000 $679,800
    The best estimate of the total monthly FIXED manufacturing cost is:

    $1,098,000
    $1,053,000
    $1,143,000
    $603,000

    Question 19 5 points Save
    Use the data in Question 18 to answer this question.
    The best estimate of the total VARIABLE manufacturing cost per unit is:

    $90.00
    $77.20
    $12.80
    $20.70

    Question 20 5 points Save
    Use the data in Question 18 to answer this question.
    The best estimate of the TOTAL cost to manufacture 5,300 units is closest to:

    $1,116,180
    $1,062,915
    $1,080,000
    $1,009,650

    © BrainMass Inc. brainmass.com October 9, 2019, 11:41 pm ad1c9bdddf
    https://brainmass.com/business/financial-accounting-bookkeeping/cost-accounting-questions-264508

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    Solution Summary

    The problem set deals with fundamental issues in cost accounting.

    $2.19