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Managerial Accounting

1. The MOST likely cost driver of distribution costs is the:

a. number of production hours

b. number of miles driven

c. number of products manufactured

d. number of parts within the product

2. Within the relevant range, if there is a change in the level of the cost driver, then:

a. fixed costs per unit will change and variable costs per unit will remain the same

b. fixed costs per unit will remain the same and variable costs per unit will change

c. fixed and variable costs per unit will change

d. fixed and variable costs per unit will remain the same

3. Wheel and Tire Manufacturing currently produces 1,000 tires per month. The following per unit data apply for sales to regular customers:

Direct materials $20
Direct manufacturing labor 3
Variable manufacturing overhead 6
Fixed manufacturing overhead 10
Total manufacturing costs $39

The plant has capacity for 3,000 tires and is considering expanding production to 2,000 tires. What is the total cost of producing 2,000 tires?

a. $78,000

b. $62,000

c. $39,000

d. $68,000

4. The value chain is the sequence of business functions in which:

a. products and services are evaluated with respect to their value to the supply chain

b. usefulness is added to the products or services of an organization

c. value is deducted from the products or services of an organization

d. value is proportionately added to the products or services of an organization

Solution Preview

1. b. number of miles driven
Distribution costs would relate to geographic area and so number of miles would be a correct cost driver

2. a. fixed costs per unit will change and variable costs per unit will remain the same ...

Solution Summary

The solution explains some multiple choice questions relating to cost driver, relevant range, total cost, value chain

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