Chapter 10 Determining How Costs Behave PDF

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Cost Accounting, 15e **(Horngren/Datar/Rajan)  Chapter 10  Determining How Costs Behave ****Objective 10 ** A cost function is a ________.  A) process of calculating present value of projected cash flows  B) process of allocating costs to cost centers or cost objects&nb...

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Cos tAc c ount i ng, 15e( Hor ngr en/ Da t ar / Ra j an) Chapt er10 Det e r mi ni ngHow Cos t sBe ha ve Obj ec t i ve10. 1 1)A c os tf unc t i oni sa________. A)pr oc e s sofc al c ul at i ngpr e s e ntval ueofpr oj e c t e dc as hflows B)pr oc e s sofal l oc a t i ngc os t st oc os tc e nt e r sorc os tobj e c t s C)ma t he ma t i c alde s c r i pt i onofhow ac os tc hangeswi t hc hangesi nt hel e ve lofan ac t i vi t yr e l a t i ngt ot ha tc os t D)i save r yt hor oughandde t ai l edwa yt oi dent i f yi ngac os tobj e c twhent he r ei sa phys i c alr e l a t i ons hi pbe t we eni nput sandout put s Ans we r :C Di ff: 2 Obj e c t i ve : 1 AACS B: Ana l yt i c alt hi nki ng 2)Be nnetCompanye mpl oys20i ndi vi dual s .Ei ght e e ne mpl oyee sar epai d$18pe r hourandt her es tar es al ar i edempl oyee spai d$3, 000amont h.Whi c hoft he f ol l owi ngi st het ot alc os tf unc t i onofper s onne l ? A)y=a+bX B)y=b C)y=bX D)y=a Ans we r :A Di ff: 2 Obj e c t i ve : 1 AACS B: Anal yt i c alt hi nki ng 3)Cr i ms onSe r vi c e s , I nc . ,empl oys8i ndi vi dual s .The yar eal lpai d$16. 50pe rhour . How woul dt ot alc os t sofper s onne lbec l as s i fied? A)var i abl ec os t B)mi xe dc os t C)i r r e l e vantc os t D)fixe dc os t Ans we r :A Di ff: 2 Obj e c t i ve : 1 AACS B: Anal yt i c alt hi nki ng 4)ForFe br uar y ,t hec os tc ompone nt sofapi c t ur ef r a mei nc l ude$0. 30f ort hegl as s , $0. 75f ort hewoodenf r ame ,and$0. 80f oras s e mbl y .Theas s e mbl yde s kandt ool s c os t$500.Twohundr e dfif t yf r ame sar ee xpec t edt obepr oduc edi nt hec omi ng ye ar .Wha tc os tf unc t i onbe s tr e pr es e nt st he s ec os t s ? A)y=1. 85+500X B)y=500+1. 85X C)y=3. 85+600X

D)y=1. 05+500X Ans we r :B Di ff: 2 Obj e c t i ve : 1 AACS B: Anal yt i c alt hi nki ng 5)Thec os tc ompone nt sofahe at eri nc l ude$30f ort hec ompr e s s or ,$10f ort he s hee tmol de dc ompoundf r ame ,and$75pe runi tf oras s e mbl y . Thef ac t or y mac hi nesandt ool sc os ti s$60, 000.Thec ompanye xpec t st opr oduc e1, 000hea t e r s i nt hec omi ngye ar .Wha tc os tf unc t i onbe s tr e pr e s ent st he s ec os t s ? A)y=60, 000+115X B)y=1, 000+60, 000X C)y=60, 000+1, 000X D)y=1, 000+115X Ans we r :A Di ff: 2 Obj e c t i ve : 1 AACSB: Ana l yt i c alt hi nki ng 6)Whi c hoft hef ol l owi ngs t a t e ment si st r ueofal i ne arc os tf unc t i on? A)I tpr e s e nt svar i abl ec os tasas l opec oeffic i ent . B)I tpr e s e nt st ot alc os tasani nt er c ept . C)I tpr es ent svar i abl ec os tasani nt e r c ept . D)I tpr es ent st ot alc os tass l opec oeffic i e nt . Ans we r :A Di ff: 2 Obj e c t i ve : 1 AACSB: Ana l yt i c alt hi nki ng 7)A financ emana ge rhast os e l e c toneoft hef ourdi ffe r ents uppl i er sofr a w ma t e r i al s .Thet ot alc os tf unc t i onsundert hef ouropt i onsar egi ve nbe l ow.As s ume t hequal i t yoft her a w ma t er i alt obet hes ame ,whi c hoft hef ol l owi ngi spr e f er r e d byt hefinanc emana ge r ? A)y=200+5X B)y=200+5. 50X C)y=200+4. 50X D)y=200+4. 70X Ans we r :C Di ff: 3 Obj e c t i ve : 1 AACSB: Ana l yt i c alt hi nki ng 8)I ft het ot alc os tf unc t i oni sy=5, 000+7X,c al c ul a t et hevar i abl ec os tf or4, 000 uni t s . A)$33, 000 B)$28, 000 C)$20, 000 D)$5, 000

Ans we r :B Expl ana t i on:B)Expl ana t i on:Var i abl ec os tf or4, 000uni t s=$7×4, 000uni t s= $28, 000 Di ff: 2 Obj e c t i ve : 1 AACSB: Appl i c a t i onofknowl e dge 9)Thec os tf unc t i ony=2, 000+6X________. A)hasas l opec oe ffic i e ntof2, 000 B)hasani nt e r c e ptof6 C)i sas t r ai ghtl i ne D)r e pr e s ent safixe dc os t Ans we r :C Di ff: 2 Obj e c t i ve : 1 AACSB: Ana l yt i c alt hi nki ng 10)Thec os tf unc t i ony=150+10X________. A)hasas l opec oe ffic i e ntof150 B)hasani nt e r c e ptof150 C)i sanonl i ne ar D)r e pr e s ent safixe dc os t Ans we r :B Di ff: 2 Obj e c t i ve : 1 AACSB: Ana l yt i c alt hi nki ng 11)Thec os tf unc t i ony=10, 000+3X________. A)r epr e s ent sami xe dc os t B)wi l li nt er s ec tt heyaxi sa t3 C)hasas l opec oe ffic i e ntof10, 000 D)i sac ur ve dl i ne Ans we r :A Di ff: 2 Obj e c t i ve : 1 AACSB: Ana l yt i c alt hi nki ng 12)Whi c hoft hef ol l owi ngf unc t i onsr epr e s ent st hel eas tt ot alc os tas s umi ngt he numbe rofuni t si se quali ne ac hc as e ? A)y=180+7X B)y=90+6X C)y=90+7X D)y=180+6X Ans we r :B Di ff: 3 Obj e c t i ve : 1 AACSB: Ana l yt i c alt hi nki ng

13)Whi c hoft hef ol l owi ngi sane qua t i onofafixed c os tf unc t i on? A)y =( a+b)X B)y =a+bX C)y =bX D)y =a Ans we r :D Di ff: 2 Obj e c t i ve : 1 AACSB: Ana l yt i c alt hi nki ng 14)Oneas s umpt i onf r eque nt l ymadei nc os tbe ha vi ore s t i ma t i oni st ha tc ha ngesi n t ot alc os t sc anbee xpl ai nedbyc hangesi nt hel e ve lofas i ngl eac t i vi t y . Ans we r :TRUE Di ff: 1 Obj e c t i ve : 1 AACSB: Ana l yt i c alt hi nki ng 15)A c os tf unc t i oni sama t hema t i c alde s c r i pt i onofhow ac os tc hange swi t h c hangesi nt hel e ve lofanac t i vi t yr e l a t i ngt ot ha tc os t . Ans we r :TRUE Di ff: 1 Obj e c t i ve : 1 AACSB: Ana l yt i c alt hi nki ng 16)Al lc os tf unc t i onsar el i ne ar . Ans we r :FALSE Expl ana t i on:Al lc os tf unc t i onsar enotl i ne ar ,butf orc os t be ha vi ores t i ma t i onwe as s umes omear el i ne arwi t hi nar e l e vantr ange . Di ff: 1 Obj e c t i ve : 1 AACSB: Ana l yt i c alt hi nki ng 17)I nac os tf unc t i ony=18, 000,t hes l opec oeffic i e nti szer o. Ans we r :TRUE Di ff: 2 Obj e c t i ve : 1 AACSB: Ana l yt i c alt hi nki ng 18)Whe nes t i ma t i ngac os tf unc t i on,c os tbe ha vi orc anbeappr oxi ma t e dbyal i ne ar c os tf unc t i onwi t hi nt her e l e vantr ange . Ans we r :TRUE Di ff: 2 Obj e c t i ve : 1 AACSB: Ana l yt i c alt hi nki ng 19)y=a+bX,y=a ,andy=bXar et het hr e ebas i ct ype sofl i ne arc os tf unc t i ons . Ans we r :TRUE Di ff: 1

Obj e c t i ve : 1 AACSB: Ana l yt i c alt hi nki ng 20)Al lot hert hi ngsbei nge qual ,t hel onge rt het i mehor i zont hemor el i ke l yac os t wi l lbefixe d. Ans we r :FALSE Expl ana t i on:Al lot hert hi ngsbe i nge qual ,t hel ongert het i mehor i zon,t hemor e l i ke l yt hec os twi l lbe var i abl e . Di ff: 1 Obj e c t i ve : 1 AACSB: Ana l yt i c alt hi nki ng 21)Out s i deoft her e l e vantr ange ,var i abl eandfixe dc os t be ha vi orpa t t er nsr e mai n c ons t ant . Ans we r :FALSE Expl ana t i on:Out s i deoft her e l e vantr ange ,var i abl eandfix edc os t be ha vi or pa t t e r nsma yc hange . Di ff: 2 Obj e c t i ve : 1 AACSB: Ana l yt i c alt hi nki ng 22)A par t i c ul arc os ti t em c oul dbevar i abl ef oronec os tobj e c tandfixe df or anot he rc os tobj ec t . Ans we r :TRUE Di ff: 1 Obj e c t i ve : 1 AACSB: Ana l yt i c alt hi nki ng 23)Wr i t eal i ne arc os tf unc t i one qua t i onf ore ac hoft hef ol l owi ngc ondi t i ons .Us ey f ore s t i ma t edc os t sandXf orac t i vi t yoft hec os tdr i ver . a.Di r e c tmanuf ac t ur i ngl abori s$10perhour . b.Di r e c tma t e r i al sc os t$15. 60perc ubi cyar d. c .Ut i l i t i e sha veami ni mum c har geof$5, 000,pl usac har geof$0. 30perki l owa t t hour . d.Mac hi neoper a t i ngc os t si nc l ude$300, 000ofmac hi nede pr e c i a t i onperyear , pl us$100ofut i l i t yc os t sf ore ac hda yt hemac hi ne r yi si noper a t i on. Ans we r : a.y=$10X b.y=$15. 60X c .y=$5, 000+$0. 30X d.y=$300, 000+$100X Di ff: 2 Obj e c t i ve : 1 AACSB: Ana l yt i c alt hi nki ng 24)Wr i t eal i ne arc os tf unc t i one qua t i onf ore ac hoft hef ol l owi ngc ondi t i ons .Us ey f ore s t i ma t edc os t sandXf orac t i vi t yoft hec os tdr i ve r .

a.Di r ec tma t er i al sc os ti s$1. 70perpound b.Tot alc os ti sfixeda t$8, 000permont hr e gar dl e s soft henumbe rofuni t s pr oduc ed. c .Aut or e nt alhasafixedf eeof$80. 00perda ypl us$2. 00permi l edr i ven. d.Mac hi neoper a t i ngc os t si nc l ude$1, 000ofmai nt e nanc epe rmont h,and$12. 00 ofc ool antus agec os t sf oreac hda yt hemac hi ner yi si nope r at i on. Ans we r : a.y=$1. 70X b.y=$8, 000 c .y=$80+$2. 00X d.y=$1, 000+$12X Di ff: 2 Obj e c t i ve : 1 AACSB: Ana l yt i c alt hi nki ng

Obj ec t i ve10. 2 1)A l i ne arc os tf unc t i onc anonl yr epr e s entfixe dc os tbeha vi or . Ans we r :FALSE Expl ana t i on:A l i nearc os tf unc t i onc anr epr es e ntfixed,mi xed,orvar i abl ec os t beha vi or . Di ff: 1 Obj e c t i ve : 2 AACSB: Ana l yt i c alt hi nki ng 2)I nagr aphi c aldi s pl a yofac os tf unc t i on,t hes t e e pnes sofal i ner epr e s e nt st he t ot alamountoffix edc os t s . Ans we r :FALSE Expl ana t i on:I nagr a phi c aldi s pl a yofac os tf unc t i on,t hec ons t antort heyi nt er c eptr e pr e s ent st heamountoffixedc os t swhe r e ast hes t e epnes sofal i ne r epr es e nt st hevar i abl ec os t . Di ff: 2 Obj e c t i ve : 2 AACSB: Ana l yt i c alt hi nki ng 3)I tc anbei nf e r r edt ha twhe nt he r ei sahi ghc or r el at i onbe t we e nt wovar i abl es , onei st hec aus eoft heot he r . Ans we r :FALSE Expl ana t i on:I tc annotbei nf er r e dt ha tahi ghc or r el at i onbe t we e nt wovar i abl e s i ndi c a t e st ha tonei st hec aus eoft heot he r .A hi ghc or r e l a t i ons i mpl yi ndi c a t e st ha t t hevar i abl e smovet oge t he r . Di ff: 2 Obj e c t i ve : 2 AACSB: Ana l yt i c alt hi nki ng

4)Ane xampl eofaphys i c alc aus e andeffe c tr e l a t i ons hi pi swhe naddi t i onaluni t s ofpr oduc t i oni nc r e as et ot aldi r e c tma t e r i alc os t s . Ans we r :TRUE Di ff: 2 Obj e c t i ve : 2 AACSB: Ana l yt i c alt hi nki ng 5)Mana ge r ss houl dus epas tda t at oc r e a t eac os tf unc t i onandt he nus et hee xac t i nf or mat i onpr ovi de dbyt hatc os tf unc t i ont oc r e a t et hebudget ar yf or e c as tf ort he ne xtye ar . Ans we r :FALSE Expl ana t i on:Mana ge r sar ei nt e r e s t e di ne s t i ma t i ngpas tc os t be ha vi orf unc t i ons bec aus et hee s t i ma t esc anhe l pt he m makemor eac c ur a t ec os tpr edi c t i ons ,or f or ec as t s ,aboutf ut ur ec os t s .Butbet t e rmana geme ntdec i s i ons ,c os tpr e di c t i ons , ande s t i ma t i onofc os tf unc t i onsc anbeac hi e vedonl yi fmana ger sc or r e c t l y i de nt i f yt hef ac t or st ha taffec tc os t s . Di ff: 2 Obj e c t i ve : 2 AACSB: Ana l yt i c alt hi nki ng 6)Wha tar et het woas s umpt i onsbe hi ndas i mpl el i ne arc os tf unc t i on?Br i e fly e xpl ai nt het hr e ewa yst ha tal i ne arc os tf unc t i onma ybe ha ve ? Ans we r : Thet wous ualas s umpt i onsbe hi ndas i mpl el i ne arc os tf unc t i onar e : 1)Var i a t i onsi nt hel e ve lofas i ngl eac t i vi t y( t hec os tdr i ve r )e xpl ai nt hevar i a t i ons i nt her e l a t e dt ot alc os t s ;and 2)Cos tbeha vi ori sappr oxi mat e dbyal i nearc os tf unc t i onwi t hi nt her e l e vant r ange .Thi smeanst ha tt ot alc os tve r s ust hel e ve lofas i ngl eac t i vi t yt ha ti sr e l a t e d t ot ha tc os ti sas t r ai ghtl i newi t hi nt her e l e vant r ange . Onc el i ne ar i t yi ses t abl i s he d,t her ear et hr e epos s i bl et ypesofl i near i t y: 1)A s t r i c t l yvar i abl ec os toft hef or m Y=bX,whe r ebi st hes l opeoft hes t r ai ght l i neandi st hevar i abl ec os tpe runi toft hec os tdr i ve r ; 2)A s t r i c t l yc ons t antc os toft hef or m Y=a ,whe r eai st het ot alfixedc os tor c ons t ant ;and 3)A mi xe dors emi var i abl ec os toft hef or m Y=a+bX,whe r eai st het ot alfixe d c os torc ons t ant ,andbi st hevar i abl ec os tperuni toft hedr i verort hes l opeoft he s t r ai ghtl i ne . Di ff: 2 Obj e c t i ve : 2 AACSB: Ana l yt i c alt hi nki ng Obj ec t i ve10. 3 1)Thec onf e r e nc eme t hode s t i ma t e sc os tf unc t i ons________. A)us i ngquant i t a t i vemet hodst ha tc anbever yt i mec ons umi ngandc os t l y

B)ba s e donanal ys i sandopi ni onsga t he r e df r om var i ousde par t me nt s C)us i ngt i me andmot i ons t udi es D)byma t hema t i c al l yanal yzi ngt her e l a t i ons hi pbe t wee ni nput sandout put si n phys i c alt er ms Ans we r :B Di ff: 2 Obj e c t i ve : 3 AACSB: Ana l yt i c alt hi nki ng 2)Theac c ountanal ys i sme t hodes t i ma t esc os tf unc t i ons________. A)byc l as s i f yi ngc os tac c ount sasvar i abl e ,fixe d,ormi x edbas e donqual i t a t i ve anal ys i s B)us i ngt i meandmot i ons t udi es C)a tahi ghc os t ,whi c hr ende r si ts e l dom us ed D)i namanne rt ha tc annotbeus e f ul l yc ombi nedwi t hanyot herc os te s t i ma t i on me t hods Ans we r :A Di ff: 2 Obj e c t i ve : 3 AACSB: Ana l yt i c alt hi nki ng 3)Quant i t a t i veanal ys i smet hodse s t i ma t ec os tf unc t i ons________. A)us i ngt het i me andmot i ons t udi es B)ba s e donanal ys i sandopi ni onsga t he r e df r om var i ousde par t me nt s C)us i ngaf or malma t hema t i c alme t hodt ofitc os tf unc t i onst opas tda t a obs e r va t i ons D)us i ngt hepool i ngofknowl edgef r om e ac hval uec hai nf unc t i on Ans we r :C Di ff: 2 Obj e c t i ve : 3 AACSB: Ana l yt i c alt hi nki ng 4)Var i abl ec os tpe rl abor houri s$8. 50.Fi xe dc os ti s$10, 500.Cal c ul at et het ot al c os tf or350l aborhour s .Ma c hi nehour sdur i ngt heper i odar e50. A)$10, 925 B)$13, 475 C)$13, 900 D)$3, 400 Ans we r :B Expl ana t i on:B)Tot alc os t=$10, 500+( $8. 50×350)=$13, 475 Di ff: 2 Obj e c t i ve : 3 AACSB: Appl i c a t i onofknowl e dge 5)Whi c hc os te s t i ma t i onme t hodanal yze sac c ount si nt hes ubs i di ar yl e dge ras var i abl e ,fixe d,ormi x edus i ngqual i t a t i veme t hods ? A)t heac c ountanal ys i smet hod B)t hec onf e r enc eme t hod

C)t hemar gi nalc os t i ngmet hod D)t hei nc r e ment alc os t i ngme t hod Ans we r :A Di ff: 1 Obj e c t i ve : 3 AACSB: Ana l yt i c alt hi nki ng 6)Whi c hc os te s t i ma t i onme t hodus esaf or malma t hema t i c alme t hodt ode ve l op c os tf unc t i onsbas e donpas tda t a? A)t hec as hac c ount i ngme t hod B)t hec onf e r enc eme t hod C)t heac c r ualac c ount i ngmet hod D)t hequant i t a t i veanal ys i sme t hod Ans we r :D Di ff: 1 Obj e c t i ve : 3 AACSB: Ana l yt i c alt hi nki ng 7)Whi c hc os tes t i ma t i onmet hodma yus et i meandmot i ons t udi e st oanal yzet he r e l a t i ons hi pbet weeni nput sandout put si nphys i c alt er ms ? A)t heac c r ualac c ount i ngme t hod B)t hehi ghl ow me t hod C)t hei ndus t r i alengi ne er i ngme t hod D)t hec as hac c ount i ngme t hod Ans we r :C Di ff: 1 Obj e c t i ve : 3 AACSB: Ana l yt i c alt hi nki ng Att heAur i cCompany , t hec os toft hepe r s onne lde par t menthasal wa ysbee n c har gedt opr oduc t i ondepar t me nt sbas e duponnumbe rofempl oye es .Rec e nt l y , opi ni onsga t her edf r om t hede par t me ntmana ge r si ndi c a t et ha tt henumberof ne w hi r e smi ghtbeabet t e rpr e di c t orofpe r s onne lc os t s . Tot alper s onne ldepar t mentc os t sar e$287, 500. Department Numberofempl oyee s 7 0 Numberofnew hi r e s 2 5

A B 280 225 1 3 1 2

C

8)I ft henumbe rofempl oyee si sc ons i der edt hec os tdr i ve r ,wha tamountof pe r s onne lc os t swi l lbeal l oc a t edt oDe par t me ntA? A)$35, 000 B)$10, 667 C)$140, 000 D)$43, 700 Ans we r :A

Expl ana t i on:A)Pe r s onne lc os t sofDepar t me ntA =[ 70/( 70+280+225) ]× $287, 500=$35, 000 Di ff: 2 Obj e c t i ve : 3 AACSB: Appl i c a t i onofknowl e dge 9)I ft henumbe rofne w hi r e si sc ons i de r e dt hec os tdr i ve r ,wha tamountof pe r s onne lc os t swi l lbeal l oc a t edt oDe par t me ntA? A)$35, 000 B)$10, 667 C)$143, 750 D)$43, 700 Ans we r :C Expl ana t i on:C)Per s onne lc os t sofDepar t me ntA =[ 25/( 25+13+12) ]×$287, 500 =$143, 750 Di ff: 2 Obj e c t i ve : 3 AACSB: Appl i c a t i onofknowl e dge 10)Whi c hc os te s t i ma t i onme t hodi sbei ngus edbyAur i cCompany? A)t hes i mpl er egr e s s i onme t hod B)t hec onf e r enc eme t hod C)t heac c ountanal ys i sme t hod D)t hemar gi nalc os t i ngme t hod Ans we r :B Di ff: 3 Obj e c t i ve : 3 AACSB: Ana l yt i c alt hi nki ng Ans we rt hef ol l owi ngque s t i onsus i ngt hei nf or mat i onbe l ow: Att heVer i l lCompany ,t hec os toft hel i br ar yandi nf or ma t i onc ent e rhasal wa ys be enc har gedt ot hevar i ousdepar t ment sba s e duponnumbe rofempl oyee s . Rec e nt l y ,opi ni onsga t he r e df r om t hede par t me ntmanage r si ndi c a t et ha tt he numbe rofengi nee r swi t hi nade par t me ntmi ghtbeabe t t e rpr edi c t orofl i br ar y andi nf or ma t i onc ent erc os t s . Tot all i br ar yandi nf or mat i onc ent erc os t sar e$200, 000. Department A B C Numberofempl oyee s 135 530 1 35 Numberofengi nee r s 0 8 0 2 0 11)Whi c hc os te s t i ma t i onme t hodi sbei ngus edbyVe r i l lCompany? A)t her e gr e s s i onanal ys i sme t hod B)t hemar gi nalc os t i ngmet hod C)t hec onf e r e nc eme t hod D)t heoper at i ngc os t i ngme t hod

Ans we r :C Di ff: 3 Obj e c t i ve : 3 AACSB: Ana l yt i c alt hi nki ng 12)I ft henumberofe mpl oye esi sc ons i der edt hec os tdr i ver ,wha tamountof l i br ar yandi nf or ma t i onc e nt e rc os t swi l lbeal l oc a t edt oDe par t me ntA? A)$30, 000 B)$33, 750 C)$0 D)$66, 667 Ans we r :B Expl ana t i on:B)Li br ar ya ndi nf or ma t i onc os t sofDe par t me ntA =[ 135/( 135+530 +135) ]×$200, 000=$33, 750 Di ff: 2 Obj e c t i ve : 3 AACSB: Appl i c a t i onofknowl e dge 13)I ft henumbe rofengi ne er si sc ons i de r e dt hec os tdr i ver ,whatamountofl i br ar y andi nf or ma t i onc e nt erc os t swi l lbeal l oc a t edt oDe par t me ntA? A)$30, 000 B)$33, 750 C)$0 D)$66, 667 Ans we r :C Expl ana t i on:C)Li br ar yandi nf or ma t i onc os t sofDe par t me ntA =[ 0/( 0+80+ 20) ]×$200, 000=$0 Di ff: 2 Obj e c t i ve : 3 AACSB: Appl i c a t i onofknowl e dge I s ondo' sTVandAppl i anc eSt or ei sas mal lc ompanyt ha thashi r e dyout oper f or m s omemana ge mentadvi s or ys er vi c es .Thef ol l owi ngi nf or ma t i onper t ai nst o2015 ope r a t i ons . Sal es( 1, 200t e l e vi s i ons ) $1, 200, 000 Cos tofgoodss ol d 540, 000 St or emana ger ' ss al ar yperyear 108, 000 Ope r at i ngc os t speryear 216, 000 Adve r t i s i ngandpr omot i onperyear 24, 000 Commi s s i ons( 3% ofs al es ) 36, 000 14)Wha twast hevar i abl ec os tperuni ts ol df or2015? A)$30 B)$480 C)$770 D)$450 Ans we r :B

Expl ana t i on:B)Var i abl ec os tpe runi t=( $540, 000+$36, 000)/1, 200=$480pe runi t Di ff: 2 Obj e c t i ve : 3 AACSB: Appl i c a t i onofknowl e dge 15)Whatwe r et ot alfixedc os t sf or2015? A)$924, 000 B)$576, 000 C)$348, 000 D)$224, 000 Ans we r :C Expl ana t i on:C)Fi xe dc os t s=$108, 000+$216, 000+$24, 000=$348, 000 Di ff: 2 Obj e c t i ve : 3 AACSB: Appl i c a t i onofknowl e dge 16)Wha tar et hee s t i ma t e dt ot alc os t si ft hec ompanye xpec t st os e l l3, 500uni t s ne xtye ar ? A)$2, 028, 000 B)$3, 619, 000 C)$3, 271, 000 D)$1, 429, 000 Ans we r :A Expl ana t i on:A)Tot alc os t=fix e dc os t s( $108, 000+$216, 000+$24, 000)+var i abl e c os t s( 3, 500uni t s×$480var i abl ec os t speruni t )=$1, 680, 000=$2, 028, 000t ot al e s t i ma t edc os t s . Di ff: 3 Obj e c t i ve : 3 AACSB: Appl i c a t i onofknowl e dge 17)Whi c hc os te s t i ma t i onme t hodi sbei ngus edbyI s ondo' sTVandAppl i anc e St or e ? A)t heoper a t i ngc os t i ngmet hod B)t hemar gi nalc os t i ngme t hod C)t heac c ountanal ys i sme t hod D)t hec os t vol ume pr ofitanal ys i sme t hod Ans we r :C Di ff: 3 Obj e c t i ve : 3 AACSB: Ana l yt i c alt hi nki ng Ans we rt hef ol l owi ngque s t i onsus i ngt hei nf or mat i onbe l ow: Ge ne nd' sGoodVal ueAppl i anc eSt or ei sas mal lc ompanyt ha thashi r edyout o pe r f or ms omemana ge me ntadvi s or ys e r vi c es .Thef ol l owi ngi nf or ma t i onpe r t ai ns t o2015oper a t i ons . Sal e s( 6, 000mi c r owa veovens )

$1, 740, 000

Cos tofgoodss ol d St or emana ger ' ss al ar yperyear Ope r at i ngc os t speryear Adve r t i s i ngandpr omot i onperyear Commi s s i ons( 3% ofs al es )

960, 000 100, 000 250, 000 30, 000 52, 200

18)Whi c hc os te s t i ma t i onme t hodi sbei ngus edbyGene nd' sGoodVal ue Appl i anc eSt or e ? A)t heac c ountanal ys i smet hod B)t heoper a t i ngc os t i ngme t hod C)t hemar gi nalc os t i ngmet hod D)t hec os t vol ume pr ofitanal ys i sme t hod Ans we r :A Di ff: 2 Obj e c t i ve : 3 AACSB: Ana l yt i c alt hi nki ng 19)Wha twast hevar i abl ec os tperuni ts o...