Quiz 2 PDF

Preview

Summary

Quiz 2 Questions...

Description

Quiz 2 1. Which costs will change with a decrease in activity within the relevant range? Unit variable cost and unit fixed cost. Unit fixed costs and total variable cost. Total fixed costs and total variable cost. Unit fixed cost and total fixed cost. 2. Given the cost formula Y = $23,000 + $8X, total cost at an activity level of 7,000 units would be: $56,000 $23,000 $79,000 $33,000 3. At a sales volume of 20,000 units, Choice Corporation's sales commissions (a cost that is variable with respect to sales volume) total $132,000. To the nearest whole cent, what should be the average sales commission per unit at a sales volume of 18,500 units? (Assume that this sales volume is within the relevant range.) $6.60 $7.14 $7.17 $6.87 4. A soft drink bottler incurred the following factory utility cost: $3,486 for 950 cases bottled and $3,592 for 1,500 cases bottled. Factory utility cost is a mixed cost containing both fixed and variable components. The variable factory utility cost per case bottled is closest to: $0.19 $2.39 $2.32 $3.67 5. Dizzy Amusement Park is open from 8:00 am till midnight every day of the year. Dizzy charges its patrons a daily entrance fee of $30 per person which gives them unlimited access to all of the park's 35 rides. Dizzy employees a certified operator for each of its 35 rides. Each operator is paid $20 per hour. The cost of the certified operators would best be described as a:

true variable cost fixed cost step-variable cost mixed cost 6. At a sales volume of 38,000 units, Tirri Corporation's property taxes (a cost that is fixed with respect to sales volume) total $733,400. To the nearest whole dollar, what should be the total property taxes at a sales volume of 37,200 units? (Assume that this sales volume is within the relevant range.) $717,960 $749,172 $733,400 $725,680 7. Hiss Corporation's activity for the last six months is as follows: Machine Hours 2,000 3,000

Electrical Cost $1,560 $2,230

July August Septemb 2,400 $1,750 er October 1,900 $1,520 Novemb 1,800 $1,450 er Decembe 2,100 $1,600 r Using the high-low method of analysis, the estimated fixed cost per month for electricity is closest to: (Round your intermediate calculations to 2 decimal places.)

$280 $235 $260 $800

8. Jorgenson Corporation has provided the following data for the first five months of the year: Machine Hours January 240 Februar 320 y March 400 April 300

Lubrication Cost $1,500 $1,600 $1,740 $1,580

May

Machine Hours 340

Lubrication Cost $1,680

Using the high-low method of analysis, the estimated variable lubrication cost per machine hour is closest to: $1.50 $0.67 $1.40 $1.25

Callander 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 $140.50 per unit. Sales volume (units)

6,000 7,000 $ $ Cost of sales 497,400 580,300 Selling and $ $ administrative costs 273,600 294,700 The best estimate of the total variable cost per unit is: (Round your intermediate calculations to 2 decimal places.)

$82.90

$104.00 $125.00 $128.50

Question 1

Within the relevant range, variable costs can be expected to: remain constant in total as the activity level changes. increase on a per unit basis as the activity level increases. vary in total in direct proportion to changes in the activity level. increase on a per unit basis as the activity level decreases. Question 2

In the standard cost formula Y = a + bX, what does the "Y" represent? variable cost per unit total cost total variable cost total fixed cost Question 3 At a sales volume of 20,000 units, Choice Corporation's sales commissions (a cost that is variable with respect to sales volume) total $132,000. To the nearest whole dollar, what should be the total sales commissions at a sales volume of 18,400 units? (Assume that this sales volume is within the relevant range.) (Round intermediate calculations to 2 decimal places.)

$143,478 $121,440 $126,720 $132,000 Question 4 In describing the cost formula equation, Y = a + bX, which of the following is correct: "a" and "b" are valid for all levels of activity. "a" is the variable cost per unit. "Y" is the independent variable. in the high-low method, "b" equals the change in cost divided by the change in activity. Question 5 Dizzy Amusement Park is open from 8:00 am till midnight every day of the year. Dizzy charges its patrons a daily entrance fee of $30 per person which gives them unlimited access to all of the park's 35 rides.

Dizzy donates $2 of every entrance fee to a local homeless shelter. This charitable contribution would best be described as a:

mixed cost true variable cost step-variable cost fixed cost

Question 8 Deidoro Company has provided the following data for maintenance cost: Prior Year

Current Year

Machine 19,100 21,300 hours Maintenance $30,800 $33,880 cost Maintenance cost is a mixed cost with variable and fixed components. The fixed and variable components of maintenance cost are closest to: (Round your intermediate calculations to 2 decimal places.)

$4,060 per year; $1.400 per machine hour $4,060 per year; $1.591 per machine hour $30,800 per year; $1.591 per machine hour $30,800 per year; $1.400 per machine hour Question 9 The management of Casablanca Manufacturing Corporation believes that machine-hours is an appropriate measure of activity for overhead cost. Shown below are machine-hours and total overhead costs for the past six months: MachineOverhead Hours Cost January 150,000 $339,000 Februar 140,000 $328,000 y March 160,000 $350,000 April 130,000 $319,500 May 170,000 $362,500 June 200,000 $400,000 Assume that the relevant range includes all of the activity levels mentioned in this problem. If Casablanca expects to incur 185,000 machine hours next month, what will the estimated total overhead cost be using the high-low method? (Round your intermediate calculations to 2 decimal places.)

$212,750 $381,700 $359,750

$382,750 Question 10 The Blaine Corporation is a highly automated manufacturer. At an activity level of 6,000 machine setups, total overhead costs equal $240,000. Of this amount, depreciation totals $80,000 (all fixed) and lubrication totals $72,000 (all variable). The remaining $88,000 of the total overhead cost consists of utility cost (mixed). At an activity level of 9,000 setups, utility cost totals $112,000. Assume that the relevant range includes all of the activity levels mentioned in this problem. The variable cost per setup for utilities is most likely closest to:

$12.44 per setup $8.00 per setup $14.66 per setup $4.00 per setup

Question 1 The following data have been collected for four different cost items. Cost Cost at 100 Cost at 140 Item units 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?

A) B)

Cost Cost X W variabl fixed e mixed fixed

variabl fixed e D) mixed fixed C)

Cost Y Cost Z mixed

variabl e

variabl mixed e variabl variabl e e mixed mixed

Choice A Choice D Choice B Choice C Question 2

Which of the following costs could contain both variable and fixed cost elements with respect to the total output of the company? Administrative salaries. Manufacturing

overhead. Direct materials. Sales commissions.

Expl anat i on: Manuf act ur i ngov er headcos tr ef er st oal l cost sas soci at edwi t hpr oduct i on apar tf r om di r ectl aborordi r ectmat er i al s.Theyar et hei ndi r ectcost s i ncur r eddur i ngt hemanuf act ur i ngpr ocess .Manuf act ur i ngov er headcos t s ar et hepr oduct i oncost st hatcannotbet r aceddi r ect l yt ot hepr oduc ed i t ems. Ex ampl esofmanuf act ur i ngov er headcost si ncl udedepr eci at i on,r epai r s andmai nt enance,i nsur ance,andheat i ngcost s .Someaspect soft he cost s ,s uchasdepr eci at i on,i nsur ance,r ent sf ort hemanuf act ur i ngspace, ar efix edcost s .Theydonotv ar ywi t hpr oduct i on.Ot herel ement sof manuf act ur i ngcost s ,suc haspower ,r epai r s ,andut i l i t i es ,ar ev ar i abl e cost s . Question 4 The following data pertains to activity and maintenance cost for two recent periods: Activity level 8,000 7,000 (units) Maintenance $34,00 $31,50 cost 0 0 Maintenance cost is a mixed cost with both fixed and variable components. Using the high-low method, the cost formula for maintenance cost is: (Round your intermediate calculations to 2 decimal places.)

Y = $4.50 X Y = $2,500 + $4.25 X Y = $4.25 X Y = $14,000 + $2.50 X Question 5 Dizzy Amusement Park is open from 8:00 am till midnight every day of the year. Dizzy charges its patrons a daily entrance fee of $30 per person which gives them unlimited access to all of the park's 35 rides. For liability insurance, Dizzy pays a set monthly fee plus a small additional amount for every patron entering the park. The cost of liability insurance would best be described as a:

mixed cost step-variable cost fixed cost true variable cost

Electrical costs at one of Rome Corporation's factories are listed below: MachineHours 458 423 440 409 426 372

Electrical Cost $ 1,007 $ 934 $ 979 $ 902 $ 952 $ 822

March April May June July August Septemb 414 $ 926 er October 431 $ 949 Novemb 468 $ 1,025 er Management believes that electrical cost is a mixed cost that depends on machinehours. Using the high-low method, the estimate of the fixed component of electrical cost per month is closest to: (Round your intermediate calculations to 2 decimal places.)

$822 $743 $38 $944 Question 10 Callander 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 $140.50 per unit. Sales volume (units)

6,000 7,000 $ $ Cost of sales 497,400 580,300 Selling and $ $ administrative costs 273,600 294,700 The best estimate of the total monthly fixed cost is: (Round your intermediate calculations to 2 decimal places.)

$823,000 $147,000 $771,000 $875,000...