Question 1

If the number of units sold is the same every month,the profit from these units will be the same every month if:

Accepted Answer

A)  absorption costing is used.
B)  variable costing is used.
C)  production is greater than sales.
D)  sales is greater than production.E) B) and C)
F) C) and D)

Question 2

Harbor Images has collected the following cost data for various levels of activity:
  a.Using the high-low method,determine the variable cost per image created and the total fixed cost.
b.Estimate the total costs when 5,500 images are created.

Accepted Answer

a.High month: October;low month: Novembe...

Question 3

All else being equal,if sales revenue doubles,fixed costs will:

Accepted Answer

A)  decrease in total.
B)  increase in total.
C)  decrease on a per unit basis.
D)  increase on a per unit basis.E) B) and D)
F) None of the above

Question 4

Which of the following is true about the visual fit method?

Accepted Answer

A)  The visual fit method is the most objective way to fit a line to cost data using a scattergraph.
B)  Although a scattergraph can be created by hand,the visual fit method of determining total fixed costs and variable costs per unit must be completed by computer.
C)  Assuming the relationship between total cost and activity is (mostly) linear the visual fit method is an approximation of total fixed costs and variable costs per unit.
D)  If the scattergraph shows there is not a linear relationship between total costs and activity,the visual fit method can give a close approximation of total fixed costs and variable costs per unit.E) A) and B)
F) None of the above

Question 5

R-square tells managers how much of the variability in activity is caused by variability in cost.

Accepted Answer

A) True 
 B)False

Question 6

Cost behavior is:

Accepted Answer

A)  the way in which costs change when the activity level changes.
B)  the difference between sales revenue and fixed costs.
C)  the same as absorption costing.
D)  the amount of sales necessary to achieve a specific profit.E) A) and C)
F) None of the above

Question 7

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output:   How much of the variation in cost is not explained by production?

Accepted Answer

A)  It is impossible to determine.
B)  4.83%
C)  7.87%
D)  2.45%E) B) and C)
F) A) and D)

Question 8

Chill Out Novelties sells ice cream bars from a kiosk near campus.Fixed costs are $200 per week and the variable cost is $0.50 per ice cream bar.Complete the following table for the levels of ice cream bars sold per week.Round your answers to two decimal places.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> Total fixed cost remains $200,but fixed...

Question 9

Which of the following is the correct equation for total mixed costs under the linearity assumption?

Accepted Answer

A)  Total Fixed Costs + (Variable Cost per Unit × Units of Activity) 
B)  Total Variable Costs + (Fixed Cost per Unit × Units of Activity) 
C)  (Total Fixed Costs × Units of Activity) + Total Variable Costs
D)  (Total Fixed Costs × Units of Activity) + (Total Variable Costs × Units of Activity) E) None of the above
F) All of the above

Question 10

The contribution margin ratio is:

Accepted Answer

A)  the contribution margin stated as a percentage of sales.
B)  the contribution margin stated as a percentage of profit.
C)  the contribution margin stated as a percentage of total costs.
D)  the contribution margin stated as a percentage of fixed costs.E) B) and C)
F) None of the above

Question 11

Jasper Enterprises had the following cost and production information for April:  What is Jasper Enterprise's income under variable costing?

Accepted Answer

A)  $1,400,000
B)  $1,460,000
C)  $1,745,000
D)  $1,785,000E) A) and D)
F) A) and B)

Question 12

The contribution margin ratio is calculated as total contribution margin divided by total sales revenue.

Accepted Answer

A) True 
 B)False

Question 13

If a firm uses absorption costing,which of the following actions taken by management would increase gross profit even if sales do not increase?

Accepted Answer

A)  Decreasing production and using items from inventory for sales.
B)  Increasing production and building up inventory.
C)  Increasing fixed costs by investing in new production technology.
D)  Increasing variable costs by purchasing higher-quality materials.E) C) and D)
F) A) and B)

Question 14

Paige Inc has the following information for its first year of operations:
  a.Prepare Paige's full absorption costing income statement.
b.Prepare Paige's variable costing income statement.

Accepted Answer

a.

(Cost of goods sold per unit = $25 ...

Question 15

The cost estimating approach that uses the two most extreme activity observations is the:

Accepted Answer

A)  scattergraph method.
B)  high-low method.
C)  visual fit method.
D)  regression analysis.E) B) and C)
F) None of the above

Question 16

Maple Corp.has a selling price of $20,variable costs of $15 per unit,and fixed costs of $25,000.Maple expects profit of $300,000 at its anticipated level of production.What is Maple's unit contribution margin?

Accepted Answer

A)  $5.00
B)  $10.00
C)  $27.50
D)  $20.00E) A) and B)
F) All of the above

Question 17

The slope of the cost line on a scattergraph represents:

Accepted Answer

A)  fixed cost per unit.
B)  total fixed cost.
C)  variable cost per unit.
D)  sales price per unit.E) A) and D)
F) All of the above

Question 18

Acme Company sold 900 units for $110 each.Variable costs were $75 per unit and total fixed expenses were $22,000.Prepare a contribution margin income statement.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> The contribution margin incom...

Question 19

Gardenia Corp.has a selling price of $15,fixed costs of $25,000,and contribution margin of $65,000.If Gardenia sells 13,000 units,how much are variable costs per unit?

Accepted Answer

A)  $2.00
B)  $5.00
C)  $7.00
D)  $10.00E) None of the above
F) C) and D)

Question 20

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output:   What is Star's formula for estimating costs?

Accepted Answer

A)  Total cost = $175,003 + ($11.57 × Production) 
B)  Total cost = $61,603 + ($0.92 × Production) 
C)  Total cost = $175,003 + ($61,603 × Production) 
D)  Total cost = $11.57 + ($0.9213 × Production) E) A) and B)
F) None of the above

Exam 5: Cost Behavior

Gardenia Corp.has a selling price of $15,fixed costs of $25,000,and contribution margin of $65,000.If Gardenia sells 13,000 units,how much are variable costs per unit?

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The cost estimating approach that uses the two most extreme activity observations is the:

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Which of the following is the correct equation for total mixed costs under the linearity assumption?

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Jasper Enterprises had the following cost and production information for April: What is Jasper Enterprise's income under variable costing?

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All else being equal,if sales revenue doubles,fixed costs will:

Correct AnswerverifiedShow Answer

If the number of units sold is the same every month,the profit from these units will be the same every month if:

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Chill Out Novelties sells ice cream bars from a kiosk near campus.Fixed costs are $200 per week and the variable cost is $0.50 per ice cream bar.Complete the following table for the levels of ice cream bars sold per week.Round your answers to two decimal places.

Correct Answerverified Total fixed cost remains $200,but fixed...View AnswerShow Answer

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: How much of the variation in cost is not explained by production?

Correct AnswerverifiedShow Answer

The contribution margin ratio is calculated as total contribution margin divided by total sales revenue.

Correct AnswerverifiedShow Answer

Paige Inc has the following information for its first year of operations: a.Prepare Paige's full absorption costing income statement. b.Prepare Paige's variable costing income statement.

Correct Answerverifieda. (Cost of goods sold per unit = $25 ...View AnswerShow Answer

R-square tells managers how much of the variability in activity is caused by variability in cost.

Correct AnswerverifiedShow Answer

Cost behavior is:

Correct AnswerverifiedShow Answer

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: What is Star's formula for estimating costs?

Correct AnswerverifiedShow Answer

The slope of the cost line on a scattergraph represents:

Correct AnswerverifiedShow Answer

The contribution margin ratio is:

Correct AnswerverifiedShow Answer

If a firm uses absorption costing,which of the following actions taken by management would increase gross profit even if sales do not increase?

Correct AnswerverifiedShow Answer

Acme Company sold 900 units for $110 each.Variable costs were $75 per unit and total fixed expenses were $22,000.Prepare a contribution margin income statement.

Correct Answerverified The contribution margin incom...View AnswerShow Answer

Harbor Images has collected the following cost data for various levels of activity: a.Using the high-low method,determine the variable cost per image created and the total fixed cost. b.Estimate the total costs when 5,500 images are created.

Correct Answerverifieda.High month: October;low month: Novembe...View AnswerShow Answer

Which of the following is true about the visual fit method?

Correct AnswerverifiedShow Answer

Maple Corp.has a selling price of $20,variable costs of $15 per unit,and fixed costs of $25,000.Maple expects profit of $300,000 at its anticipated level of production.What is Maple's unit contribution margin?

Correct AnswerverifiedShow Answer

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Total fixed cost remains $200,but fixed...
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(Cost of goods sold per unit = $25 ...
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The contribution margin incom...
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a.High month: October;low month: Novembe...
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