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Exam 1: Managerial Accounting and Cost Concepts

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Question 51

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Fasheh Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows: If 10,000 units are produced, the total amount of manufacturing overhead cost is closest to:

A) $180,500
B) $134,500
C) $157,500
D) $146,000

E) A) and B)
F) A) and C)

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Question 52

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Bressette Corporation has provided the following information: For financial reporting purposes, the total amount of product costs incurred to make 5,000 units is closest to:

A) $65,750
B) $10,000
C) $70,750
D) $55,750

E) None of the above
F) All of the above

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Question 53

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Within the relevant range, a difference between variable costs and fixed costs is:

A partial listing of costs incurred at Archut Corporation during September appears below: The total of the manufacturing overhead costs listed above for September is:

Leas Corporation staffs a helpline to answer questions from customers. The costs of operating the helpline are variable with respect to the number of calls in a month. At a volume of 25,000 calls in a month, the costs of operating the helpline total $452,500. To the nearest whole dollar, what should be the total cost of operating the helpline costs at a volume of 23,900 calls in a month? (Assume that this call volume is within the relevant range.) (Round intermediate calculations to 2 decimal places.)

Mark is an engineer who has designed a telecommunications device. He is convinced that there is a big potential market for the device. Accordingly, he has decided to quit his present job and start a company to manufacture and market the device. Rent on the administrative office space is:

Conversion cost is the same thing as manufacturing overhead.

Lagle Corporation has provided the following information: For financial reporting purposes, the total amount of product costs incurred to make 4,000 units is closest to:

Most companies use the contribution approach in preparing financial statements for external reporting purposes.

An income statement for Sam's Bookstore for the first quarter of the year is presented below: On average, a book sells for $50. Variable selling expenses are $5 per book with the remaining selling expenses being fixed. The variable administrative expenses are 4% of sales with the remainder being fixed. The contribution margin for Sam's Bookstore for the first quarter is:

Dominik Corporation purchased a machine 5 years ago for $527,000 when it launched product M08Y. Unfortunately, this machine has broken down and cannot be repaired. The machine could be replaced by a new model 310 machine costing $545,000 or by a new model 240 machine costing $450,000. Management has decided to buy the model 240 machine. It has less capacity than the model 310 machine, but its capacity is sufficient to continue making product M08Y. Management also considered, but rejected, the alternative of dropping product M08Y and not replacing the old machine. If that were done, the $450,000 invested in the new machine could instead have been invested in a project that would have returned a total of $532,000. In making the decision to invest in the model 240 machine, the opportunity cost was:

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:

Given the cost formula, Y = $16,000 + $3.40X, total cost for an activity level of 4,000 units would be:

A fixed cost is constant if expressed on a per unit basis but the total dollar amount changes as the number of units increases or decreases.

Mccaskell Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows: If 8,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

In a traditional format income statement, the gross margin minus selling and administrative expenses equals net operating income.

A partial listing of costs incurred during March at Febbo Corporation appears below: The total of the manufacturing overhead costs listed above for March is:

A fixed cost fluctuates in total as activity changes but remains constant on a per unit basis over the relevant range.

The following costs are all examples of committed fixed costs: depreciation on buildings, salaries of highly trained engineers, real estate taxes, and insurance expenses.

The cost of direct materials is classified as a: