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Exam 1: Managerial Accounting and Cost Concepts

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Question 1

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What is the total amount of the costs listed above that are NOT direct costs of the Northridge Store?

A) $172,000
B) $33,000
C) $80,000
D) $94,000

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

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Question 2

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In a manufacturing company, direct labor costs combined with direct materials costs are known as:

A) period costs.
B) conversion costs.
C) prime costs.
D) opportunity costs.

E) All of the above
F) A) and B)

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Question 3

Multiple Choice

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Using the high-low method, the estimate of the fixed component of inspection cost per month is closest to:

The traditional format income statement provides managers with an income statement that clearly distinguishes between fixed and variable costs and therefore aids planning, control, and decision making.

Oaklis Company has provided the following data for maintenance cost: Maintenance cost is a mixed cost with variable and fixed components. The fixed and variable components of maintenance cost are closest to:

The best estimate of the total contribution margin when 5,300 units are sold is:

A number of costs and measures of activity are listed below. Required: For each item above, indicate whether the cost is MAINLY fixed or variable with respect to the possible measure of activity listed next to it.

Werner Brothers, Inc., used the high-low method to derive its cost formula for electrical power cost. According to the cost formula, the variable cost per unit of activity is $2 per machine-hour. Total electrical power cost at the high level of activity was $9,400 and at the low level of activity was $9,000. If the high level of activity was 2,200 machine hours, then the low level of activity was:

The best estimate of the total variable cost per unit is:

Bee Company's cost formula for total selling and administrative expenses, with "X" equal to the number of units sold would be:

Using the high-low method of analysis, the variable cost per meal served in the cafeteria would be estimated to be:

Country Charm Restaurant is open 24 hours a day and always has a fire going in the fireplace in the middle of its dining area. The cost of the firewood for this fire is fixed with respect to the number of meals served at the restaurant.

Depreciation on manufacturing equipment is a product cost.

Contribution margin equals revenue minus all fixed costs.

To the nearest whole cent, what should be the average sales commission per unit at a sales volume of 33,600 units? (Assume that this sales volume is within the relevant range.)

For planning, control, and decision-making purposes:

Abbott Company's manufacturing overhead is 20% of its total conversion costs. If direct labor is $38,000 and if direct materials are $23,000, the manufacturing overhead is:

Committed fixed costs represent organizational investments with a multi-year planning horizon that can't be significantly reduced even for short periods.

In making the decision to buy the model 260 machine rather than the model 330 machine, the differential cost was:

Using the high-low method, the estimate of the variable component of electrical cost per machine-hour is closest to: