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Exam 1: Managerial Accounting and Cost Concepts

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Question 1

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The cost of leasing production equipment is classified as: $\begin{array}{lcc} & \text { Prime cost } & \text { Product cost } \\\text { A) } & \text { No } & \text { Yes } \\\text { B) } & \text { No } & \text { No } \\\text { C) } & \text { Yes } & \text { No } \\\text { D) } & \text { Yes } & \text { Yes }\end{array}$

A) Option A
B) Option B
C) Option C
D) Option D

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

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Question 2

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Average maintenance costs are $1.50 per machine-hour at an activity level of 8,000 machine-hours and $1.20 per machine-hour at an activity level of 13,000 machine-hours.Assuming that this activity is within the relevant range,total expected maintenance cost for a budgeted activity level of 10,000 machine-hours would be closest to:

A) $16,128
B) $15,000
C) $13,440
D) $11,433

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

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Question 3

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The following cost data pertain to the operations of Mancia Department Stores, Inc., for the month of February. The Brentwood Store is just one of many stores owned and operated by the company. The Shoe Department is one of many departments at the Brentwood Store. The central warehouse serves all of the company's stores. -What is the total amount of the costs listed above that are direct costs of the Shoe Department?

Inspection costs at one of Krivanek Corporation's factories are listed below: Management believes that inspection cost is a mixed cost that depends on units produced. -Using the high-low method,the estimate of the fixed component of inspection cost per month is closest to:

At an activity level of 5,900 units,Haas Corporation's total variable cost is $347,982 and its total fixed cost is $284,321. Required: For the activity level of 6,100 units,compute: (a)the total variable cost; (b)the total fixed cost; (c)the total cost; (d)the average variable cost per unit; (e)the average fixed cost per unit;and (f)the average total cost per unit.Assume that this activity level is within the relevant range.

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 $151.60 per unit. -The best estimate of the total variable cost per unit is:

Edeen Corporation has provided the following production and total cost data for two levels of monthly production volume.The company produces a single product. The best estimate of the total variable manufacturing cost per unit is:

At a volume of 10,000 units,Company P incurs $30,000 in factory overhead costs,including $10,000 in fixed costs.Assuming that this activity is within the relevant range,if volume increases to 12,000 units,Company P would expect to incur total factory overhead costs of:

In a contribution format income statement for a merchandising company,cost of goods sold is a variable cost that gets included in the "Variable expenses" portion of the income statement.

Haar Inc.is a merchandising company.Last month the company's cost of goods sold was $61,000.The company's beginning merchandise inventory was $11,000 and its ending merchandise inventory was $21,000.What was the total amount of the company's merchandise purchases for the month?

Maintenance costs at a Tierce Corporation factory are listed below: Management believes that maintenance cost is a mixed cost that depends on machine-hours.Using the high-low method to estimate the variable and fixed components of this cost,these estimates would be closest to:

At an activity level of 5,300 machine-hours in a month, Clyburn Corporation's total variable maintenance cost is $114,268 and its total fixed maintenance cost is $154,336. -What would be the average fixed maintenance cost per unit at an activity level of 5,600 machine-hours in a month? Assume that this level of activity is within the relevant range.

Buckeye Company has provided the following data for maintenance cost: The best estimate of the cost formula for maintenance would be:

Chaffee 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 33,000 calls in a month, the costs of operating the helpline total $742,500. -To the nearest whole cent,what should be the average cost of operating the helpline per call at a volume of 36,100 calls in a month? (Assume that this call volume is within the relevant range. )

A partial listing of costs incurred during December at Gagnier Corporation appears below: -The total of the period costs listed above for December is:

Getchman Marketing, Inc., a merchandising company, reported sales of $592,500 and cost of goods sold of $305,000 for April. The company's total variable selling expense was $37,500; its total fixed selling expense was $16,000; its total variable administrative expense was $35,000; and its total fixed administrative expense was $38,900. The cost of goods sold in this company is a variable cost. -The gross margin for April is:

The following cost data pertain to the operations of Swestka Department Stores, Inc., for the month of July. The Northridge Store is just one of many stores owned and operated by the company. The Cosmetics Department is one of many departments at the Northridge Store. The central warehouse serves all of the company's stores. -What is the total amount of the costs listed above that are direct costs of the Cosmetics Department?

Babuca Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. -The best estimate of the total monthly fixed manufacturing cost is:

When the level of activity increases,total variable cost will increase.

In a contribution format income statement,sales minus cost of goods sold equals the gross margin.