question 1 which of the following would be an example 270732

Question 1

Which of the following would be an example of a fixed cost?

Answer

		raw materials
		sales commissions
		utilities
		property taxes

3 points

Question 2

A mixed cost

Answer

		contains both a fixed and variable component
		is always easy to separate
		will decrease as output increases
		none of the answers are correct

3 points

Question 3

When a mixed cost is graphed the slope of the line equals

Answer

		the fixed cost per unit of output
		the total cost per unit
		the sales price per unit
		the variable cost per unit of the activity driver

3 points

Question 4

The scatter graph method

Answer

		is the most accurate method
		has the advantage of objectivity
		may reveal the presence of outliers
		none of the answers are correct

3 points

Question 5

The relevant range

Answer

		is the normal range of output
		is the range of output where cost relationships are valid
		may change from period to period
		all of the answers are correct

3 points

Question 6

Which of the following would probably be a discretionary fixed cost for a law firm?

Answer

		salary of receptionist
		cost of television commercials
		depreciation on furniture and equipment
		cost of legal forms

3 points

Question 7

Figure 3 2.

Lassiter Toys, Inc. Cost of Materials
No. of toys	Total cost
produced	of materials
100,000	$20,000
200,000	$40,000
300,000	$60,000

See Figure 3 2: The cost behavior of the materials cost is

Answer

		fixed
		mixed
		variable
		step

3 points

Question 8

Figure 3 2.

Lassiter Toys, Inc. Cost of Materials
No. of toys	Total cost
produced	of materials
100,000	$20,000
200,000	$40,000
300,000	$60,000

See Figure 3 2: What should the total materials cost be at a production level of 220,000 toys?

Answer

		$88,000
		$44,000
		$22,000
		$132,000

3 points

Question 9

Figure 3 2.

Lassiter Toys, Inc. Cost of Materials
No. of toys	Total cost
produced	of materials
100,000	$20,000
200,000	$40,000
300,000	$60,000

See Figure 3 2: What is the materials cost per unit of output?

Answer

		$.20
		$.10
		$.60
		$.40

3 points

Question 10

Figure 3 3.

Okafor Company manufactures skis. The management accountant wants to calculate the fixed and variable costs associated with the leasing of machinery. Data for the past four months were collected.

Month	Lease cost	Machine hours
April	$ 21,000	550
May	16,500	420
June	19,000	510
July	22,230	570

See Figure 3 3: Using the high low method calculate the variable rate for the lease cost

Answer

		$38.20
		$38.18
		$61.50
		$37.25

3 points

Question 11

Figure 3 3.

Okafor Company manufactures skis. The management accountant wants to calculate the fixed and variable costs associated with the leasing of machinery. Data for the past four months were collected.

Month	Lease cost	Machine hours
April	$ 21,000	550
May	16,500	420
June	19,000	510
July	22,230	570

See Figure 3 3: Using the high low method calculate the fixed cost of leasing

Answer

		$482
		$516
		$420
		$456

3 points

Question 12

Figure 3 3.

Okafor Company manufactures skis. The management accountant wants to calculate the fixed and variable costs associated with the leasing of machinery. Data for the past four months were collected.

Month	Lease cost	Machine hours
April	$ 21,000	550
May	16,500	420
June	19,000	510
July	22,230	570

See Figure 3 3: What would Okafor Company’s cost formula be to estimate the cost of leasing within the relevant range?

Answer

		total lease cost = $456 + ($38.20 ´ machine hours)
		total lease cost = $516 + ($38.18 ´ machine hours)
		total lease cost = $420 + ($37.25 ´ machine hours)
		none of the answers are correct

3 points

Question 13

Figure 3 3.

Okafor Company manufactures skis. The management accountant wants to calculate the fixed and variable costs associated with the leasing of machinery. Data for the past four months were collected.

Month	Lease cost	Machine hours
April	$ 21,000	550
May	16,500	420
June	19,000	510
July	22,230	570

See Figure 3 3: What would the estimate of Okafor Company’s total lease cost be at a level of 500 machine hours?

Answer

		$19,606
		$19,556
		$16,464
		$18,546

3 points

Question 14

Figure 3 6.

Taran Company incurred the following costs for the months of January and February.

Type of Cost	January	February
Insurance	$ 5,000	$ 5,000
Utilities	4,000	6,000
Depreciation	3,500	3,500
Materials	10,000	20,000

See Figure 3 6: From the information above we can assume that

Answer

		insurance and depreciation are fixed costs
		output decreased from January to February
		output stayed the same from January to February
		insurance is a mixed cost

3 points

Question 15

Figure 3 6.

Taran Company incurred the following costs for the months of January and February.

Type of Cost	January	February
Insurance	$ 5,000	$ 5,000
Utilities	4,000	6,000
Depreciation	3,500	3,500
Materials	10,000	20,000

See Figure 3 6: Assume that output was 5,000 units in January and 10,000 units in February, utility cost is a mixed cost, and the fixed cost of utilities was $3,000. What was the variable rate per unit of output for utilities cost in January?

Answer

		$.20
		$.40
		$.60
		$.30

3 points

Question 16

Figure 3 6.

Taran Company incurred the following costs for the months of January and February.

Type of Cost	January	February
Insurance	$ 5,000	$ 5,000
Utilities	4,000	6,000
Depreciation	3,500	3,500
Materials	10,000	20,000

See Figure 3 6: If output was 5,000 units in January and 10,000 units in February we can assume that

Answer

		utilities and materials are variable costs
		utilities, insurance, and depreciation are fixed costs
		insurance and depreciation are mixed costs
		materials is the only variable cost

3 points

Question 17

Figure 4 1.

Foster Company makes power tools. The budgeted sales are $420,000, budgeted variable costs are $147,000, and budgeted fixed costs are $227,500.

Refer to Figure 4 1. What is the budgeted operating income?

Answer

		$273,000
		$227,500
		$45,500
		$374,500
		$567,000

3 points

Question 18

Figure 4 1.

Foster Company makes power tools. The budgeted sales are $420,000, budgeted variable costs are $147,000, and budgeted fixed costs are $227,500.

Refer to Figure 4 1. What is the variable cost ratio?

Answer

		35%
		54%
		89%
		19%
		50%

3 points

Question 19

Figure 4 1.

Foster Company makes power tools. The budgeted sales are $420,000, budgeted variable costs are $147,000, and budgeted fixed costs are $227,500.

Refer to Figure 4 1. What is the breakeven point in sales dollars?

Answer

		$350,000
		$420,000
		$650,000
		$780,000
		$567,000

3 points

Question 20

Figure 4 1.

Foster Company makes power tools. The budgeted sales are $420,000, budgeted variable costs are $147,000, and budgeted fixed costs are $227,500.

Refer to Figure 4 1. What is the contribution margin?

Answer

		$90,000
		$183,000
		$36,000
		$273,000
		$374,500

3 points

Question 21

Figure 4 1.

Foster Company makes power tools. The budgeted sales are $420,000, budgeted variable costs are $147,000, and budgeted fixed costs are $227,500.

Refer to Figure 4 1. What is the contribution ratio?

Answer

		35%
		65%
		54%
		89%
		50%

3 points

Question 22

Figure 4 6.

Xeller Company makes electronic keyboards. The practice model price is $220 and variable expenses are $190. The deluxe model price is $340 and variable expenses are $250. The professional model price is $1,200 and variable expense per unit is $800. Total fixed expenses are $187,000. Generally, Xeller sells 6 practice models and 3 deluxe models for every professional model sold.

Refer to Figure 4 6. Using the sales mix stated in the facts from Figure 4 6 to form a package, what is the total package contribution margin?

Answer

		$850
		$450
		$520
		$1,890
		$587

3 points

Question 23

Figure 4 6.

Xeller Company makes electronic keyboards. The practice model price is $220 and variable expenses are $190. The deluxe model price is $340 and variable expenses are $250. The professional model price is $1,200 and variable expense per unit is $800. Total fixed expenses are $187,000. Generally, Xeller sells 6 practice models and 3 deluxe models for every professional model sold.

Refer to Figure 4 6. What is the number of practice models sold at breakeven?

Answer

		850
		220
		180
		1,320
		440

3 points

Question 24

Figure 4 6.

Xeller Company makes electronic keyboards. The practice model price is $220 and variable expenses are $190. The deluxe model price is $340 and variable expenses are $250. The professional model price is $1,200 and variable expense per unit is $800. Total fixed expenses are $187,000. Generally, Xeller sells 6 practice models and 3 deluxe models for every professional model sold.

Refer to Figure 4 6. What is the number of deluxe models sold at breakeven

Answer

		220
		660
		1,320
		850
		440

3 points

Question 25

Figure 4 6.

Xeller Company makes electronic keyboards. The practice model price is $220 and variable expenses are $190. The deluxe model price is $340 and variable expenses are $250. The professional model price is $1,200 and variable expense per unit is $800. Total fixed expenses are $187,000. Generally, Xeller sells 6 practice models and 3 deluxe models for every professional model sold.

Refer to Figure 4 6. What is the number of professional models sold at breakeven?

Answer

		220
		850
		400
		4,675
		440

3 points

Question 26

Figure 4 6.

Xeller Company makes electronic keyboards. The practice model price is $220 and variable expenses are $190. The deluxe model price is $340 and variable expenses are $250. The professional model price is $1,200 and variable expense per unit is $800. Total fixed expenses are $187,000. Generally, Xeller sells 6 practice models and 3 deluxe models for every professional model sold.

Refer to Figure 4 6. What is the overall sales revenue at breakeven?

Answer

		$778,800
		$387,200
		$1,288,700
		$2,067,800
		$968,000

3 points

Question 27

If fixed costs increase, the break even point in units will

Answer

		increase
		decrease
		remain the same
		remain the same; however, contribution per unit will decrease

3 points

Question 28

If the contribution margin per unit decreases, the break even point in units

Answer

		will increase
		will decrease
		will remain the same
		cannot be determined from the information given

3 points

Question 29

Firm X and Firm Y are competitors within the same industry. Firm X produces its product using large amounts of direct labor. Firm Y has replaced direct labor with investment in machinery. Projected sales for both firms are 15% LESS than in the prior year. Which statement regarding projected profits is TRUE?

Answer

		Firm X will lose more profit than Firm Y
		Firm Y will lose more profit than Firm X
		Firm X and Firm Y will lose the same amount of profit.
		Neither Firm X nor Firm Y will lose profit.

3 points

Question 30

Figure 4 10.

A company provided the following data:

Sales	$540,000
Variable costs	$378,000
Fixed costs	$120,000
Expected production and sales in units	40,000

Refer to Figure 4 10. What is the break even point in sales dollars?

Answer

		$498,000
		$400,000
		$171,429
		$112,500
		$150,000

4 points

Question 31

Figure 4 10.

A company provided the following data:

Sales	$540,000
Variable costs	$378,000
Fixed costs	$120,000
Expected production and sales in units	40,000

Refer to Figure 4 10. How much sales in dollars is necessary to generate a profit of $30,000?

Answer

		$528,000
		$500,000
		$214,286
		$100,000
		$150,000

3 points

Question 32

If sales remain the same and the margin of safety increases, which of the following is true?

Answer

		the breakeven point has increased
		the breakeven point has decreased
		fixed costs have increased
		none of these is true

3 points

Question 33

Operating leverage is the relative mix of

Answer

		revenues earned and manufacturing costs
		fixed and variable costs
		high volume and low volume products
		manufacturing costs and period costs
		revenues earned and variable costs

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