Managerial 2.3
1) A mixed cost is: A) a fixed cost B) a cost with fixed and variable elements C) a variable cost D) always an indirect cost
B
10) Which of the following is a fixed cost for an automobile manufacturing plant? A) administrative salaries B) electricity used by assembly-line machines C) sales commissions D) windows for each car produced
A
3) Cost behavior refers to: A) how costs react to a change in the level of activity B) whether a cost is incurred in a manufacturing, merchandising, or service company C) classifying costs as either inventoriable or period costs D) whether a particular expense has been ethically incurred
A
7) Fixed costs: A) may include either direct or indirect costs B) vary with production or sales volumes C) include parts and materials used to manufacture a product D) can be adjusted in the short run to meet actual demands
A
5) At a plant where a union agreement sets annual salaries and conditions, annual labor costs usually: A) are considered a variable cost B) are considered a fixed cost C) depend on the scheduling of floor workers D) depend on the scheduling of production runs
B
6) Variable costs: A) are always indirect costs B) increase in total when the actual level of activity increases C) include most personnel costs and depreciation on machinery D) can always be traced directly to the cost object
B
11) If each motorcycle requires a belt that costs $20 and 2,000 motorcycles are produced for the month, the total cost for belts is: A) considered to be a direct fixed cost B) considered to be a direct variable cost C) considered to be an indirect fixed cost D) considered to be an indirect variable cost
B
12) The most likely cost driver of distribution costs is the: A) number of parts within the product B) number of miles driven C) number of products manufactured D) number of production hours
B
14) Which of the following statements is FALSE? A) There is a cause-and-effect relationship between the cost driver and the amount of cost. B) Fixed costs have cost drivers over the short run. C) Over the long run all costs have cost drivers. D) Volume of production is a cost driver of direct manufacturing costs.
B
20) What are the fixed costs per unit associated with Product ICT101? A) $102 B) $48 C) $52 D) $32
B
22) What are the fixed costs per unit associated with Product ORD203? A) $23 B) $32 C) $35 D) $44
B
8) Fixed costs depend on the: A) amount of resources used B) amount of resources acquired C) volume of production D) volume of sales
B
13) The most likely cost driver of direct labor costs is the: A) number of machine setups for the product B) number of miles driven C) number of production hours D) number of machine hours
C
16) Within the relevant range, if there is a change in the level of the cost driver, then: A) total fixed costs and total variable costs will change B) total fixed costs and total variable costs will remain the same C) total fixed costs will remain the same and total variable costs will change D) total fixed costs will change and total variable costs will remain the same
C
18) Which of the following would be LEAST likely to be a cost driver for a company's human resource costs? A) the number of employees in the human resource department B) the number of job applications processed C) the number of units sold D) the square footage of the office space used by the human resource department
C
2) Which of the following is a mixed cost? A) monthly rent payment B) manager's salary C) monthly electric bill D) direct materials
C
9) Which one of the following is a variable cost for an insurance company? A) rent B) president's salary C) sales commissions D) property taxes
C
The East Company manufactures several different products. Unit costs associated with Product ORD203 are as follows: Direct materials $50 Direct manufacturing labor 8 Variable manufacturing overhead 10 Fixed manufacturing overhead 23 Sales commissions (2% of sales) 5 Administrative salaries 9 Total $105 21) What are the variable costs per unit associated with Product ORD203? A) $60 B) $82 C) $73 D) $105
C
15) A band of normal activity or volume in which specific cost-volume relationships are maintained is referred to as the: A) average range B) cost-allocation range C) cost driver range D) relevant range
D
17) Within the relevant range, if there is a change in the level of the cost driver, then: A) fixed and variable costs per unit will change B) fixed and variable costs per unit will remain the same C) fixed costs per unit will remain the same and variable costs per unit will change D) fixed costs per unit will change and variable costs per unit will remain the same
D
4) An understanding of the underlying behavior of costs helps in all of the following EXCEPT: A) costs can be better estimated as volume expands and contracts B) true costs can be better evaluated C) process inefficiencies can be better identified and as a result improved D) sales volume can be better estimated
D
The Singer Company manufactures several different products. Unit costs associated with Product ICT101 are as follows: Direct materials $ 60 Direct manufacturing labor 10 Variable manufacturing overhead 18 Fixed manufacturing overhead 32 Sales commissions (2% of sales) 4 Administrative salaries 16 Total $140 19) What are the variable costs per unit associated with Product ICT101? A) $18 B) $22 C) $88 D) $92
D
