Acc Final

Committed fixed costs are also known as: A) Capacity costs B) Managed fixed costs C) Mixed costs D) Step costs

A) Capacity costs

Which of the following is not a component of strategic cost management? A) Ratio analysis B) Value chain analysis C) Cost driver analysis D) Strategic position analysis

A) Ratio analysis

Fixed costs equal $12,000, unit contribution margin equals $20, and the number of units sold equal 1,600. Operating income is: A) $12,000 B) $20,000 C) $32,000 D) $40,000

B) $20,000

Electricity used to heat, light, and cool a manufacturing facility would best be classified as what type of cost? A) Variable cost B) Fixed cost C) Mixed cost D) Step cost

C) Mixed cost

Which of the following is a mixed cost? A) monthly rent payment B) manager's salary C) monthly electric bill D) direct materials

C) monthly electric bill

George Rentals offers machine rental services for concrete cutting. Consider the following costs of the company over the relevant range of 4,000 to 10,000 hours of operating time for its concrete cutting equipment. Hours of Operating Time 4,000 ; 5,000 ; 8,000 ; 10,000 Total Costs: Variable Costs $20,000 Fixed Costs $82,000 Total Costs $102,000 What is the estimated total cost per hour at a volume of 8,000 hours? A) $12.50 B) $14.25 C) $18.00 D) $15.25

D) $15.25

he 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 What are the variable costs per unit associated with Product ICT101? A) $18 B) $22 C) $88 D) $92

D) $92

Nancy's Niche sells a single product. 8,000 units were sold resulting in $80,000 of sales revenue, $20,000 of variable costs, and $10,000 of fixed costs. The contribution margin percentage is: A) 12.5% B) 25.0% C) 37.5% D) 75.0%

D) 75.0%

Managerial accounting is primarily focused on: A) Providing creditors information on the status of their loans B) Providing investors with useful information for valuing securities Incorrect Response C) Providing the Internal Revenue Service with information to determine the amount of taxes owed D) Providing managers with relevant information to help achieve organizational goals

D) Providing managers with relevant information to help achieve organizational goals

A cost that is constant within a relevant range but differs outside the relevant range of activity is best classified as what type of cost? A) Variable cost B) Fixed cost C) Mixed cost D) Step cost

D) Step cost

The contribution income statement: A) reports gross margin B) is allowed for external reporting to shareholders C) categorizes costs as either direct or indirect D) can be used to predict future profits at different levels of activity

D) can be used to predict future profits at different levels of activity

Bryce Co. sales are $914,000, variable costs are $498,130, and operating income is $196,000. What is the contribution margin ratio? a) 52.2% b) 28.4% c) 54.5% d) 45.5%

d) 45.5%

Strait Co. manufactures office furniture. During the most productive month of the year, 3,000 desks were manufactured at a total cost of $59,000. In the month of lowest production the company made 1,125 desks at a cost of $38,000. Using the high-low method of cost estimation, total fixed costs are a) $21,000 b) $25,400 c) $42,000 d) $13,000

b) $25,400

Rusty Co. sells two products, X and Y. Last year, Rusty sold 5,000 units of X and 35,000 units of Y. Related data are: Product ; Unit Selling Price ; Unit Variable Cost ; Unit Contribution margin X: $110.00 ; $70.00 ; $40.00 Y: 70.00 ; 50.00 ; 20.00 What was Rusty Co.'s weighted average unit selling price? a) $180.00 b) $75.00 c) $100.00 d) $110.00

b) $75.00

The three most common cost behavior classifications are a) variable costs, product costs, and sunk costs b) fixed costs, variable costs, and mixed costs c) variable costs, period costs, and differential costs d) variable costs, sunk costs, and opportunity costs

b) fixed costs, variable costs, and mixed costs

If fixed costs are $750,000 and variable costs are 60% of sales, what is the the amount of sales dollars required to cover all costs and report an operating income of 0 (zero)? a) $1,250,000 b) $450,000 c) $1,875,000 d) $300,000

c) $1,875,000

Costs that vary in total in direct proportion to changes in an activity level are called a) fixed costs b) sunk costs c) variable costs d) differential costs

c) variable costs

Parts used in manufacturing digital cameras would best be classified as what type of cost? A) Variable cost B) Fixed cost C) Mixed cost D) Step cost

A) Variable cost

The Heartland Delivery Service has the following information about its truck fleet miles and operating costs: YearMilesOperating Costs 2015125,000$80,000 2016150,000$87,500 2017175,000$105,000 What is the best estimate of fixed costs for fleet operating expenses in 2017 using the high-low method? A) $50,000 B) $17,000 C) $17,500 D) $25,000

C) $17,500

Amber Manufacturing provided the following information for last month: Sales $20,000 Variable costs 6,000 Fixed costs 9,000 Operating income $5,000 If sales double next month, what is the projected operating income? A) $10,000 B) $25,000 C) $19,000 D) $12,000

C) $19,000

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 What are the variable costs per unit associated with Product ORD203? A) $60 B) $82 C) $73 D) $105

C) $73

In cost estimation: A) Care must be taken to make sure that data used in developing cost estimates are based on currently employed technology B) Changes in technology and prices make cost estimation difficult C) Only data reflecting a single price level should be used in cost estimation D) All of the above

D) All of the above

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) sales volume can be better estimated

If sales are $425,000, variable costs are 62% of sales, and operating income is $50,000, what is the contribution margin ratio? a) 38% b) 26.8% c) 11.8% d) 62%

a) 38%

As production increases, the fixed cost per unit a) increases b) decreases c) remains the same d) either increases or decreases, depending on the variable costs

b) decreases

Which of the following describes the behavior of a variable cost per unit? a) varies in increasing proportion with changes in the activity level b) varies in decreasing proportion with changes in the activity level c) remains constant with changes in the activity level d) varies in direct proportion with the activity level

c) remains constant with changes in the activity level

When 10,000 units are produced, variable costs are $6 per unit. Therefore, when 20,000 units are produced: A) variable costs will total $120,000 B) variable costs will total $60,000 C) variable unit costs will increase to $12 per unit D) variable unit costs will decrease to $3 per unit

A) variable costs will total $120,000

The Illinois Tools Machine Shop wants to develop a cost estimating equation for its monthly cost of electricity. It has the following data: MonthCost of Electricity (Y)Direct Labor-Hours (X) January $7,000 ; 750 April $7,500 ; 850 July $8,500 ; 1,000 October $7,250 ; 800 What would be the best equation using the high-low method? A) Y = $2,000 + $4X B) Y = $2,500 + $6X C) Y = $1,500 + $8X D) Y = $500 + $6X

B) Y = $2,500 + $6X

Marci Johnson uses gas to heat her home. She has accumulated the following information regarding her monthly gas bill and monthly heating degree-days. The heating degree-days value for a month is found by first subtracting the average temperature for each day from 65 degrees and then summing these daily amounts together for the month. MonthHeating Degree-DaysGas Bill February850$129 April300$52 The equation representing the relationship between the gas bill (Y) and heating degree-days (X) is: A) Y = $0.14 B) Y =$10 + $0.14X C) Y =$10 - $0.14X D) Y =$60 + $0.14X

B) Y =$10 + $0.14X

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) a cost with fixed and variable elements

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) are considered a fixed cost

Sherry's Custom Jewelry sells a single product. 700 units were sold resulting in $7,000 of sales revenue, $2,800 of variable costs, and $1,200 of fixed costs. Contribution margin per unit is: A) $4.00 B) $4.29 C) $6.00 D) None of these answers are correct.

C) $6.00

To compete on the basis of price, the seller must most carefully manage: A) Service B) Product development C) Cost D) Quality

C) Cost

As a consequence of automation and product diversity, in cost estimation: A) A facility level approach to estimating costs is increasingly important B) Companies no longer need to pay attention to estimating overhead C) Cost estimation is improved with the inclusion of non-unit cost drivers D) Direct labor is playing an increasingly important role in cost determination

C) Cost estimation is improved with the inclusion of non-unit cost drivers

lectricity used to heat, light, and cool a manufacturing facility would best be classified as what type of cost? A) Variable cost B) Fixed cost C) Mixed cost D) Step cost

C) Mixed cost

Which of the following best defines an activity cost driver? A) Fundamental choices about the size and scope of operations and technologies employed in delivering products or services to customers B) Choices concerning the organization of activities and the involvement of persons inside and outside the organization in decision making C) Specific units of work performed to serve customer needs that consume costly resources D) The process of ensuring that results agree with plans

C) Specific units of work performed to serve customer needs that consume costly resources

Operating income calculations use: A) net income B) income tax expense C) cost of goods sold and operating costs D) nonoperating revenues and nonoperating expenses

C) cost of goods sold and operating costs

When 20,000 units are produced, fixed costs are $16 per unit. Therefore, when 40,000 units are produced fixed costs will: A) increase to $32 per unit B) remain at $16 per unit C) decrease to $8 per unit D) total $640,000

C) decrease to $8 per unit

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) sales commissions

The following procedure performed at the United States mint is not a batch level activity: A) Inspecting the first units produced to verify proper set-up B) Movement of manufactured coins to finishing stations C) Setting up machinery for the stamping process D) Stamping each individual coin

D) Stamping each individual coin

Kym Manufacturing provided the following information for last month: Sales $12,000 Variable costs 4,000 Fixed costs 1,000 Operating income $7,000 If sales double next month, what is the projected operating income? A) $14,000 B) $15,000 C) $18,000 D) $19,000

B) $15,000

To stay competitive in the express delivery business, both Federal Express and United Parcel Service must compete against each other based on which of the following? A) Price/Cost B) Service C) Quality D) All of the above

D) All of the above

The contribution income statement highlights: A) gross margin B) products costs and period costs C) different product lines D) variable and fixed costs

D) variable and fixed costs

John Anderson uses gas to heat his home. He has accumulated the following information regarding his monthly gas bill and monthly heating degree-days. The heating degree-days value for a month is found by first subtracting the average temperature for each day from 65 degrees and then summing these daily amounts together for the month. MonthHeating Degree-DaysGas Bill February850$129 April300$52 What will be the increase in John's monthly gas bill per heating degree-day using the high-low method? A) $0.14 B) $6.59 C) $0.17 D) $5.77

A) $0.14

eorge Rentals offers machine rental services for concrete cutting. Consider the following costs of the company over the relevant range of 4,000 to 10,000 hours of operating time for its concrete cutting equipment. Hours of Operating Time: 4,000 ; 5,000 ; 8,000 ; 10,000 Total Costs: Variable Costs $ 20,000 Fixed Costs 82,000 Total Costs $102,000 What is the estimated total fixed cost per hour at a volume 8,000 hours? A) $10.25 B) $28.00 C) $24.00 D) $37.60

A) $10.25

The introduction of production technology to replace labor in a manufacturing process would likely result in which of the following? A) A shift in costs from variable costs to fixed costs. B) A shift in costs from fixed costs to variable costs. C) An increase in total manufacturing costs. D) A decrease in total manufacturing costs.

A) A shift in costs from variable costs to fixed costs.

_______________ are specific units of work performed to serve customer needs that consume costly resources. A) Activity cost drivers B) Customer cost drivers C) Organizational cost drivers D) Structural cost drivers

A) Activity cost drivers

Which one of the following statements about difficulties of cost estimation is true? A) Data may not be based on normal operating conditions B) Linear relationships between total costs and activity levels may exist C) Both A and B D) None of the above

A) Data may not be based on normal operating conditions

In cost estimation: A) Old price data of cost elements should be used cautiously, if at all B) Only data reflecting historical price levels should be used in cost estimation C) The prices of various cost elements are likely to change at the same rates and at the same times D) All of the above

A) Old price data of cost elements should be used cautiously, if at all

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) administrative salaries

Cost-volume-profit analysis is used primarily by management: A) as a planning tool B) for control purposes C) to prepare external financial statements D) to attain accurate financial results

A) as a planning tool

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) how costs react to a change in the level of activity

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) may include either direct or indirect costs

George Rentals offers machine rental services for concrete cutting. Consider the following costs of the company over the relevant range of 4,000 to 10,000 hours of operating time for its concrete cutting equipment. Hours of Operating Time: 4,000 ; 5,000 ; 8,000 ; 10,000 Total Costs: Variable Costs $ 20,000 Fixed Costs $82,000 Total Costs $102,000 What are the estimated total costs at a volume of 5,000 hours? A) $ 94,000 B) $107,000 C) $108,000 D) $100,000

B) $107,000

Sherry's Custom Jewelry sells a single product. 700 units were sold resulting in $7,000 of sales revenue, $2,800 of variable costs, and $1,200 of fixed costs. If sales increase by $25,000, operating income will increase by: A) $10,000 B) $15,000 C) $22,200 D) None of these answers are correct.

B) $15,000

Holly's Ham, Inc. sells hams during the major holiday seasons. During the current year 11,000 hams were sold resulting in $220,000 of sales revenue, $55,000 of variable costs, and $24,000 of fixed costs. Contribution margin per ham is: A) $5.00 B) $15.00 C) $20.00 D) None of these answers are correct.

B) $15.00

Dr. Charles Hunter, MD, performs a certain outpatient procedure for $1,000. His fixed costs are $20,000, while his variable costs are $500 per procedure. Dr. Hunter currently plans to perform 200 procedures this month. What is the budgeted revenue for the month assuming that Dr. Hunter plans to perform this procedure 200 times? A) $100,000 B) $200,000 C) $300,000 D) $400,000

B) $200,000

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 What are the fixed costs per unit associated with Product ORD203? A) $23 B) $32 C) $35 D) $44

B) $32

Kenefic Company sells its only product for $9 per unit, variable production costs are $3 per unit, and selling and administrative costs are $1.50 per unit. Fixed costs for 10,000 units are $5,000. The contribution margin is: A) $6 per unit B) $4.50 per unit C) $5.50 per unit D) $4 per unit

B) $4.50 per unit

The Singer Company manufactures several different products. Unit costs associated with Product ICT101 are as follows: Direct materials $60 Direct manufacturing labor10 Variable manufacturing overhead 18 Fixed manufacturing overhead 32 Sales commissions (2% of sales) 4 Administrative salaries 16 Total $140 What are the fixed costs per unit associated with Product ICT101? A) $102 B) $48 C) $52 D) $32

B) $48

George Rentals offers machine rental services for concrete cutting. Consider the following costs of the company over the relevant range of 4,000 to 10,000 hours of operating time for its concrete cutting equipment. Hours of Operating Time: 4,000 ; 5,000 ; 8,000 ; 10,000 Total Costs: Variable Costs $ 20,000 Fixed Costs $82,000 Total Costs $102,000 What are the estimated total fixed costs at a volume of 10,000 hours? A) $100,000 B) $94,000 C) $95,000 D) $82,000

B) $94,000

Which statement is true? A) All variable costs are direct costs. B) Because of a cost-benefit tradeoff, some direct costs may be treated as indirect costs. C) All fixed costs are indirect costs. D) All direct costs are variable costs.

B) Because of a cost-benefit tradeoff, some direct costs may be treated as indirect costs.

Depreciation of a copy machine in the Human Resource Department would best be classified as what type of cost? A) Variable Cost B) Fixed cost C) Mixed cost D) Step cost

B) Fixed cost

Over the short term, which type of costs is indifferent to activity level changes? A) Variable costs B) Fixed costs C) Mixed costs D) Step costs

B) Fixed costs

Which of the following would be classified as a discretionary fixed cost? A) Depreciation B) Research and Development C) Property Taxes D) Interest on Bonds

B) Research and Development

Which of the following methods of cost estimation utilizes all observations and relies on statistical measures to determine the cost estimation model? A) High-Low Method B) Scatter Diagram C) Least-Squares Regression D) Linear Programming

B) Scatter Diagram

Which one of the following statements about difficulties in cost estimation is true? A) Changes in the company's production technology make estimating the company's production costs easier B) The shorter the time period, the higher the probability of inappropriately matching activity and cost C) The stronger the economy, the harder it is to accurately match activity and cost D) When prices of a company's raw materials or labor are rapidly increasing, cost estimations based on previous periods will overestimate future costs

B) The shorter the time period, the higher the probability of inappropriately matching activity and cost

Which of the following items is NOT an assumption of CVP analysis? A) Total costs can be divided into a fixed component and a component that is variable with respect to the level of output. B) When graphed, total costs curve upward. C) The unit-selling price is known and constant. D) All revenues and costs can be added and compared without taking into account the time value of money.

B) When graphed, total costs curve upward.

Fixed costs depend on the: A) amount of resources used B) amount of resources acquired C) volume of production D) volume of sales

B) amount of resources acquired

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) considered to be a direct variable cost

A unit cost is computed by: A) multiplying total cost by the number of units B) dividing total cost by the number of units C) dividing variable cost by the number of units D) adding variable cost to fixed cost

B) dividing total cost by the number of units

All of the following are assumed in the above analysis EXCEPT: A) a constant product mix B) fixed costs increase when activity increases C) cost and revenue relationships are reflected accurately D) all costs can be classified as either fixed or variable

B) fixed costs increase when activity increases

One of the first steps to take when using CVP analysis to help make decisions is: A) finding out where the total costs line intersects with the total revenues line on a graph B) identifying which costs are variable and which costs are fixed. C) calculation of the degree of operating leverage for the company. D) estimating how many products will have to be sold to make a decent profit.

B) identifying which costs are variable and which costs are fixed.

Variable costs: A) are always indirect cost 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) increase in total when the actual level of activity increases

Northenscold Company sells several products. Information of average revenue and costs is as follows: Selling price per unit $20.00 Variable costs per unit: Direct material $4.00 Direct manufacturing labor $1.60 Manufacturing overhead $0.40 Selling costs $2.00 Annual fixed costs $96,000 The contribution margin per unit is: A) $6 B) $8 C) $12 D) $14

C) $12

If selling price per unit is $30, variable costs per unit are $20, total fixed costs are $10,000, the tax rate is 30%, and the company sells 5,000 units, net income is: A) $12,000 B) $14,000 C) $28,000 D) $40,000

C) $28,000

Holly's Ham, Inc. sells hams during the major holiday seasons. During the current year 11,000 hams were sold resulting in $220,000 of sales revenue, $55,000 of variable costs, and $24,000 of fixed costs. If sales increase by $40,000, operating income will increase by: A) $10,000 B) $20,000 C) $30,000 D) None of these answers are correct

C) $30,000

Wheel and Tire Manufacturing currently produces 1,000 tires per month. The following per unit data apply for sales to regular customers: Direct materials $20 Direct manufacturing labor 3 Variable manufacturing overhead 6 Fixed manufacturing overhead 10 Total manufacturing costs $39 The plant has capacity for 3,000 tires and is considering expanding production to 2,000 tires. What is the total cost of producing 2,000 tires? A) $39,000 B) $78,000 C) $68,000 D) $62,000

C) $68,000

Tire and Spoke Manufacturing currently produces 1,000 bicycles per month. The following per unit data apply for sales to regular customers: Direct materials $50 Direct manufacturing labor 5 Variable manufacturing overhead 14 Fixed manufacturing overhead 10 Total manufacturing costs $79 The plant has capacity for 3,000 bicycles and is considering expanding production to 2,000 bicycles. What is the per unit cost of producing 2,000 bicycles? A) $79 per unit B) $158 per unit C) $74 per unit D) $134 per unit

C) $74 per unit

As volume increases, which of the following statements is not correct? A) Variable cost per unit will remain the same. B) Total fixed will remain the same. C) Average cost per unit will increase. D) Total variable costs will increase.

C) Average cost per unit will increase.

Managerial accounting is primarily focused on: A) Providing information for internal and external users B) Providing general purpose financial statements C) Providing special-purpose information and reports D) Following generally accepted accounting principles

C) Providing special-purpose information and reports

As volume increases, average cost per unit decreases because: A) Total fixed costs increase B) Total variable costs increase C) Total fixed costs stay the same D) Total variable costs stay the same

C) Total fixed costs stay the same

Contribution margin equals: A) revenues minus period costs B) revenues minus product costs C) revenues minus variable costs D) revenues minus fixed costs

C) revenues minus variable costs

Cost-volume-profit analysis assumes all of the following EXCEPT: A) all costs are variable or fixed B) units manufactured equal units sold C) total variable costs remain the same over the relevant range D) total fixed costs remain the same over the relevant range

C) total variable costs remain the same over the relevant range

Nancy's Niche sells a single product. 8,000 units were sold resulting in $80,000 of sales revenue, $20,000 of variable costs, and $10,000 of fixed costs. To achieve $100,000 in operating income, sales must total: A) $440,000 B) $160,000 C) $130,000 D) None of these answers are correct.

D) None of these answers are correct.

All of the following are examples of activity cost drivers except: A) Placing a purchase order for raw materials B) Inspecting incoming raw materials C) Hiring and training a new employee D) Providing employees with cost information and authorizing them to make decisions

D) Providing employees with cost information and authorizing them to make decisions

Given the following cost and activity observations for Smithson Company's utilities, use the highlow method to calculate Smithson's fixed costs per month. Do not round your intermediate calculations. Cost ; Machine Hours January $52,200 ; 20,000 February 75,000 ; 29,000 March 57,000 ; 22,000 April 64,000 ; 24,500 a) $1,533 b) $2,530 c) $22,800 d) $50,600

a) $1,533

Ace, Inc. determines its total materials handling costs at two production levels as follows: Cost: $160,000 $132,000 Gallons: 80,000 60,000 What is the estimated total cost for handling 70,000 gallons if variable and fixed costs are estimated using the high-low method? a) $146,000 b) $150,000 c) $153,000 d) $165,000

a) $146,000

"Discretionary costs" are costs which a) Management decides to incur in the current period to enable the company to achieve objectives other than the filling of orders placed by customers. b) Are likely to respond to the amount of attention devoted to them by a specified manger. c) Are governed mainly by past decisions that established the present levels of operating and orga_nizational capacity and which only change slowly in response to small changes in capacity. d) Will be unaffected by current managerial decisions.

a) Management decides to incur in the current period to enable the company to achieve objectives other than the filling of orders placed by customers.

"Controllable costs" are costs that a) Management decides to incur in the current period to enable the company to achieve objectives other than the filling of orders placed by customers. b) Are likely to respond to the amount of attention devoted to them by a specified manger. c) Fluctuate in total in response to small changes in the rate of utilization of capacity. d) Will be unaffected by current managerial decisions.

b) Are likely to respond to the amount of attention devoted to them by a specified manger.

Which of the following is the best example of a variable cost? a) The corporate president's salary. b) Cost of raw material. c) Interest charges. d) Property taxes.

b) Cost of raw material.

Parker Company pays each member of its sales staff a salary as well as a commission on each unit sold. For the coming year, Parker plans to increase all salaries by 5% and to keep unchanged the commission paid on each unit sold. Because of increased demand, Parker expects the volume of sales to increase by 10%. How will the total cost of sales salaries and commissions change for the coming year? a) Increase by 5% or less. b) Increase by more than 5% but less than 10%. c) Increase by 10%. d) Increase by more than 10%.

b) Increase by more than 5% but less than 10%.

Which of the following is correct regarding a relevant range? a) Total variable costs will not change. b) Total fixed costs will not change. c) Actual fixed costs usually fall outside the relevant range. d) The relevant range cannot be changed after being established.

b) Total fixed costs will not change.

The difference between variable costs and fixed costs is a) Variable costs per unit fluctuate and fixed costs per unit remain constant. b) Variable costs per unit are fixed over the relevant range and fixed costs per unit are variable. c) Total variable costs are variable over the relevant range and fixed in the long term, while fixed costs never change. d) Variable costs per unit change in varying increments, while fixed costs per unit change in equal increments.

b) Variable costs per unit are fixed over the relevant range and fixed costs per unit are variable.

Spice Inc.'s unit selling price is $60, the unit variable costs are $35, fixed costs are $125,000, and current sales are 10,000 units. How much will operating income change if sales increase by 8,000 units? a) $150,000 decrease b) $175,000 increase c) $200,000 increase d) $150,000 increase

c) $200,000 increase

If fixed costs are $1,200,000, the unit selling price is $240, and the unit variable costs are $110, how many usits should the company sell to realize an operating income of $200,000? a) 9,231 units b) 12,000 units c) 10,769 units d) 5,833 units

c) 10,769 units

"Committed costs" are a) Costs which management decides to incur in the current period to enable the company to achieve objectives other than the filling of orders placed by customers. b) Costs which are likely to respond to the amount of attention devoted to them by a specified manager. c) Costs which are governed mainly by past decisions that established the present levels of operating and organizational capacity and which only change slowly in response to small changes in capacity d) Amortization of costs which were capitalized in previous periods.

c) Costs which are governed mainly by past decisions that established the present levels of operating and organizational capacity and which only change slowly in response to small changes in capacity

An assembly plant accumulates its variable and fixed manufacturing overhead costs in a single cost pool, which is then applied to work in process using a single application base. The assembly plant management wants to estimate the magnitude of the total manufacturing overhead costs for different volume levels of the application activity base using a cost formula. If there is an increase in the application activity base that is within the relevant range of activity for the assembly plant, which one of the following relationships regarding variable and fixed costs is true? a) The variable cost per unit is constant, and the total fixed costs decrease. b) The variable cost per unit is constant, and the total fixed costs increase. c) The variable cost per unit and the total fixed costs remain constant. d) The variable cost per unit increases, and the total fixed costs remain constant.

c) The variable cost per unit and the total fixed costs remain constant.

Which of the following costs is a mixed cost? a) salary of a factory supervisor b) electricity costs of $3 per kilowatt-hour c) rental costs of $10,000 per month plus $0.30 per machine hour of use d) straight-line depreciation on factory equipment

c) rental costs of $10,000 per month plus $0.30 per machine hour of use

Butteco has the following cost components for 100,000 units of product for the year: Direct materials $200,000 Direct labor 100,000 Manufacturing overhead 200,000 Selling and administrative expense 150,000 All costs are variable except for $100,000 of manufacturing overhead and $100,000 of selling and administrative expenses. The total costs to produce and sell 80,000 units for the year are a) $650,000 b) $715,000 c) $695,000 d) $560,000

d) $560,000

Which one of the following categories of cost is most likely not considered entirely a component of fixed factory overhead? Incorrect Response a) Rent. b) Property taxes. c) Depreciation. d) Power.

d) Power.