Chapter 10 and 11 Exam 2 Cost Accounting

​Ace Cleaning Service is considering expanding into one or more new market areas. Which costs are relevant to Ace's decision on​ whether to expand? Sunk Costs / Variable Costs / Opportunity Costs A. No / Yes / Yes B. Yes / Yes / Yes C. No / Yes / No D. Yes / No / Yes

A

In regression analysis, the coefficient of determination, A. Is used to determine the proportion of the total variation in the dependent variable (y) explained by the independent variable (x). B. Ranges between negative one and positive one. C. Is used to determine the expected value of the net income based on the regression line. D. Becomes smaller as the fit of the regression line improves.

A.

A regression equation is set up, where the dependent variables is total costs and the independent variable is production. A correlation coefficient of 0.70 implies that: A. The coefficient of determination is negative B. The level of production explain 49% percent of the variation in total costs. C. There is a slightly inverse relationship between production and total costs. D. A correlation coefficient of 1.30 would produce a regression line with better fit to the data.

B.

Lees Corp. is deciding whether to keep or drop a small segment of its business. Key information regarding the segment​ includes: Contribution​ margin: ​35,000 Avoidable fixed​ costs: ​30,000 Unavoidable fixed​ costs: ​25,000 Given the information​ above, Lees​ should: A. Drop the segment because the contribution margin is less than total fixed costs. B. Drop the segment because avoidable fixed costs exceed unavoidable fixed costs. C. Keep the segment because the contribution margin exceeds avoidable fixed costs. Your answer is correct. D. Keep the segment because the contribution margin exceeds unavoidable fixed costs.

C.

HL Co. uses the high-low method to derive a total cost formula. Using a range of units produced from 1,500 to 7,500, and a range of total costs from $21,000 to $45,000, producing 2,000 units will cost HL. A. $8,000 ; B. $12,000 ; C. $23,000 ; D. $29,000

C. $23,000 Y= 4X + a a= Y - 4x a= 45,000 -4(7,500) a= 15,000 Hence, the cost equation is: Y= 4x + 15,000 X= 2,000 units , Cost= 4*2,000+15,000 = $23,000

Chade Corp. is considering a special order brought to it by a new client. If Chade determines the variable cost to be​ $9 per​ unit, and the contribution margin of the next best alternative of the facility to be​ $5 per​ unit, then if Chade​ has: A. Full​ capacity, the company will be profitable at​ $4 per unit. B. Excess​ capacity, the company will be profitable at​ $6 per unit. C. Full​ capacity, the selling price must be greater than​ $5 per unit. D. Excess​ capacity, the selling price must be greater than​ $9 per unit.

D.

In order to determine whether a special order should be accepted at full​ capacity, the sales price of the special order must be compared to the per​ unit: A. Contribution margin of the special order. B. Variable cost and contribution margin of the special order. C. Variable cost and contribution margin of the next best alternative. D. Variable cost of current production and the contribution margin of the next best alternative.

D.

Which of the following​ is not a qualitative factor that Atlas Manufacturing should consider when deciding whether to buy or make a part used in manufacturing their​ product? A. Quality of the outside​ producer's product. B. Potential loss of trade secrets. C. Manufacturing deadlines and special orders. D. Variable cost per unit of the product.

D.

A firm uses simple linear regression to forecast the costs for its main product line. If fixed costs are equal to $235,000 and variable costs are $10 per unit. How many units does it need to sell at $15 per unit to make a $300,000 profit? A. 21,400 ; B. 47,000 ; C. 60,000 ; D. 107,000

D. Y= a + bx Y= $235,000 + 10x $15x - ($235,000 + $10x) = $300,000 $5x = $535,000 x= 107,000 units