Managerial Accounting Exam 1

Bressette Corporation has provided the following information: Direct Materials: 6.20 cost per unit Direct Labor: 3.70 cost per unit Variable Manufacturing overhead: 1.25 cost per unit Fixed Manufacturing overhead: 10,000 cost per period Sales Commissions: 1.50 cost per unit Variable administrative expense: .50 cost per unit Fixed selling and administrative expense: 5,000 cost per period For financial reporting purposes, the total amount of product costs incurred to make 5,000 units closest to:

6.20* 5,000 + 3.70* 5,000 + 1.35* 5,000 = 55,750 + 10,000 = 65,750

Timchak Corporation reports that at an activity level of 9,900 units, its total variable cost is 919,116 and its fixed cost is 259, 974. What would be the total cost, both fixed and variable, at an activity level of 10,100 units? Assume that this level of activity is within the relevant range.

919,116/ 9,900 = 92.84 92.84* 10,000= 937,684 + 259, 974 = 1,197, 658

When the level of activity decreases within a relevant range, the fixed cost per unit A. increases B. decreases C. remains the same

A. increase increases because it varies inversely so if the level of activity is decreasing the fixed cost per unit is increasing

The following data have been collected for four different cost items: Cost Item Cost @100 units Cost @ 140 units W $8,000 $10,560 X $5,000 $5,000 Y $6,500 $9,100 Z $6,700 $8,580 Which of the following classifications of these cost items by cost behavior is correct? The cost of direct materials are classified as: A. variable, fixed, mixed, variable B. mixed, fixed, variable, mixed C. variable, fixed, variable, variable

B. mixed, fixed, variable, mixed W: 8000/ 100= 80 80* 140= 11,200 MC X: FC Y: 6500/100=65 65*140= 9100 VC Z: 6700/100= 67 67* 140= 9380 MC

Perteet Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units its average cost per unit are as follows: Average Cost: 6.70- direct materials 3.25- direct labor 1.60- variable manufacturing overhead 3.00- fixed manufacturing overhead .70- fixed selling expense .40- fixed administrative expense .50- sales commissions .55 variable selling expense If 4,000 units are produced, the total amount of manufacturing overhead cost is closest to: A. 21,400 B. 18,100 C. 21,800 D. 14,800

MANUFACTURING OVERHEAD ** only use variable and fixed manufacturing overhead A. 21,400 4,000* 1.60= 6,400 5,000* 3.00= 15000 15,000+ 6,400= 21,400

Manufacturing Overhead includes:

all manufacturing costs except direct labor and direct materials

Contribution Margin is

sales less variable production, variable selling, and variable administrative expenses