ACT 220 Exam 1

The relative proportion of variable, fixed, and mixed costs in a company is known as the company's: 1. contribution margin 2. cost structure 3. product mix 4. relevant rage

cost structure

Fassino Corporation reported the following data for the month of November: Direct materials $ 51,000 Direct labor cost $ 54,000 Manufacturing overhead $ 82,000 Selling expense $ 18,000 Administrative expense $ 42,000 The conversion cost for November was:

$136,000

Management of Plascencia Corporation is considering whether to purchase a new model 370 machine costing $360,000 or a new model 220 machine costing $340,000 to replace a machine that was purchased 7 years ago for $348,000. The old machine was used to make product I43L until it broke down last week. Unfortunately, the old machine cannot be repaired. Management has decided to buy the new model 220 machine. It has less capacity than the new model 370 machine, but its capacity is sufficient to continue making product I43L. Management also considered, but rejected, the alternative of simply dropping product I43L. If that were done, instead of investing $340,000 in the new machine, the money could be invested in a project that would return a total of $411,000. In making the decision to invest in the model 220 machine, the opportunity cost was:

$411,000

Which of the following is an example of a period cost in a company that makes clothing?: 1. advertising cost for a new line of clothing 2. fabric used to produced men's pants 3. factory supervisor's salary 4. Monthly depreciation on production equipment

1. advertising cost for a new line of clothing

The cost of electricity for running production equipment is classified as: 1. conversion cost 2. period cost

1. conversion cost

The cost of lubricants used to grease a production machine in a manufacturing company is an example of a(n): 1. indirect material 2. period cost 3. opportunity cost 4. direct material cost

1. indirect material cost

Barredo Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows: Direct materials $ 6.60 Direct labor $ 3.65 Variable manufacturing overhead $ 1.65 Fixed manufacturing overhead $ 2.80 Fixed selling expense $ 0.70 Fixed administrative expense $ 0.40 Sales commissions $ 0.50 Variable administrative expense $ 0.45 If 4,000 units are sold, the variable cost per unit sold is closest to:

12.85

The costs of direct materials are classified as: 1. conversion cost 2. manufacturing cost 3. prime Cost

2 and 3

A given cost can be direct or indirect. The classification can change if the cost object changes. True or False?

True

The three cost elements ordinarily included in product costs are direct materials, direct labor, and manufacturing overhead. True or False?

True

In the standard cost formula Y = a + bX, what does the "b" represent? 1. variable cost per unit 2. total cost 3. level of activity 4. total fixed cost

variable cost per unit