Managerial Accounting - CHPT2

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Which of the following represents the components of the income statement for a merchandising business?

Sales Revenue - Cost of Goods Sold = gross profit

Which of the following methods of cost estimation relies on only two data points?

high-low method

A scatter graph is used to test the assumption that the relationship between cost and activity level is ________.

linear

Which of the following statements is true regarding average fixed costs?

Average fixed costs per unit fall as the level of activity rises.

Which of the following represents the components of the income statement for a service business?

Service Revenue - Operating Expenses = operating income

Conversion costs include wages of production workers.

TRUE

Fixed costs are expenses that remain constant as activity changes.

TRUE

Total costs for ABC Distributing are $250,000 when the activity level is 10,000 units. If variable costs are $5 per unit, their fixed costs are $200,000.

TRUE

Which of the following would not be classified as manufacturing overhead?

direct labor

Variable costs are expenses that ________.

remain constant on a per-unit basis but change in total based on activity level

Which of the following is not considered a product cost?

selling expense

Which of the following is the primary source of revenue for a merchandising business?

the purchase and resale of finished products


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