Midterm (Chapter 1)

Manufacturing overhead includes:

all manufacturing costs except direct labor and direct materials

Which of the following is correct concerning reactions to INCREASES activity?

Choice D (increase & constant )

Schwiesow Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $ 7.05 Direct labor $ 3.50 Variable manufacturing overhead $ 1.65 Fixed manufacturing overhead $ 11,000 Sales commissions $ 1.00 Variable administrative expense $ 0.40 Fixed selling and administrative expense $ 5,500 If 4,000 units are sold, the variable cost per unit sold is closest to:

$13.60 Direct materials $ 7.05 Direct labor 3.50 Variable manufacturing overhead 1.65 Sales commissions 1.00 Variable administrative expense 0.40 = Variable cost per unit sold $ 13.60

Bolka Corporation , a merchandising company , reported the following results for October : Sales $ 4,096,400 Cost of goods sold (all variable ) 2,194,500 Total variable selling expense $238,700 Total fixed selling expense $ 144,700 Total variable administrative expense $ 238,700 Total fixed administrative expense $282,900 The contribution margin for October is:

1,424,500 Sales (4096400)- cost of goods sold (2194500) Variable selling expense (238,700) variable administrative expense (238,700)

Given the cost formula, Y=\16,000+$3.40X , total cost for an activity level of 4,000 units would be

29,600 Y=$16,000+($3.40 per unit* X); =$16,000+($3.40 pe; unit * 4.000unit ) =$16,000+$13,600; =$29.600

Mark is an engineer who has designed a telecommunications device. He is convinced that there is a big potential market for the device. Accordinglyhe has decided to quit his present job and start a company to manufacture and market the device . Rent on the administrative office space is

A period cost

Mark is an engineer who has designed a telecommunications device. He is convinced that there is a big potential market for the device. Accordingly, he decided to quit his present job and start a company to manufacture and market the device. Mark purchased a machine two years ago to make experimental boards. The machine will be used to manufacture the new board. The cost of this machine is:

A sunk cost

Which of the following is NOT a period cost?

Depreciation of factory maintenance equipment.

Contribution margin is

Sales less variable costs and variable selling and administrative expenses.

T or F: A factory supervisor's salary would be classified as an indirect cost with respect to a unit of product

True

T or F: Conversion cost is the sum of direct labor cost and manufacturing overhead cost

True

The three cost elements ordinarily included in product costs are direct materials, direct labor, and manufacturing overhead

True

Fixed costs expressed on a per unit basis:

decrease with increases in activity.

Which of the following is unlikely to be classified as a fixed cost with respect to the number of units produced and sold?

production supplies

An example of a committed fixed cost would be

taxes on real estate