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Exam 1: Managerial Accounting and Cost Concepts

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Question 161

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Kesterson Corporation has provided the following information: If 6,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:

A) $8,100
B) $24,900
C) $22,100
D) $14,000

E) C) and D)
F) B) and D)

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Question 162

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Fixed costs expressed on a per unit basis:

A) increase with increases in activity.
B) decrease with increases in activity.
C) are not affected by activity.
D) should be ignored in making decisions since they cannot change.

E) B) and D)
F) A) and D)

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Question 163

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For the past 8 months, Jinan Corporation has experienced a steady increase in its cost per unit even though total costs have remained stable. This cost per unit increase may be due to _____________ costs if the level of activity at Jinan is _______________.

Pedregon Corporation has provided the following information: If 3,000 units are sold, the total variable cost is closest to:

A partial listing of costs incurred at Boylen Corporation during March appears below: Required: a. What is the total amount of product cost listed above? Show your work. b. What is the total amount of period cost listed above? Show your work.

Contribution margin and gross margin mean the same thing.

Dake Corporation's relevant range of activity is 2,300 units to 5,500 units. When it produces and sells 3,900 units, its average costs per unit are as follows: If 2,900 units are produced, the total amount of direct manufacturing cost incurred is closest to:

Bolka Corporation, a merchandising company, reported the following results for October: The contribution margin for October is:

Mary Tappin, an assistant Vice President at Galaxy Toys, was disturbed to find on her desk a memo from her boss, Gary Resnick, to the controller of the company. The memo appears below: GALAXY TOYS INTERNAL MEMO Sept 15 To: Harry Wilson, Controller Fm: Gary Resnick, Executive Vice President As you know, we won't start recording many sales until October when stores start accepting shipments from us for the Christmas season. Meanwhile, we are producing flat-out and are building up our finished goods inventories so that we will be ready to ship next month. Unfortunately, we are in a bind right now since it looks like the net income for the quarter ending on Sept 30 is going to be pretty awful. This may get us in trouble with the bank since they always review the quarterly financial reports and may call in our loan if they don't like what they see. Is there any possibility that we could change the classification of some of our period costs to product costs-such as the rent on the finished goods warehouse? Please let me know as soon as possible. The President is pushing for results. Mary didn't know what to do about the memo. It wasn't intended for her, but its contents were alarming. Required:a. Why has Gary Resnick suggested reclassifying some period costs as product costs?b. Why do you think Mary was alarmed about the memo?

The relevant range is the range of activity within which the assumption that cost behavior is strictly linear is reasonably valid.

Wessner Corporation has provided the following information: If the selling price is $25.00 per unit, the contribution margin per unit sold is closest to:

The variable cost per unit depends on how many units are produced.

The cost of direct materials is classified as a:

A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $2,100 and is paid at the beginning of the first year. Sixty percent of the premium applies to manufacturing operations and forty percent applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage?

Vignana Corporation manufactures and sells hand-painted clay figurines of popular sports heroes. Shown below are some of the costs incurred by Vignana for last year: What is the total of the direct costs above?

Skolnick Corporation has provided the following information: Required:a. If 8,500 units are produced, what is the total amount of direct manufacturing cost incurred? (Do not round intermediate calculations.)b. If 8,500 units are produced, what is the total amount of indirect manufacturing costs incurred?

Haack Incorporated is a merchandising company. Last month the company's cost of goods sold was $84,000. The company's beginning merchandise inventory was $20,000 and its ending merchandise inventory was $18,000. What was the total amount of the company's merchandise purchases for the month?

Streif Incorporated a local retailer, has provided the following data for the month of June: The net operating income for June was:

When the level of activity decreases within the relevant range, the fixed cost per unit will:

Oerther Corporation reports that at an activity level of 5,000 units, its total variable cost is $131,750 and its total fixed cost is $31,200.What would be the total variable cost at an activity level of 5,200 units? Assume that this level of activity is within the relevant range. (Round intermediate calculations to 2 decimal places.)