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Exam 1: Managerial Accounting and Cost Concepts

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Question 71

Multiple Choice

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A partial listing of costs incurred at Archut Corporation during September appears below: The total of the product costs listed above for September is:

A) $292,000
B) $294,000
C) $50,000
D) $586,000

E) None of the above
F) A) and D)

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Question 72

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Meginnis 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: If 6,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

A) $79,200
B) $63,600
C) $62,700
D) $53,700

E) B) and C)
F) A) and B)

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Question 73

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Batterson Corporation leases its corporate headquarters building. This lease cost is fixed with respect to the company's sales volume. In a recent month in which the sales volume was 28,000 units, the lease cost was $697,200. To the nearest whole dollar, what should be the total lease cost at a sales volume of 29,200 units in a month? (Assume that this sales volume is within the relevant range.)

Boersma Sales, Inc., a merchandising company, reported sales of 7,100 units in September at a selling price of $682 per unit. Cost of goods sold, which is a variable cost, was $317 per unit. Variable selling expenses were $44 per unit and variable administrative expenses were $22 per unit. The total fixed selling expenses were $157,200 and the total administrative expenses were $338,000. The contribution margin for September was:

Mullennex Corporation's relevant range of activity is 2,000 units to 6,000 units. When it produces and sells 4,000 units, its average costs per unit are as follows: If 5,000 units are produced, the average fixed manufacturing cost per unit produced is closest to:

The cost of shipping parts from a supplier is considered a period cost.

Within the relevant range, a change in activity results in a change in variable cost per unit and total fixed cost.

At a sales volume of 38,000 units, Tirri Corporation's property taxes (a cost that is fixed with respect to sales volume) total $733,400. To the nearest whole dollar, what should be the total property taxes at a sales volume of 37,200 units? (Assume that this sales volume is within the relevant range.)

Rotonga Manufacturing Company leases a vehicle to deliver its finished products to customers. Which of the following terms correctly describes the monthly lease payments made on the delivery vehicle?

Dake Corporation's relevant range of activity is 2,000 units to 6,000 units. When it produces and sells 4,000 units, its average costs per unit are as follows: If 3,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

A variable cost remains constant if expressed on a unit basis.

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

Depreciation is always considered a period cost for external financial reporting purposes in a manufacturing company.

A step-variable cost is a cost that is obtained in large chunks and that increases or decreases only in response to fairly wide changes in activity.

The amount that a manufacturing company could earn by renting unused portions of its warehouse is an example of an opportunity cost.

The following cost data pertain to the operations of Quinonez Department Stores, Inc., for the month of September. The Northridge Store is just one of many stores owned and operated by the company. The Cosmetics Department is one of many departments at the Northridge Store. The central warehouse serves all of the company's stores. What is the total amount of the costs listed above that are NOT direct costs of the Northridge Store?

An income statement for Sam's Bookstore for the first quarter of the year is presented below: On average, a book sells for $50. Variable selling expenses are $5 per book with the remaining selling expenses being fixed. The variable administrative expenses are 4% of sales with the remainder being fixed. If 20,000 books are sold during the second quarter and this activity is within the relevant range, the company's expected contribution margin would be:

The concept of the relevant range does not apply to variable costs.

Schwiesow Corporation has provided the following information: If the selling price is $18.70 per unit, the contribution margin per unit sold is closest to:

Schwiesow Corporation has provided the following information: The incremental manufacturing cost that the company will incur if it increases production from 5,000 to 5,001 units is closest to: