Question 1

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 has decided to quit his present job and start a company to manufacture and market the device. The cost of the raw materials that will be used in manufacturing the computer board is:

Accepted Answer

A)   a sunk cost
B)   a fixed cost
C)   a period cost
D)   a variable costE) None of the above
F) A) and B) D

Question 2

If the activity level increases, then one would expect the fixed cost per unit to increase as well.

Accepted Answer

A) True 
 B)False

Question 3

Bellucci Corporation has provided the following information:  The incremental manufacturing cost that the company will incur if it increases production from 9,000 to 9,001 units is closest to (assume that the increase is within the relevant range) :

Accepted Answer

A)   $26.75
B)   $12.80
C)   $30.05
D)   $24.50E) A) and B)
F) All of the above

Question 4

Perteet 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 4,000 units are produced, the total amount of manufacturing overhead cost is closest to:

Accepted Answer

A)   $18,100
B)   $28,000
C)   $21,400
D)   $14,800E) All of the above
F) None of the above

Question 5

Ouelette 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 indirect manufacturing cost incurred is closest to:

Accepted Answer

A)   $15,000
B)   $22,800
C)   $7,800
D)   $25,800E) B) and D)
F) B) and C)

Question 6

A number of costs and measures of activity are listed below.
  Required:
For each item above, indicate whether the cost is MAINLY fixed or variable with respect to the possible measure of activity listed next to it.

Accepted Answer

1. Salary of production manager at a sur...

Question 7

A merchandising company typically will have a high proportion of which type of cost in its cost structure?

Accepted Answer

A)   Variable.
B)   Fixed.
C)   Mixed.
D)   Step-variable.E) None of the above
F) A) and D)

Question 8

Varela 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:  For financial reporting purposes, the total amount of period costs incurred to sell 4,000 units is closest to:

Accepted Answer

A)   $7,700
B)   $11,600
C)   $3,600
D)   $8,000E) A) and B)
F) A) and C) B

Question 9

Traditional format income statements are widely used for preparing external financial statements.

Accepted Answer

A) True 
 B)False

Question 10

Prime cost equals manufacturing overhead cost.

Accepted Answer

A) True 
 B)False

Question 11

Schwiesow Corporation has provided the following information:  If 4,000 units are sold, the total variable cost is closest to:

Accepted Answer

A)   $54,400
B)   $48,800
C)   $57,600
D)   $67,600E) B) and C)
F) B) and D)

Question 12

Abburi Company's manufacturing overhead is 60% of its total conversion costs. If direct labor is $52,000 and if direct materials are $28,000, the manufacturing overhead is:

Accepted Answer

A)   $34,667
B)   $78,000
C)   $42,000
D)   $120,000E) A) and B)
F) A) and C)

Question 13

Landmann Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows:  For financial reporting purposes, the total amount of product costs incurred to make 9,000 units is closest to:

Accepted Answer

A)   $106,200
B)   $236,700
C)   $121,500
D)   $227,700E) A) and C)
F) B) and C)

Question 14

Marquess Corporation has provided the following partial listing of costs incurred during May:
  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.

Accepted Answer

a. Product costs consist of di...

Question 15

Which of the following costs could contain both variable and fixed cost elements with respect to the total output of the company?

Accepted Answer

A)   Sales commissions.
B)   Manufacturing overhead.
C)   Direct materials.
D)   Administrative salaries.E) A) and B)
F) A) and C)

Question 16

A direct cost is a cost that can be easily traced to the particular cost object under consideration.

Accepted Answer

A) True 
 B)False

Question 17

Opportunity costs at a manufacturing company are not part of manufacturing overhead.

Accepted Answer

A) True 
 B)False  True

Question 18

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

Accepted Answer

A)   $294,000
B)   $344,000
C)   $292,000
D)   $50,000E) B) and D)
F) All of the above

Question 19

Comparative income statements for Boggs Sports Equipment Company for the last two months are presented below:  All of the company's costs are either fixed, variable, or a mixture of the two (i.e., mixed) . Assume that the relevant range includes all of the activity levels mentioned in this problem.
Which of the selling and administrative expenses of the company is variable?

Accepted Answer

A)   Rent
B)   Sales Commissions
C)   Maintenance Expense
D)   Clerical ExpenseE) B) and C)
F) A) and C)

Question 20

The term that refers to costs incurred in the past that are not relevant to a decision is:

Accepted Answer

A)   marginal cost.
B)   indirect cost.
C)   period cost.
D)   sunk cost.E) B) and D)
F) C) and D)

Exam 1: Managerial Accounting and Cost Concepts

Correct Answer
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D

If the activity level increases, then one would expect the fixed cost per unit to increase as well.

Correct Answer
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Bellucci Corporation has provided the following information: The incremental manufacturing cost that the company will incur if it increases production from 9,000 to 9,001 units is closest to (assume that the increase is within the relevant range) :

Correct Answer
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Perteet 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 4,000 units are produced, the total amount of manufacturing overhead cost is closest to:

Correct Answer
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Ouelette 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 indirect manufacturing cost incurred is closest to:

Correct Answer
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A number of costs and measures of activity are listed below. Required: For each item above, indicate whether the cost is MAINLY fixed or variable with respect to the possible measure of activity listed next to it.

Correct Answer
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1. Salary of production manager at a sur...
View Answer

A merchandising company typically will have a high proportion of which type of cost in its cost structure?

Correct Answer
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Varela 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: For financial reporting purposes, the total amount of period costs incurred to sell 4,000 units is closest to:

Correct Answer
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B

Traditional format income statements are widely used for preparing external financial statements.

Correct Answer
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Prime cost equals manufacturing overhead cost.

Correct Answer
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Schwiesow Corporation has provided the following information: If 4,000 units are sold, the total variable cost is closest to:

Correct Answer
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Abburi Company's manufacturing overhead is 60% of its total conversion costs. If direct labor is $52,000 and if direct materials are $28,000, the manufacturing overhead is:

Correct Answer
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Landmann Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows: For financial reporting purposes, the total amount of product costs incurred to make 9,000 units is closest to:

Correct Answer
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Marquess Corporation has provided the following partial listing of costs incurred during May: 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.

Correct Answer
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a. Product costs consist of di...
View Answer

Which of the following costs could contain both variable and fixed cost elements with respect to the total output of the company?

Correct Answer
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A direct cost is a cost that can be easily traced to the particular cost object under consideration.

Correct Answer
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Opportunity costs at a manufacturing company are not part of manufacturing overhead.

Correct Answer
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True

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

Correct Answer
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Correct Answer
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The term that refers to costs incurred in the past that are not relevant to a decision is:

Correct Answer
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Exam 1: Managerial Accounting and Cost Concepts

Correct AnswerverifiedD

If the activity level increases, then one would expect the fixed cost per unit to increase as well.

Correct AnswerverifiedShow Answer

Bellucci Corporation has provided the following information: The incremental manufacturing cost that the company will incur if it increases production from 9,000 to 9,001 units is closest to (assume that the increase is within the relevant range) :

Correct AnswerverifiedShow Answer

Perteet 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 4,000 units are produced, the total amount of manufacturing overhead cost is closest to:

Correct AnswerverifiedShow Answer

Ouelette 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 indirect manufacturing cost incurred is closest to:

Correct AnswerverifiedShow Answer

A number of costs and measures of activity are listed below. Required: For each item above, indicate whether the cost is MAINLY fixed or variable with respect to the possible measure of activity listed next to it.

Correct Answerverified1. Salary of production manager at a sur...View AnswerShow Answer

A merchandising company typically will have a high proportion of which type of cost in its cost structure?

Correct AnswerverifiedShow Answer

Varela 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: For financial reporting purposes, the total amount of period costs incurred to sell 4,000 units is closest to:

Correct AnswerverifiedB

Traditional format income statements are widely used for preparing external financial statements.

Correct AnswerverifiedShow Answer

Prime cost equals manufacturing overhead cost.

Correct AnswerverifiedShow Answer

Schwiesow Corporation has provided the following information: If 4,000 units are sold, the total variable cost is closest to:

Correct AnswerverifiedShow Answer

Abburi Company's manufacturing overhead is 60% of its total conversion costs. If direct labor is $52,000 and if direct materials are $28,000, the manufacturing overhead is:

Correct AnswerverifiedShow Answer

Landmann Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows: For financial reporting purposes, the total amount of product costs incurred to make 9,000 units is closest to:

Correct AnswerverifiedShow Answer

Marquess Corporation has provided the following partial listing of costs incurred during May: 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.

Correct Answerverifieda. Product costs consist of di...View AnswerShow Answer

Which of the following costs could contain both variable and fixed cost elements with respect to the total output of the company?

Correct AnswerverifiedShow Answer

A direct cost is a cost that can be easily traced to the particular cost object under consideration.

Correct AnswerverifiedShow Answer

Opportunity costs at a manufacturing company are not part of manufacturing overhead.

Correct AnswerverifiedTrue

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The term that refers to costs incurred in the past that are not relevant to a decision is:

Correct AnswerverifiedShow Answer

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D

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1. Salary of production manager at a sur...
View Answer

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B

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a. Product costs consist of di...
View Answer

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True

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Correct Answer
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Correct Answer
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