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Exam 1: Managerial Accounting and Cost Concepts

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Question 91

Multiple Choice

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Rhome 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 sold, the variable cost per unit sold is closest to:

A) $13.65
B) $10.65
C) $16.05
D) $12.05

E) None of the above
F) All of the above

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Question 92

Multiple Choice

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Direct labor cost is classified as:

A) Choice A
B) Choice B
C) Choice C
D) Choice D

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

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Question 93

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In a traditional format income statement, the gross margin minus selling and administrative expenses equals net operating income.

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:

Management of Plascencia Corporation is considering whether to purchase a new model 370 machine costing $446,000 or a new model 220 machine costing $408,000 to replace a machine that was purchased 9 years ago for $426,000. The old machine was used to make product I43L until it broke down last week. Unfortunately, the old machine cannot be repaired.Management has decided to buy the new model 220 machine. It has less capacity than the new model 370 machine, but its capacity is sufficient to continue making product I43L.Management also considered, but rejected, the alternative of simply dropping product I43L. If that were done, instead of investing $408,000 in the new machine, the money could be invested in a project that would return a total of $20,000.In making the decision to buy the model 220 machine rather than the model 370 machine, the differential cost was:

Dizzy Amusement Park is open from 8:00 am till midnight every day of the year. Dizzy charges its patrons a daily entrance fee of $30 per person which gives them unlimited access to all of the park's 35 rides.For liability insurance, Dizzy pays a set monthly fee plus a small additional amount for every patron entering the park. The cost of liability insurance would best be described as a:

Which of the following statements about product costs is true?

Fasheh 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: If 10,000 units are produced, the total amount of fixed manufacturing cost incurred is closest to:

Which of the following costs is classified as both a prime cost and a conversion cost?

Dizzy Amusement Park is open from 8:00 am till midnight every day of the year. Dizzy charges its patrons a daily entrance fee of $30 per person which gives them unlimited access to all of the park's 35 rides.Dizzy gives out a free T-shirt to every 100th customer entering the park. The cost of this T-shirt would best be described as a:

In May direct labor was 60% of conversion cost. If the manufacturing overhead for the month was $54,000 and the direct materials cost was $30,000, the direct labor cost was:

At an activity level of 7,200 machine-hours in a month, Falks Corporation's total variable production engineering cost is $556,416 and its total fixed production engineering cost is $226,008. What would be the total production engineering cost per machine-hour, both fixed and variable, at an activity level of 7,300 machine-hours in a month? Assume that this level of activity is within the relevant range. (Round intermediate calculations to 2 decimal places.)

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

A fixed cost fluctuates in total as activity changes but remains constant on a per unit basis over the relevant range.

Glew Corporation has provided the following information: If 3,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

At an activity level of 9,300 machine-hours in a month, Falks Corporation's total variable production engineering cost is $766,320 and its total fixed production engineering cost is $191,040. What would be the total production engineering cost per machine-hour, both fixed and variable, at an activity level of 9,600 machine-hours in a month? Assume that this level of activity is within the relevant range. (Round intermediate calculations to 2 decimal places.)

Lambeth Corporation has provided the following information: If 3,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

Selling and administrative expenses are period costs under generally accepted accounting principles.

Manufacturing overhead includes:

The fixed portion of the cost of electricity for a manufacturing facility is classified as a: