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Homework answers / question archive / Question 1 2 / 2 pts Within the relevant range, variable costs can be expected to: increase on a per unit basis as the activity level increases
Question 1
2 / 2 pts
Within the relevant range, variable costs can be expected to:
increase on a per unit basis as the activity level increases.
increase on a per unit basis as the activity level decreases.
remain constant in total as the activity level changes.
vary in total in direct proportion to changes in the activity level.
2 / 2 pts
The salary paid to the president of a company would be classified on the income statement as a(n):
direct labor cost.
manufacturing overhead cost.
administrative expense.
selling expense.
2 / 2 pts
Oliver, Inc. is a company that produces and sells a single product whose contribution margin ratio is 63%. The company's monthly fixed expense is $720,720 and the company's monthly target profit is $28,000. The dollar sales to attain that target profit is closest to:
$471,694
$1,188,444
$1,144,000
$454,054
2 / 2 pts
Data concerning Mika Lumber Company's single product appear below:
| Selling price per unit | $ 150.00 |
| Variable expense per unit | $ 34.50 |
| Fixed expense per month | $ 466,620 |
The break-even in monthly unit sales is closest to: (Round your intermediate calculations to 2 decimal places.)
3,111
4,040
6,892
13,525
0 / 2 pts
Gredvig, Inc. produces and sells a single product. Data concerning that product appear below:
| Selling price per unit | $ 130.00 |
| Variable expense per unit | $ 41.60 |
| Fixed expense per month | $ 109,616 |
The break-even in monthly dollar sales is closest to: (Round your intermediate calculations to 2 decimal places.)
$109,616
$161,200
$204,455
$342,550
2 / 2 pts
DeMey Corporation's selling price was $20 per unit. Fixed expenses totaled $54,000, variable expenses were $14 per unit, and the company reported a profit of $9,000 for the year. The break-even point for DeMey Corporation is:
8,500 units
10,500 units
9,000 units
4,500 units
2 / 2 pts
Cassius Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range.
| Sales (7,000 units) | $ 210,000 |
| Variable expenses | 136,500 |
| Contribution margin | 73,500 |
| Fixed expenses | 67,200 |
| Net operating income | $ 6,300 |
The number of units that must be sold to achieve a target profit of $31,500 is closest to:
35,000 units
42,000 units
9,400 units
16,400 units
2 / 2 pts
Data concerning Kodiak National Corporation's single product appear below:
| Selling price per unit | $ 160.00 |
| Variable expense per unit | $ 65.60 |
| Fixed expense per month | $ 387,040 |
The unit sales to attain the company's monthly target profit of $17,000 is closest to: (Round your intermediate calculations to 2 decimal places.)
2,525
4,321
6,159
4,280
0 / 2 pts
Saks Unlimited'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:
| Average Cost per Unit | |
| Direct materials | $ 5.40 |
| Direct labor | $ 3.55 |
| Variable manufacturing overhead | $ 1.70 |
| Fixed manufacturing overhead | $ 3.00 |
| Fixed selling expense | $ 0.60 |
| Fixed administrative expense | $ 0.40 |
| Sales commissions | $ 1.00 |
| Variable administrative expense | $ 0.40 |
$53,250
$60,250
$80,250
$68,250
0 / 2 pts
Direct costs:
are incurred to benefit a particular accounting period.
are incurred due to a specific decision.
can be easily traced to a particular cost object.
are the variable costs of producing a product.
2 / 2 pts
In the standard cost formula Y = a + bX, what does the "b" represent?
variable cost per unit
the level of activity
total cost
total fixed cost
2 / 2 pts
L3 Enterprises, Inc. has provided the following contribution format income statement. Assume that the following information is within the relevant range.
| Sales (4,000 units) | $ 240,000 |
| Variable expenses | 156,000 |
| Contribution margin | 84,000 |
| Fixed expenses | 81,900 |
| Net operating income | $ 2,100 |
The break-even point in dollar sales is closest to:
$234,000
$156,000
$237,900
$0
2 / 2 pts
Which of the following is NOT a period cost?
Salary of a clerk who handles customer billing.
Cost of a seminar concerning tax law updates that was attended by the company's controller.
Depreciation of factory maintenance equipment.
Insurance on a company showroom where customers can view new products.
2 / 2 pts
Which of the following would most likely NOT be included as manufacturing overhead in a furniture factory?
The amount paid to the individual who stains a chair.
The cost of the glue in a chair.
The workman's compensation insurance of the supervisor who oversees production.
The factory utilities of the department in which production takes place.
2 / 2 pts
The following costs were incurred in May:
| Direct materials | $ 41,000 |
| Direct labor | $ 13,000 |
| Manufacturing overhead | $ 46,000 |
| Selling expenses | $ 18,000 |
| Administrative expenses | $ 15,000 |
Conversion costs during the month totaled:
$54,000
$87,000
$59,000
$133,000
0 / 2 pts
A partial listing of costs incurred during September at Whitney Corporation appears below:
| Factory supplies | $ 9,000 |
| Administrative wages and salaries | $ 85,000 |
| Direct materials | $ 126,000 |
| Sales staff salaries | $ 30,000 |
| Factory depreciation | $ 33,000 |
| Corporate headquarters building rent | $ 43,000 |
| Indirect labor | $ 26,000 |
| Marketing | $ 65,000 |
| Direct labor | $ 99,000 |
The total of the product costs listed above for September is:
$516,000
$223,000
$293,000
$68,000
0 / 2 pts
The cost of direct materials is classified as a:
| Conversion cost | Prime cost | |
| A) | No | No |
| B) | Yes | No |
| C) | No | Yes |
| D) | Yes | Yes |
Choice C
Choice B
Choice D
Choice A
2 / 2 pts
Wilmington Corporation has a total expense per unit of $1.50 at the 15,000 unit level of activity and total expense per unit of $1.45 at the 20,000 unit level of activity. Assume that the relevant range includes all of the activity levels mentioned in this problem.
What would be the variable cost per unit for Wilmington Corporation?
$1.45
$1.50
$1.30
$0.77
2 / 2 pts
Torgette Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 4,000 units, its average costs per unit are as follows:
| Average Cost per Unit | |
| Direct materials | $ 7.15 |
| Direct labor | $ 3.40 |
| Variable manufacturing overhead | $ 1.35 |
| Fixed manufacturing overhead | $ 2.80 |
| Fixed selling expense | $ 0.70 |
| Fixed administrative expense | $ 0.40 |
| Sales commissions | $ 0.50 |
| Variable administrative expense | $ 0.40 |
If 5,000 units are produced, the total amount of fixed manufacturing cost incurred is closest to:
$11,200
$12,600
$16,800
$14,000
2 / 2 pts
The following costs were incurred in October:
| Direct materials | $ 33,000 |
| Direct labor | $ 13,000 |
| Manufacturing overhead | $ 23,000 |
| Selling expenses | $ 16,000 |
| Administrative expenses | $ 34,000 |
Conversion costs during the month totaled:
$46,000
$36,000
$69,000
$119,000
40 / 40 pts
Cullen Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range.
| Sales (9,000 units) | $270,000 |
| Variable expenses | 189,000 |
| Contribution margin | 81,000 |
| Fixed expenses | 77,400 |
| Net operating income | $3,600 |
Required:
a. Estimate how many units must be sold to achieve a target profit of $52,200.
b. If sales increase to 9,500 units, what would be the estimated increase in net operating income?
c. If the variable cost per unit increases by $7, fixed expenses increases by $4,500, and unit sales
are 22,200 units, what would be the estimated net operating income?
Your answer:
20 / 20 pts
The Rowan Management Team, provides training classes teaching Excel classes. The company is relatively new and management is seeking information regarding the Team's cost structure. The following information has been gathered since the inception of the business in July of the current year:
| Classes Offered | Costs Incurred | |
| July | 10 | $17,000 |
| August | 12 | $18,800 |
| September | 15 | $20,900 |
| October | 18 | $23,762 |
| November | 16 | $21,800 |
| December | 13 | $19,400 |
Required:
a. Using the high-low method, estimate the variable cost per seminar and the total fixed cost per month.
b. Calculate the estimated total costs if 25 seminars are offered in January.
Your answer:
Question 1
2 / 2 pts
Within the relevant range, variable costs can be expected to:
increase on a per unit basis as the activity level increases.
increase on a per unit basis as the activity level decreases.
remain constant in total as the activity level changes.
Correct!
vary in total in direct proportion to changes in the activity level.
2 / 2 pts
The salary paid to the president of a company would be classified on the income statement as a(n):
direct labor cost.
manufacturing overhead cost.
Correct!
administrative expense.
selling expense.
2 / 2 pts
Oliver, Inc. is a company that produces and sells a single product whose contribution margin ratio is 63%. The company's monthly fixed expense is $720,720 and the company's monthly target profit is $28,000. The dollar sales to attain that target profit is closest to:
$471,694
Correct!
$1,188,444
$1,144,000
$454,054
2 / 2 pts
Data concerning Mika Lumber Company's single product appear below:
| Selling price per unit | $ 150.00 |
| Variable expense per unit | $ 34.50 |
| Fixed expense per month | $ 466,620 |
The break-even in monthly unit sales is closest to: (Round your intermediate calculations to 2 decimal places.)
3,111
Correct!
4,040
6,892
13,525
0 / 2 pts
Gredvig, Inc. produces and sells a single product. Data concerning that product appear below:
| Selling price per unit | $ 130.00 |
| Variable expense per unit | $ 41.60 |
| Fixed expense per month | $ 109,616 |
The break-even in monthly dollar sales is closest to: (Round your intermediate calculations to 2 decimal places.)
$109,616
Correct answer
$161,200
You Answered
$204,455
$342,550
2 / 2 pts
DeMey Corporation's selling price was $20 per unit. Fixed expenses totaled $54,000, variable expenses were $14 per unit, and the company reported a profit of $9,000 for the year. The break-even point for DeMey Corporation is:
8,500 units
10,500 units
Correct!
9,000 units
4,500 units
2 / 2 pts
Cassius Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range.
| Sales (7,000 units) | $ 210,000 |
| Variable expenses | 136,500 |
| Contribution margin | 73,500 |
| Fixed expenses | 67,200 |
| Net operating income | $ 6,300 |
The number of units that must be sold to achieve a target profit of $31,500 is closest to:
35,000 units
42,000 units
Correct!
9,400 units
16,400 units
2 / 2 pts
Data concerning Kodiak National Corporation's single product appear below:
| Selling price per unit | $ 160.00 |
| Variable expense per unit | $ 65.60 |
| Fixed expense per month | $ 387,040 |
The unit sales to attain the company's monthly target profit of $17,000 is closest to: (Round your intermediate calculations to 2 decimal places.)
2,525
4,321
6,159
Correct!
4,280
0 / 2 pts
Saks Unlimited'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:
| Average Cost per Unit | |
| Direct materials | $ 5.40 |
| Direct labor | $ 3.55 |
| Variable manufacturing overhead | $ 1.70 |
| Fixed manufacturing overhead | $ 3.00 |
| Fixed selling expense | $ 0.60 |
| Fixed administrative expense | $ 0.40 |
| Sales commissions | $ 1.00 |
| Variable administrative expense | $ 0.40 |
$53,250
Correct answer
$60,250
You Answered
$80,250
$68,250
0 / 2 pts
Direct costs:
are incurred to benefit a particular accounting period.
are incurred due to a specific decision.
Correct answer
can be easily traced to a particular cost object.
You Answered
are the variable costs of producing a product.
2 / 2 pts
In the standard cost formula Y = a + bX, what does the "b" represent?
Correct!
variable cost per unit
the level of activity
total cost
total fixed cost
2 / 2 pts
L3 Enterprises, Inc. has provided the following contribution format income statement. Assume that the following information is within the relevant range.
| Sales (4,000 units) | $ 240,000 |
| Variable expenses | 156,000 |
| Contribution margin | 84,000 |
| Fixed expenses | 81,900 |
| Net operating income | $ 2,100 |
The break-even point in dollar sales is closest to:
Correct!
$234,000
$156,000
$237,900
$0
2 / 2 pts
Which of the following is NOT a period cost?
Salary of a clerk who handles customer billing.
Cost of a seminar concerning tax law updates that was attended by the company's controller.
Correct!
Depreciation of factory maintenance equipment.
Insurance on a company showroom where customers can view new products.
2 / 2 pts
Which of the following would most likely NOT be included as manufacturing overhead in a furniture factory?
Correct!
The amount paid to the individual who stains a chair.
The cost of the glue in a chair.
The workman's compensation insurance of the supervisor who oversees production.
The factory utilities of the department in which production takes place.
2 / 2 pts
The following costs were incurred in May:
| Direct materials | $ 41,000 |
| Direct labor | $ 13,000 |
| Manufacturing overhead | $ 46,000 |
| Selling expenses | $ 18,000 |
| Administrative expenses | $ 15,000 |
Conversion costs during the month totaled:
$54,000
$87,000
Correct!
$59,000
$133,000
0 / 2 pts
A partial listing of costs incurred during September at Whitney Corporation appears below:
| Factory supplies | $ 9,000 |
| Administrative wages and salaries | $ 85,000 |
| Direct materials | $ 126,000 |
| Sales staff salaries | $ 30,000 |
| Factory depreciation | $ 33,000 |
| Corporate headquarters building rent | $ 43,000 |
| Indirect labor | $ 26,000 |
| Marketing | $ 65,000 |
| Direct labor | $ 99,000 |
The total of the product costs listed above for September is:
$516,000
You Answered
$223,000
Correct answer
$293,000
$68,000
0 / 2 pts
The cost of direct materials is classified as a:
| Conversion cost | Prime cost | |
| A) | No | No |
| B) | Yes | No |
| C) | No | Yes |
| D) | Yes | Yes |
Correct answer
Choice C
Choice B
You Answered
Choice D
Choice A
2 / 2 pts
Wilmington Corporation has a total expense per unit of $1.50 at the 15,000 unit level of activity and total expense per unit of $1.45 at the 20,000 unit level of activity. Assume that the relevant range includes all of the activity levels mentioned in this problem.
What would be the variable cost per unit for Wilmington Corporation?
$1.45
$1.50
Correct!
$1.30
$0.77
2 / 2 pts
Torgette Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 4,000 units, its average costs per unit are as follows:
| Average Cost per Unit | |
| Direct materials | $ 7.15 |
| Direct labor | $ 3.40 |
| Variable manufacturing overhead | $ 1.35 |
| Fixed manufacturing overhead | $ 2.80 |
| Fixed selling expense | $ 0.70 |
| Fixed administrative expense | $ 0.40 |
| Sales commissions | $ 0.50 |
| Variable administrative expense | $ 0.40 |
If 5,000 units are produced, the total amount of fixed manufacturing cost incurred is closest to:
Correct!
$11,200
$12,600
$16,800
$14,000
2 / 2 pts
The following costs were incurred in October:
| Direct materials | $ 33,000 |
| Direct labor | $ 13,000 |
| Manufacturing overhead | $ 23,000 |
| Selling expenses | $ 16,000 |
| Administrative expenses | $ 34,000 |
Conversion costs during the month totaled:
$46,000
Correct!
$36,000
$69,000
$119,000
40 / 40 pts
Cullen Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range.
| Sales (9,000 units) | $270,000 |
| Variable expenses | 189,000 |
| Contribution margin | 81,000 |
| Fixed expenses | 77,400 |
| Net operating income | $3,600 |
Required:
a. Estimate how many units must be sold to achieve a target profit of $52,200.
b. If sales increase to 9,500 units, what would be the estimated increase in net operating income?
c. If the variable cost per unit increases by $7, fixed expenses increases by $4,500, and unit sales
are 22,200 units, what would be the estimated net operating income?
Your answer:
T a r g e t p r o f i i n u n i t s = ( t a r g e t p r o f i t ÷ f i x e d cos ? t ) ÷ o n t r i b u t i o n m a r g i n p e r u n i t
( 52200 + 77400 ) ÷ ( 81000 ÷ 9000 )
129 , 600 ÷ 9
14400 U n i t s
S a l e s cos ? t p e r u n i t = 270 , 000 ÷ 9000 = 30
V a r i a b l e e x p e n s e cos ? t ( p e r u n i t ) = 189000 ÷ 9000 = 21
Sales 285000
9500*30
Variable expense 199500
9500*21
Contribution margin (Sales-Variable exp.) 85500
Fixed expense 77400
Net operating Income(estimated) 8100
Net operating income( Current ) 3600
Increase in net operating income(estimated) 4500
(8100-3600)
Sales (22200*30) 666000
Variable Exp.(22200*28) 621600
Contribution Margin(666000-621600) 44400
Fixed Exp. (77400+4500) 81900
Net operating Loss 37500
Perfect!
20 / 20 pts
The Rowan Management Team, provides training classes teaching Excel classes. The company is relatively new and management is seeking information regarding the Team's cost structure. The following information has been gathered since the inception of the business in July of the current year:
| Classes Offered | Costs Incurred | |
| July | 10 | $17,000 |
| August | 12 | $18,800 |
| September | 15 | $20,900 |
| October | 18 | $23,762 |
| November | 16 | $21,800 |
| December | 13 | $19,400 |
Required:
a. Using the high-low method, estimate the variable cost per seminar and the total fixed cost per month.
b. Calculate the estimated total costs if 25 seminars are offered in January.
Your answer:
a. Using the high-low method, estimate the variable cost per seminar and the total fixed cost per month.
High activity cost = $23762
Low activity cost =$17000
High activity in classes offered =18
Low activity in classes offered =10
Variable cost per seminar=(high activity cost-low activity cost)/(high activity in classes offered-low activity in classes offered)
( 23762 − 17000 ) ÷ ( 18 − 10 )
6762 ÷ 8
$845025 per seminar
Fixed Cost
fixed coast=high activity cost - High activity * Variable cost per seminar
23762 − 18 × 845.25
23762 − 15214.50
Fixed cost per month = $8547.50
b. Calculate the estimated total costs if 25 seminars are offered in January.
estimated total costs if 25 seminars are offered in January= Fixed cost+Variable cost*activity
8547.50 + 845.25 × 25
8547.50 + 21131.25
29678.75
estimated total costs if 25 seminars are offered in January= $29678.75
Perfect!
