Reference no: EM13880088

Question 1

Which of the following would be classified as a discretionary fixed cost?

a. Depreciation

b. Research and Development

c. Property Taxes

d. Interest on Bonds

Question 2

As volume increases, average cost per unit decreases because:

a. Total fixed costs increase

b. Total variable costs increase

c. Total fixed costs stay the same

d. Total variable costs stay the same

Question 3

Which of the following methods of cost estimation utilizes all observations and relies on statistical measures to determine the cost estimation model?

a. High-Low Method

b. Scatter Diagram

c. Least Squares Regression

d. Linear Programming

Question 4

Which of the following methods of cost estimation utilizes judgment to determine the cost estimation model?

a. High-Low Method

b. Scatter Diagram

c. Least Squares Regression

d. Linear Programming

Question 5

Anka Company manufactures and sells specialty items. The following representative direct labor-hours and production costs are provided for a four-month period:

Month	Hrs. Direct Labor	Production Costs
January	3,000	$  45,000
February	4,000	52,500
March	7,000	81,000
April	4,000	45,000
Total	18,000	$223,500

a. Calculate the variable cost per direct labor hour.

b. Calculate the total fixed costs.

c. Estimate total monthly production costs for May using the high-low method, assuming the direct labor hours for May are expected to be 4,500.

Question 6

The total monthly operating costs of Caroline's Yogurt Ice Cream Shack are:

$1,700 + $0.45X, where X = 12 ounce serving

Calculate the average cost per serving at each of the following monthly volumes: 1,000, 2,000, 3,000 and 5,000.

Question 7

The J. Page Furniture Company has the following information available regarding costs at various levels of monthly production:

Production volume (units)	16,000 Units	22,000 Units
Direct materials	$  70,000	$100,000
Direct labor	66,000	90,000
Indirect materials	21,000	30,000
Supervisors' salaries	12,000	12,000
Depreciation on plant and equipment	10,000	10,000
Maintenance	32,000	44,000
Utilities	15,000	21,000
Insurance on plant and equipment	1,600	1,600
Property taxes on plant and equipment	2,000	2,000
Total	$229,600	$310,600

Identify each of the costs above as being variable, fixed, or mixed.

Question 8

Contribution margin can be defined as:

a. sales revenue minus variable expenses

b. The amount of sales revenue necessary to cover variable expenses

c. The amount of sales revenue necessary to cover fixed and variable expenses

d. Sales revenue minus fixed expenses

Question 9

If the degree of operating leverage is 4, then a one percent change in quantity sold should result in a four percent change in:

a. net operating income

b. variable expenses

c. unit contribution margin

d. revenue

Question 10

1. Excareno Corp. has provided its contribution format income statement for June. The company produces and sells a single product.

Sales (8,400 units)	$764,400
variable expenses	445,200
Contribution margin	319,200
Fixed expenses	250,900
Net operating income	68,300

2. Calculate the company's total contribution margin if the company sells 8,200 units.

Question 11

Hopi Corp. expects the following operating results for next year:

Sales	$400,000
Contribution margin ratio	75%
Degree of operating leverage	4

What is Hopi expecting total fixed expenses to be next year?

a. $75,000

b. $100,000

c. $225,000

d. $200,000

Question 12

Rovinsky Corp, a company that produces and sells a single product, has provided its contribution margin format income statement for November.

Sales (5,700 units)	$319,200
variable expenses	188,100
Contribution margin	131,100
Fixed expenses	106,500
Net operating income	24,600

Calculate the company's Net Operating Income if the company sales 5,300 units.

Question 13

The Bronco Birdfeed company reported the following information:

sales (400 cases)	$100,000
variables expenses	60,000
contribution margin	40,000
fixed expenses	35,000
net operating income	5,000

1. How much will the sales of one additional case add to Bronco's net operating income?

Question 14

Gayne Corp. contribution margin ratio is 12% and its fixed monthly expenses are $84,000. If the company's sales for a month are $738,000, what is the best estimate of the company's net operating income? Assume that the fixed monthly expenses do not change.

Question 15

Wilson Company prepared the following preliminary budget assuming no advertising expenditures:

selling price	$10 per unit
unit sales	100,000
variable expenses	$600,000
fixed expenses	$300,000

Based on a market study, the company estimated that it could increase the unit selling price by 15% and increase the unit sales volume by 10% if $100,000 were spent on advertising. Assuming that these changes are incorporated in its budget, what should be the budgeted net operating income?

Question 16

Data concerning Strite Corporation's single product appear below:

selling price per unit	$150.00
variable expense per unit	$42.00
Fixed expenses per month	$421,200

Assume the company's monthly target profit is $17,000. What would be the unit sales to attain that target profit of $17,000?