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Exam 1: Managerial Accounting and Cost Concepts

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Question 21

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The University Store, Incorporated is the major bookseller for four nearby colleges. An income statement for the first quarter of the year is presented below: On average, a book sells for $40.00. Variable selling expenses are $3.00 per book; the remaining selling expenses are fixed. The variable administrative expenses are 5% of sales; the remainder of the administrative expenses are fixed.The cost formula for selling and administrative expenses with "X" equal to the number of books sold is:

A) Y = $105,000 + $3X
B) Y = $105,000 + $5X
C) Y = $110,000 + $5X
D) Y = $110,000 + $33X

E) B) and C)
F) All of the above

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Question 22

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An income statement for Sam's Bookstore for the first quarter of the year is presented below: On average, a book sells for $65. Variable selling expenses are $6 per book with the remaining selling expenses being fixed. The variable administrative expenses are 5% of sales with the remainder being fixed. The net operating income using the contribution approach for the first quarter is:

A) $265,000
B) $181,000
C) $135,500
D) $52,000

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

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Question 23

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A cost can be direct or indirect. The classification can change if the cost object changes.

Weingartner Corporation, a merchandising company, reported sales of 4,800 units for July at a selling price of $269 per unit. The cost of goods sold (all variable) was $114 per unit and the variable selling expense was $6 per unit. The total fixed selling expense was $38,100. The variable administrative expense was $14 per unit and the total fixed administrative expense was $59,900. Required:a. Prepare a contribution format income statement for July.b. Prepare a traditional format income statement for July.

At an activity level of 9,000 machine-hours in a month, Moffatt Corporation's total variable maintenance cost is $390,240 and its total fixed maintenance cost is $368,280.What would be the average fixed maintenance cost per unit at an activity level of 9,300 machine-hours in a month? Assume that this level of activity is within the relevant range.

Wessner Corporation has provided the following information: If 5,000 units are produced, the total amount of manufacturing overhead cost is closest to:

If managers are reluctant to lay off direct labor employees when activity declines leads to a decrease in the ratio of variable to fixed costs.

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 cent, what should be the average property tax per unit at a sales volume of 37,300 units? (Assume that this sales volume is within the relevant range.)

Kesterson 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:

At an activity level of 8,400 units in a month, Braughton Corporation's total variable maintenance and repair cost is $697,284 and its total fixed maintenance and repair cost is $464,100. What would be the total maintenance and repair cost, both fixed and variable, at an activity level of 8,500 units in a month? Assume that this level of activity is within the relevant range. (Round intermediate calculations to 2 decimal places.)

The following costs were incurred in May: Conversion costs during the month totaled:

Conversion cost is the same thing as manufacturing overhead.

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 produced, the average fixed manufacturing cost per unit produced is closest to:

The following cost data pertain to the operations of Quinonez Department Stores, Incorporated, 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 direct costs of the Cosmetics Department?

The costs of direct materials are classified as:

The cost of lubricants used to grease a production machine in a manufacturing company is an example of a(n) :

Which of the following is an example of a period cost in a company that makes clothing?

Prime cost equals manufacturing overhead cost.

Schwiesow Corporation has provided the following information: If 4,000 units are produced, the total amount of manufacturing overhead cost is closest to:

A factory supervisor's wages are classified as: