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Exam 1: Managerial Accounting and Cost Concepts

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Question 31

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Rotonga Manufacturing Company leases a vehicle to deliver its finished products to customers. Which of the following terms correctly describes the monthly lease payments made on the delivery vehicle?

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

E) A) and D)
F) C) and D)

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Question 32

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

A) $586,000
B) $50,000
C) $292,000
D) $30,000

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

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Question 33

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In May direct labor was 40% of conversion cost. If the manufacturing overhead for the month was $120,600 and the direct materials cost was $29,200, the direct labor cost was:

Bauman Sales Corporation, a merchandising company, reported total sales of $4,069,800 for November. The cost of goods sold (all variable) was $2,351,100, the total variable selling expense was $204,000, the total fixed selling expense was $117,700, the total variable administrative expense was $102,000, and the total fixed administrative expense was $267,000. Required:a. Prepare a contribution format income statement for November.b. Prepare a traditional format income statement for November.

Cost behavior is considered curvilinear whenever a straight line is a reasonable approximation for the relation between cost and activity.

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) :

A decrease in production will ordinarily result in a decrease in fixed production costs per unit.

Waldhauser 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 sold, the total variable cost is closest to:

A step-variable cost is a cost that is obtained in large chunks and that increases or decreases only in response to fairly wide changes in activity.

The salary paid to the president of a company would be classified on the income statement as a(n) :

Management of Mcgibboney Corporation has asked your help as an intern in preparing some key reports for November. Direct materials cost was $42,000, direct labor cost was $25,000, and manufacturing overhead was $62,000. Selling expense was $21,000 and administrative expense was $38,000.The prime cost for November was:

Dominik Corporation purchased a machine 5 years ago for $527,000 when it launched product M08Y. Unfortunately, this machine has broken down and cannot be repaired. The machine could be replaced by a new model 310 machine costing $545,000 or by a new model 240 machine costing $450,000. Management has decided to buy the model 240 machine. It has less capacity than the model 310 machine, but its capacity is sufficient to continue making product M08Y. Management also considered, but rejected, the alternative of dropping product M08Y and not replacing the old machine. If that were done, the $450,000 invested in the new machine could instead have been invested in a project that would have returned a total of $532,000.In making the decision to buy the model 240 machine rather than the model 310 machine, the differential cost was:

The concept of the relevant range does not apply to variable costs.

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.Property taxes on the building that will be purchased to house the manufacturing facility are:

Which of the following approaches to preparing an income statement includes a calculation of the gross margin?

Salomon Marketing, Incorporated a merchandising company, reported sales of $1,555,500 and cost of goods sold of $1,025,100 for December. The company's total variable selling expense was $96,900; its total fixed selling expense was $34,300; its total variable administrative expense was $71,400; and its total fixed administrative expense was $100,100. The cost of goods sold in this company is a variable cost.The contribution margin for December is:

Abburi Company's manufacturing overhead is 55% of its total conversion costs. If direct labor is $58,500 and if direct materials are $29,200, the manufacturing overhead is:

An income statement for Sam's Bookstore for the first quarter of the year is presented below: On average, a book sells for $50. Variable selling expenses are $5 per book with the remaining selling expenses being fixed. The variable administrative expenses are 4% of sales with the remainder being fixed.The cost formula for selling and administrative expenses with "X" equal to the number of books sold is:

At a volume of 5,000 units, Pwerson Company incurred $32,000 in factory overhead costs, including $14,000 in fixed costs. If volume increases to 6,000 units and both 5,000 units and 6,000 units are within the relevant range, then the company would expect to incur total factory overhead costs of: (Round intermediate calculations to 2 decimal places.)

Bowering Corporation has provided the following information: For financial reporting purposes, the total amount of period costs incurred to sell 9,000 units is closest to: