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39) The following production and average cost data for two levels of monthly production volume
have been supplied by a company that produces a single product:
Production volume
2,000
units
4,000
units
Direct materials
$
88.40
per unit
$
88.40
per unit
Direct labor
$
20.60
per unit
$
20.60
per unit
Manufacturing overhead
$
86.90
per unit
$
55.30
per unit
The best estimate of the total cost to manufacture 2,200 units is closest to:
A) $396,220
B) $430,980
C) $361,460
D) $418,340
40) Wilson Corporation's activity for the first six of the current year is as follows:
Machine-
Hours
Electrical
Cost
January
2,000
$
1,560
February
3,000
$
2,200
March
2,400
$
1,750
April
1,900
$
1,520
May
1,800
$
1,480
June
2,100
$
1,600
Using the high-low method, the variable cost per machine hour would be:
A) $0.67
B) $0.64
C) $0.40
D) $0.60
41) Wilson Corporation's activity for the first six of the current year is as follows:
Machine-
Hours
Electrical
Cost
January
2,000
$
1,560
February
3,000
$
2,200
March
2,400
$
1,750
April
1,900
$
1,520
May
1,800
$
1,480
June
2,100
$
1,600
Using the high-low method, the fixed portion of the electrical cost each month would be:
A) $400
B) $760
C) $280
D) $190
42) Inspection costs at one of Ratulowski Corporation's factories are listed below:
Units Produced
Inspection
Costs
April
777
$
10,176
May
807
$
10,404
June
798
$
10,355
July
835
$
10,665
August
822
$
10,542
September
795
$
10,313
October
805
$
10,409
November
853
$
10,795
December
796
$
10,310
Management believes that inspection cost is a mixed cost that depends on units produced.
Using the high-low method, the estimate of the variable component of inspection cost per unit
produced is closest to:
A) $8.14
B) $7.05
C) $0.12
D) $12.89
43) Inspection costs at one of Ratulowski Corporation's factories are listed below:
Units Produced
Inspection Costs
April
777
$
10,176
May
807
$
10,404
June
798
$
10,355
July
835
$
10,665
August
822
$
10,542
September
795
$
10,313
October
805
$
10,409
November
853
$
10,795
December
796
$
10,310
Management believes that inspection cost is a mixed cost that depends on units produced.
Using the high-low method, the estimate of the fixed component of inspection cost per month is
closest to:
A) $10,344
B) $10,441
C) $3,852
D) $10,176
44) Compton Corporation is a wholesale distributor of educational CD-ROMs. The company's
records indicate the following:
This Year
Last Year
Units Sold
250,000
200,000
Sales
$
1,250,000
$
1,000,000
Cost of goods sold
875,000
700,000
Gross margin
375,000
300,000
Selling and administrative expenses
222,000
210,000
Net operating income
$
153,000
$
90,000
Using the high-low method of analysis, what are the company's estimated variable selling and
administrative expenses per unit?
A) $0.24
B) $4.17
C) $0.88
D) $0.96
45) Compton Corporation is a wholesale distributor of educational CD-ROMs. The company's
records indicate the following:
This Year
Last Year
Units Sold
250,000
200,000
Sales
$
1,250,000
$
1,000,000
Cost of goods sold
875,000
700,000
Gross margin
375,000
300,000
Selling and administrative expenses
222,000
210,000
Net operating income
$
153,000
$
90,000
Using the high-low method of analysis, what are the company's estimated total fixed selling and
administrative expenses per year?
A) $60,000
B) $174,000
C) $150,000
D) $162,000
46) Compton Corporation is a wholesale distributor of educational CD-ROMs. The company's
records indicate the following:
This Year
Last Year
Units Sold
250,000
200,000
Sales
$
1,250,000
$
1,000,000
Cost of goods sold
875,000
700,000
Gross margin
375,000
300,000
Selling and administrative expenses
222,000
210,000
Net operating income
$
153,000
$
90,000
What is the company's contribution margin for this year?
A) $315,000
B) $(667,500)
C) $375,000
D) $213,000
47) The Blaine Corporation is a highly automated manufacturer. At an activity level of 6,000
machine setups, total overhead costs equal $240,000. Of this amount, depreciation totals $80,000
(all fixed) and lubrication totals $72,000 (all variable). The remaining $88,000 of the total
overhead cost consists of utility cost (mixed). At an activity level of 9,000 setups, utility cost
totals $112,000.
Assume that the relevant range includes all of the activity levels mentioned in this problem.
The variable cost per setup for utilities is most likely closest to:
A) $ 8.00 per setup
B) $12.44 per setup
C) $ 4.00 per setup
D) $14.66 per setup
48) The Blaine Corporation is a highly automated manufacturer. At an activity level of 6,000
machine setups, total overhead costs equal $240,000. Of this amount, depreciation totals $80,000
(all fixed) and lubrication totals $72,000 (all variable). The remaining $88,000 of the total
overhead cost consists of utility cost (mixed). At an activity level of 9,000 setups, utility cost
totals $112,000.
Assume that the relevant range includes all of the activity levels mentioned in this problem.
The total fixed overhead costs for Blaine Corporation are most likely closest to:
A) $112,000
B) $120,000
C) $ 40,000
D) $ 80,000
49) The Blaine Corporation is a highly automated manufacturer. At an activity level of 6,000
machine setups, total overhead costs equal $240,000. Of this amount, depreciation totals $80,000
(all fixed) and lubrication totals $72,000 (all variable). The remaining $88,000 of the total
overhead cost consists of utility cost (mixed). At an activity level of 9,000 setups, utility cost
totals $112,000.
Assume that the relevant range includes all of the activity levels mentioned in this problem.
If 7,800 setups are projected for the next period, total expected overhead cost would be closest
to:
A) $156,000
B) $236,000
C) $214,400
D) $276,000
50) Babuca Corporation has provided the following production and total cost data for two levels
of monthly production volume. The company produces a single product.
Production volume
5,000
units
6,000
units
Direct materials
$
103,500
$
124,200
Direct labor
$
282,500
$
339,000
Manufacturing overhead
$
667,000
$
679,800
The best estimate of the total monthly fixed manufacturing cost is:
A) $1,098,000
B) $1,053,000
C) $1,143,000
D) $603,000
51) Babuca Corporation has provided the following production and total cost data for two levels
of monthly production volume. The company produces a single product.
Production volume
5,000
units
6,000
units
Direct materials
$
103,500
$
124,200
Direct labor
$
282,500
$
339,000
Manufacturing overhead
$
667,000
$
679,800
The best estimate of the total variable manufacturing cost per unit is:
A) $90.00
B) $77.20
C) $12.80
D) $20.70
52) Babuca Corporation has provided the following production and total cost data for two levels
of monthly production volume. The company produces a single product.
Production volume
5,000
units
6,000
units
Direct materials
$
103,500
$
124,200
Direct labor
$
282,500
$
339,000
Manufacturing overhead
$
667,000
$
679,800
The best estimate of the total cost to manufacture 5,300 units is closest to:
A) $1,116,180
B) $1,062,915
C) $1,080,000
D) $1,009,650
