109) A cost incurred in the past that is not relevant to any current decision is classified as a(n):
A) period cost.
B) opportunity cost.
C) sunk cost.
D) differential cost.
110) The term that refers to costs incurred in the past that are not relevant to a decision is:
A) marginal cost.
B) indirect cost.
C) period cost.
D) sunk cost.
111) Differential costs can:
A) only be fixed costs.
B) only be variable costs.
C) be either fixed or variable.
D) be sunk costs.
112) All of the following can be differential costs except:
A) variable costs.
B) sunk costs.
C) opportunity costs.
D) fixed costs.
113) Contribution margin is:
A) Sales less cost of goods sold.
B) Sales less variable production, variable selling, and variable administrative expenses.
C) Sales less variable production expense.
D) Sales less all variable and fixed expenses.
114) Which of the following approaches to preparing an income statement includes a calculation
of the gross margin?
Traditional
Approach
Contribution
Approach
A)
Yes
Yes
B)
Yes
No
C)
No
Yes
D)
No
No
A) Choice A
B) Choice B
C) Choice C
D) Choice D
115) Meginnis 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:
Average
Cost per
Unit
Direct materials
$
5.20
Direct labor
$
3.75
Variable manufacturing overhead
$
1.65
Fixed manufacturing overhead
$
2.60
Fixed selling expense
$
0.50
Fixed administrative expense
$
0.40
Sales commissions
$
1.50
Variable administrative expense
$
0.50
If 6,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:
A) $79,200
B) $63,600
C) $62,700
D) $53,700
Direct materials
$
Direct labor
Direct manufacturing cost per unit (a)
$
Number of units produced (b)
6,000
Total direct manufacturing cost (a) × (b)
$
53,700
116) Perkey Corporation has provided the following information:
Cost per Unit
Cost per Period
Direct materials
$
5.00
Direct labor
$
2.90
Variable manufacturing overhead
$
1.25
Fixed manufacturing overhead
$
21,000
Sales commissions
$
1.00
Variable administrative expense
$
0.55
Fixed selling and administrative expense
$
7,500
If 4,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:
A) $53,400
B) $35,600
C) $36,600
D) $31,600
Direct materials
$
Direct labor
Direct manufacturing cost per unit (a)
$
Number of units produced (b)
4,000
Total direct manufacturing cost (a) × (b)
$
31,600
117) Norred Corporation has provided the following information:
Cost per Unit
Cost per Period
Direct materials
$
7.50
Direct labor
$
3.70
Variable manufacturing overhead
$
1.60
Fixed manufacturing overhead
$
121,500
Sales commissions
$
1.50
Variable administrative expense
$
0.45
Fixed selling and administrative expense
$
44,550
If 8,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:
A) $120,800
B) $134,300
C) $12,800
D) $121,500
× 8,000 units)
Total fixed manufacturing overhead cost
121,500
Total indirect manufacturing cost
$
134,300
118) Ouelette 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:
Average
Cost per
Unit
Direct materials
$
5.25
Direct labor
$
4.05
Variable manufacturing overhead
$
1.30
Fixed manufacturing overhead
$
3.00
Fixed selling expense
$
0.70
Fixed administrative expense
$
0.40
Sales commissions
$
0.50
Variable administrative expense
$
0.45
If 6,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:
A) $15,000
B) $22,800
C) $7,800
D) $25,800
5,000 units*)
Total indirect manufacturing cost
$
119) 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:
A) $54,000
B) $133,000
C) $59,000
D) $87,000
120) Abburi Company’s manufacturing overhead is 60% of its total conversion costs. If direct
labor is $52,000 and if direct materials are $28,000, the manufacturing overhead is:
A) $34,667
B) $78,000
C) $42,000
D) $120,000
121) During the month of May, direct labor cost totaled $10,000 and direct labor cost was 40%
of prime cost. If total manufacturing costs during May were $86,000, the manufacturing
overhead was:
A) $76,000
B) $25,000
C) $61,000
D) $15,000
122) In May direct labor was 60% of conversion cost. If the manufacturing overhead for the
month was $54,000 and the direct materials cost was $30,000, the direct labor cost was:
A) $36,000
B) $20,000
C) $81,000
D) $45,000
123) The following costs were incurred in May:
Direct materials
$
33,000
Direct labor
$
13,000
Manufacturing overhead
$
23,000
Selling expenses
$
16,000
Administrative expense
$
34,000
Prime costs during the month totaled:
A) $36,000
B) $119,000
C) $69,000
D) $46,000
124) Kneeland Corporation has provided the following information:
Cost per Unit
Cost per Period
Direct materials
$
6.80
Direct labor
$
4.15
Variable manufacturing overhead
$
1.65
Fixed manufacturing overhead
$
121,500
Sales commissions
$
1.00
Variable administrative expense
$
0.50
Fixed selling and administrative expense
$
40,500
If 10,000 units are produced, the total amount of manufacturing overhead cost is closest to:
A) $186,000
B) $138,000
C) $162,000
D) $150,000
Explanation:
× 10,000 units)
Total fixed manufacturing overhead cost
121,500
Total manufacturing overhead cost (a)
$
138,000
125) Perteet 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:
Average
Cost per
Unit
Direct materials
$
6.70
Direct labor
$
3.25
Variable manufacturing overhead
$
1.60
Fixed manufacturing overhead
$
3.00
Fixed selling expense
$
0.70
Fixed administrative expense
$
0.40
Sales commissions
$
0.50
Variable administrative expense
$
0.55
If 4,000 units are produced, the total amount of manufacturing overhead cost is closest to:
A) $18,100
B) $28,000
C) $21,400
D) $14,800
5,000 units*)
Total manufacturing overhead cost (a)
$
126) A manufacturing company prepays its insurance coverage for a three-year period. The
premium for the three years is $2,100 and is paid at the beginning of the first year. Sixty percent
of the premium applies to manufacturing operations and forty percent applies to selling and
administrative activities. What amounts should be considered product and period costs
respectively for the first year of coverage?
Product
Period
A)
$280
$420
B)
$420
$280
C)
$700
$0
D)
$0
$700
A) Choice A
B) Choice B
C) Choice C
D) Choice D
127) Shelp Corporation has provided the following information:
Cost per Unit
Cost per Period
Direct materials
$
7.15
Direct labor
$
3.35
Variable manufacturing overhead
$
1.40
Fixed manufacturing overhead
$
81,000
Sales commissions
$
0.50
Variable administrative expense
$
0.50
Fixed selling and administrative expense
$
40,500
For financial reporting purposes, the total amount of period costs incurred to sell 9,000 units is
closest to:
A) $33,000
B) $9,000
C) $40,500
D) $49,500
Sales commissions
$
0.50
Variable administrative expense
0.50
Variable selling and administrative expense per unit
1.00
unit × 9,000 units sold)
Total fixed selling and administrative expense
40,500
Total period (nonmanufacturing) cost
$
49,500
128) Phaup 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:
Average
Cost per
Unit
Direct materials
$
4.85
Direct labor
$
4.00
Variable manufacturing overhead
$
1.75
Fixed manufacturing overhead
$
3.90
Fixed selling expense
$
0.90
Fixed administrative expense
$
0.60
Sales commissions
$
0.50
Variable administrative expense
$
0.45
For financial reporting purposes, the total amount of period costs incurred to sell 5,000 units is
closest to:
A) $8,200
B) $12,250
C) $7,500
D) $4,750
Sales commissions
$
Variable administrative expense
Variable selling and administrative expense per unit
$
unit × 5,000 units sold)
($0.90 per unit × 5,000 units + $0.60 per unit × 5,000 units)
Total period (nonmanufacturing) cost
$
129) Bressette Corporation has provided the following information:
Cost per Unit
Cost per Period
Direct materials
$
6.20
Direct labor
$
3.70
Variable manufacturing overhead
$
1.25
Fixed manufacturing overhead
$
10,000
Sales commissions
$
1.50
Variable administrative expense
$
0.50
Fixed selling and administrative expense
$
5,000
For financial reporting purposes, the total amount of product costs incurred to make 5,000 units
is closest to:
A) $65,750
B) $10,000
C) $70,750
D) $55,750
Direct materials
$
6.20
Direct labor
3.70
Variable manufacturing overhead
1.25
Variable manufacturing cost per unit
$
11.25
units produced)
Total fixed manufacturing overhead cost
10,000
Total product (manufacturing) cost
$
65,750
130) Landmann Corporation’s relevant range of activity is 7,000 units to 11,000 units. When it
produces and sells 9,000 units, its average costs per unit are as follows:
Average
Cost per Unit
Direct materials
$
6.35
Direct labor
$
4.10
Variable manufacturing overhead
$
1.35
Fixed manufacturing overhead
$
13.50
Fixed selling expense
$
2.25
Fixed administrative expense
$
1.80
Sales commissions
$
1.00
Variable administrative expense
$
0.45
For financial reporting purposes, the total amount of product costs incurred to make 9,000 units
is closest to:
A) $106,200
B) $236,700
C) $121,500
D) $227,700
Direct materials
$
6.35
Direct labor
4.10
Variable manufacturing overhead
1.35
Variable manufacturing cost per unit
$
11.80
units produced)
9,000 units produced)
Total product (manufacturing) cost
$
227,700
131) Timchak Corporation reports that at an activity level of 9,900 units, its total variable cost is
$919,116 and its total fixed cost is $259,974. What would be the total cost, both fixed and
variable, at an activity level of 10,100 units? Assume that this level of activity is within the
relevant range.
A) $1,197,658
B) $1,191,000
C) $1,179,090
D) $1,202,910