214) Lagle Corporation has provided the following information:
Cost per
Unit
Cost per Period
Direct materials
$
4.85
Direct labor
$
3.35
Variable manufacturing overhead
$
1.35
Fixed manufacturing overhead
$
8,000
Sales commissions
$
1.50
Variable administrative expense
$
0.45
Fixed selling and administrative expense
$
4,400
For financial reporting purposes, the total amount of product costs incurred to make 4,000 units
is closest to:
A) $46,200
B) $38,200
C) $8,000
D) $50,200
Direct materials
$
4.85
Direct labor
3.35
Variable manufacturing overhead
1.35
Variable manufacturing cost per unit
$
9.55
Total variable manufacturing cost
($9.55 per unit × 4,000 units produced)
$
38,200
Total fixed manufacturing overhead cost
Total product (manufacturing) cost
$
46,200
215) Lagle Corporation has provided the following information:
Cost per
Unit
Cost per Period
Direct materials
$
4.85
Direct labor
$
3.35
Variable manufacturing overhead
$
1.35
Fixed manufacturing overhead
$
8,000
Sales commissions
$
1.50
Variable administrative expense
$
0.45
Fixed selling and administrative expense
$
4,400
For financial reporting purposes, the total amount of period costs incurred to sell 4,000 units is
closest to:
A) $12,200
B) $7,800
C) $4,400
D) $8,100
Sales commissions
$
1.50
Variable administrative expense
0.45
Variable selling and administrative expense per unit
$
1.95
Total variable selling and administrative expense
($1.95 per unit × 4,000 units sold)
$
Total fixed selling and administrative expense
Total period (nonmanufacturing) cost
$
12,200
216) Lagle Corporation has provided the following information:
Cost per
Unit
Cost per
Period
Direct materials
$
4.85
Direct labor
$
3.35
Variable manufacturing overhead
$
1.35
Fixed manufacturing overhead
$
8,000
Sales commissions
$
1.50
Variable administrative expense
$
0.45
Fixed selling and administrative expense
$
4,400
If 5,000 units are sold, the variable cost per unit sold is closest to:
A) $14.60
B) $11.50
C) $9.55
D) $11.55
Direct materials
$
Direct labor
Variable manufacturing overhead
Sales commissions
Variable administrative expense
Variable cost per unit sold
$
11.50
217) Lagle Corporation has provided the following information:
Cost per
Unit
Cost per
Period
Direct materials
$
4.85
Direct labor
$
3.35
Variable manufacturing overhead
$
1.35
Fixed manufacturing overhead
$
8,000
Sales commissions
$
1.50
Variable administrative expense
$
0.45
Fixed selling and administrative expense
$
4,400
If 5,000 units are sold, the total variable cost is closest to:
A) $47,750
B) $73,000
C) $57,500
D) $57,750
Direct materials
$
Direct labor
Variable manufacturing overhead
Sales commissions
Variable administrative expense
Variable cost per unit sold
$
11.50
Variable cost per unit sold (a)
$
Number of units sold (b)
Total variable costs (a) × (b)
$
57,500
218) Bowering Corporation has provided the following information:
Cost per
Unit
Cost per
Period
Direct materials
$
6.60
Direct labor
$
3.85
Variable manufacturing overhead
$
1.50
Fixed manufacturing overhead
$
81,000
Sales commissions
$
0.50
Variable administrative expense
$
0.50
Fixed selling and administrative expense
$
44,550
For financial reporting purposes, the total amount of product costs incurred to make 9,000 units
is closest to:
A) $81,000
B) $188,550
C) $107,550
D) $197,550
Direct materials
$
Direct labor
Variable administrative expense
Variable manufacturing cost per unit
$
Total variable manufacturing cost
($11.95 per unit × 9,000 units produced)
$
107,550
Total fixed manufacturing overhead cost
Total product (manufacturing) cost
$
188,550
219) Bowering Corporation has provided the following information:
Cost per
Unit
Cost per
Period
Direct materials
$
6.60
Direct labor
$
3.85
Variable manufacturing overhead
$
1.50
Fixed manufacturing overhead
$
81,000
Sales commissions
$
0.50
Variable administrative expense
$
0.50
Fixed selling and administrative expense
$
44,550
For financial reporting purposes, the total amount of period costs incurred to sell 9,000 units is
closest to:
A) $35,700
B) $9,000
C) $53,550
D) $44,550
Sales commissions
$
0.50
Variable administrative expense
0.50
Variable manufacturing cost per unit
$
1.00
Total variable manufacturing cost
($1.00 per unit × 9,000 units produced)
$
Total fixed selling and administrative expense
44,550
Total period (nonmanufacturing) cost
$
53,550
220) 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.
The salary that Mark earns at his present employ is:
A) a variable cost
B) a fixed cost
C) a product cost
D) an opportunity cost
221) 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.
Mark purchased a machine two years ago to make experimental boards. The machine will be
used to manufacture the new board. The cost of this machine is:
A) an opportunity cost
B) a sunk cost
C) a differential cost
D) a period cost
222) 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.
The cost of the raw materials that will be used in manufacturing the computer board is:
A) a sunk cost
B) a fixed cost
C) a period cost
D) a variable cost
223) 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.
Rent on the administrative office space is:
A) a variable cost
B) an opportunity cost
C) a period cost
D) a product cost
224) 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:
A) a product cost
B) a variable cost
C) an opportunity cost
D) a period cost
225) 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 dollar, what should be the total property taxes at a sales volume of 37,200
units? (Assume that this sales volume is within the relevant range.)
A) $725,680
B) $733,400
C) $749,172
D) $717,960
226) 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.)
A) $19.30
B) $19.66
C) $19.72
D) $19.48
227) Leas Corporation staffs a helpline to answer questions from customers. The costs of
operating the helpline are variable with respect to the number of calls in a month. At a volume of
25,000 calls in a month, the costs of operating the helpline total $452,500.
To the nearest whole dollar, what should be the total cost of operating the helpline costs at a
volume of 23,900 calls in a month? (Assume that this call volume is within the relevant range.)
A) $442,545
B) $452,500
C) $473,326
D) $432,590
228) Leas Corporation staffs a helpline to answer questions from customers. The costs of
operating the helpline are variable with respect to the number of calls in a month. At a volume of
25,000 calls in a month, the costs of operating the helpline total $452,500.
To the nearest whole cent, what should be the average cost of operating the helpline per call at a
volume of 25,300 calls in a month? (Assume that this call volume is within the relevant range.)
A) $18.93
B) $18.00
C) $17.89
D) $18.10
229) Dizzy Amusement Park is open from 8:00 am till midnight every day of the year. Dizzy
charges its patrons a daily entrance fee of $30 per person which gives them unlimited access to
all of the park’s 35 rides.
Dizzy gives out a free T-shirt to every 100th customer entering the park. The cost of this T-shirt
would best be described as a:
A) fixed cost
B) mixed cost
C) step-variable cost
D) true variable cost
230) Dizzy Amusement Park is open from 8:00 am till midnight every day of the year. Dizzy
charges its patrons a daily entrance fee of $30 per person which gives them unlimited access to
all of the park’s 35 rides.
For liability insurance, Dizzy pays a set monthly fee plus a small additional amount for every
patron entering the park. The cost of liability insurance would best be described as a:
A) fixed cost
B) mixed cost
C) step-variable cost
D) true variable cost
231) Dizzy Amusement Park is open from 8:00 am till midnight every day of the year. Dizzy
charges its patrons a daily entrance fee of $30 per person which gives them unlimited access to
all of the park’s 35 rides.
Dizzy employees a certified operator for each of its 35 rides. Each operator is paid $20 per hour.
The cost of the certified operators would best be described as a:
A) fixed cost
B) mixed cost
C) step-variable cost
D) true variable cost
232) Dizzy Amusement Park is open from 8:00 am till midnight every day of the year. Dizzy
charges its patrons a daily entrance fee of $30 per person which gives them unlimited access to
all of the park’s 35 rides.
Dizzy donates $2 of every entrance fee to a local homeless shelter. This charitable contribution
would best be described as a:
A) fixed cost
B) mixed cost
C) step-variable cost
D) true variable cost
233) At a sales volume of 20,000 units, Choice Corporation’s sales commissions (a cost that is
variable with respect to sales volume) total $132,000.
To the nearest whole dollar, what should be the total sales commissions at a sales volume of
18,400 units? (Assume that this sales volume is within the relevant range.)
A) $126,720
B) $132,000
C) $121,440
D) $143,478
234) At a sales volume of 20,000 units, Choice Corporation’s sales commissions (a cost that is
variable with respect to sales volume) total $132,000.
To the nearest whole cent, what should be the average sales commission per unit at a sales
volume of 18,500 units? (Assume that this sales volume is within the relevant range.)
A) $6.60
B) $6.87
C) $7.17
D) $7.14
235) Adens 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:
Average
Cost per Unit
Direct materials
$
6.25
Direct labor
$
2.80
Variable manufacturing overhead
$
1.55
Fixed manufacturing overhead
$
2.40
Fixed selling expense
$
0.50
Fixed administrative expense
$
0.40
Sales commissions
$
1.00
Variable administrative expense
$
0.50
If 5,000 units are sold, the variable cost per unit sold is closest to:
A) $13.00
B) $10.60
C) $12.10
D) $15.40
Direct materials
Direct labor
Variable manufacturing overhead
Sales commissions
Variable administrative expense
Variable cost per unit sold
12.10
236) Adens 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:
Average
Cost per Unit
Direct materials
$
6.25
Direct labor
$
2.80
Variable manufacturing overhead
$
1.55
Fixed manufacturing overhead
$
2.40
Fixed selling expense
$
0.50
Fixed administrative expense
$
0.40
Sales commissions
$
1.00
Variable administrative expense
$
0.50
If 5,000 units are sold, the total variable cost is closest to:
A) $53,000
B) $65,000
C) $60,500
D) $77,000
Direct materials
Direct labor
Variable manufacturing overhead
Sales commissions
Variable administrative expense
Variable cost per unit sold
12.10
Variable cost per unit sold (a)
Number of units sold (b)
Total variable costs (a) × (b)
60,500
237) Batterson Corporation leases its corporate headquarters building. This lease cost is fixed
with respect to the company’s sales volume. In a recent month in which the sales volume was
28,000 units, the lease cost was $697,200.
To the nearest whole dollar, what should be the total lease cost at a sales volume of 29,200 units
in a month? (Assume that this sales volume is within the relevant range.)
A) $712,140
B) $697,200
C) $727,080
D) $668,548
238) Batterson Corporation leases its corporate headquarters building. This lease cost is fixed
with respect to the company’s sales volume. In a recent month in which the sales volume was
28,000 units, the lease cost was $697,200.
To the nearest whole cent, what should be the average lease cost per unit at a sales volume of
26,400 units in a month? (Assume that this sales volume is within the relevant range.)
A) $25.66
B) $24.90
C) $23.88
D) $26.41
239) Oerther Corporation reports that at an activity level of 5,000 units, its total variable cost is
$131,750 and its total fixed cost is $31,200.
What would be the total variable cost at an activity level of 5,200 units? Assume that this level of
activity is within the relevant range.
A) $137,020
B) $131,750
C) $162,950
D) $32,448
240) Oerther Corporation reports that at an activity level of 5,000 units, its total variable cost is
$131,750 and its total fixed cost is $31,200.
What would be the average fixed cost per unit at an activity level of 5,200 units? Assume that
this level of activity is within the relevant range.
A) $6.24
B) $6.00
C) $14.94
D) $32.59