Accounting Chapter 1 Chapter 1_version1 The three cost elements ordinarily included in product costs are direct materials, direct labor, and manufacturing overhead

Version 1 1

Student name:__________

1) Dobosh Corporation has provided the following information:

Cost per Unit Cost per

Period

Direct materials $ 7.05

Direct labor $ 3.65

Variable manufacturing overhead $ 1.60

Fixed manufacturing overhead $ 113,400

Sales commissions $ 1.50

Variable administrative expense $ 0.55

Fixed selling and administrative expense $ 36,450

Required:

a. For financial reporting purposes, what is the total amount of product costs incurred to make

9,000 units?

b. For financial reporting purposes, what is the total amount of period costs incurred to sell

9,000 units?

c. If 10,000 units are sold, what is the variable cost per unit sold?

d. If 10,000 units are sold, what is the total amount of variable costs related to the units sold?

e. If 10,000 units are produced, what is the total amount of manufacturing overhead cost

incurred?

f. If the selling price is $21.60 per unit, what is the contribution margin per unit sold?

g. If 8,000 units are produced, what is the total amount of direct manufacturing cost incurred?

h. If 8,000 units are produced, what is the total amount of indirect manufacturing costs

incurred?

i. What incremental manufacturing cost will the company incur if it increases production from

9,000 to 9,001 units?

Version 1 2

2) Saxbury Corporation’s relevant range of activity is 3,000 units to 7,000 units. When it

produces and sells 4,300 units, its average costs per unit are as follows:

Average Cost per

Unit

Direct materials $ 6.50

Direct labor $ 3.20

Variable manufacturing overhead $ 1.30

Fixed manufacturing overhead $ 3.40

Fixed selling expense $ 0.60

Fixed administrative expense $ 0.45

Sales commissions $ 0.35

Variable administrative expense $ 0.35

Required:

a. For financial reporting purposes, what is the total amount of product costs incurred to make

4,300 units?

b. For financial reporting purposes, what is the total amount of period costs incurred to sell

4,300 units?

c. If 5,300 units are sold, what is the variable cost per unit sold? (Round “Per unit” answer to

2 decimal places.)

d. If 5,300 units are sold, what is the total amount of variable costs related to the units sold?

e. If 5,300 units are produced, what is the average fixed manufacturing cost per unit produced?

(Round “Per unit” answer to 2 decimal places.)

f. If 5,300 units are produced, what is the total amount of fixed manufacturing cost incurred?

g. If 5,300 units are produced, what is the total amount of manufacturing overhead cost

incurred? What is this total amount expressed on a per unit basis? (Round “Per unit” answer to

2 decimal places.)

h. If the selling price is $24.00 per unit, what is the contribution margin per unit sold? (Round

“Per unit” answer to 2 decimal places.)

i. If 3,300 units are produced, what is the total amount of direct manufacturing cost incurred?

j. If 3,300 units are produced, what is the total amount of indirect manufacturing cost incurred?

k. What incremental manufacturing cost will the company incur if it increases production from

4,300 to 4,301 units? (Round “Per unit” answer to 2 decimal places.)

Version 1 3

3) Saxbury 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 $ 5.30

Direct labor $ 3.65

Variable manufacturing overhead $ 1.50

Fixed manufacturing overhead $ 3.90

Fixed selling expense $ 0.75

Fixed administrative expense $ 0.60

Sales commissions $ 0.50

Variable administrative expense $ 0.50

Required:

a. For financial reporting purposes, what is the total amount of product costs incurred to make

5,000 units?

b. For financial reporting purposes, what is the total amount of period costs incurred to sell

5,000 units?

c. If 6,000 units are sold, what is the variable cost per unit sold? (Round “Per unit” answer to

2 decimal places.)

d. If 6,000 units are sold, what is the total amount of variable costs related to the units sold?

e. If 6,000 units are produced, what is the average fixed manufacturing cost per unit produced?

(Round “Per unit” answer to 2 decimal places.)

f. If 6,000 units are produced, what is the total amount of fixed manufacturing cost incurred?

g. If 6,000 units are produced, what is the total amount of manufacturing overhead cost

incurred? What is this total amount expressed on a per unit basis? (Round “Per unit” answer to

2 decimal places.)

h. If the selling price is $22.90 per unit, what is the contribution margin per unit sold? (Round

“Per unit” answer to 2 decimal places.)

i. If 4,000 units are produced, what is the total amount of direct manufacturing cost incurred?

j. If 4,000 units are produced, what is the total amount of indirect manufacturing cost incurred?

k. What incremental manufacturing cost will the company incur if it increases production from

5,000 to 5,001 units? (Round “Per unit” answer to 2 decimal places.)

Version 1 4

4) Myklebust Corporation’s relevant range of activity is 4,000 units to 8,000 units. When it

produces and sells 6,000 units, its average costs per unit are as follows:

Average Cost per

Unit

Direct materials $ 6.40

Direct labor $ 3.80

Variable manufacturing overhead $ 1.60

Fixed manufacturing overhead $ 3.00

Fixed selling expense $ 0.75

Fixed administrative expense $ 0.60

Sales commissions $ 1.50

Variable administrative expense $ 0.45

Required:

a.For financial reporting purposes, what is the total amount of product costs incurred to make

6,000 units?

b. For financial reporting purposes, what is the total amount of period costs incurred to sell

6,000 units?

c. If the selling price is $20.20 per unit, what is the contribution margin per unit sold?

d. If 7,000 units are produced, what is the total amount of direct manufacturing cost incurred?

e. If 7,000 units are produced, what is the total amount of indirect manufacturing cost incurred?

f. What incremental manufacturing cost will the company incur if it increases production from

6,000 to 6,001 units?

5) Learned Corporation has provided the following information:

Cost per Unit Cost per

Period

Direct materials $ 5.20

Direct labor $ 3.85

Variable manufacturing overhead $ 1.35

Fixed manufacturing overhead $ 27,000

Version 1 5

Sales commissions $ 0.50

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 9,000

Required:

a. For financial reporting purposes, what is the total amount of product costs incurred to make

6,000 units?

b. For financial reporting purposes, what is the total amount of period costs incurred to sell

6,000 units?

c. If the selling price is $22.40 per unit, what is the contribution margin per unit sold? (Round

your answer to 2 decimal places.)

d. If 7,000 units are produced, what is the total amount of direct manufacturing cost incurred?

e. If 7,000 units are produced, what is the total amount of indirect manufacturing costs

incurred?

6) Learned Corporation has provided the following information:

Cost per Unit Cost per

Period

Direct materials $ 5.40

Direct labor $ 4.45

Variable manufacturing overhead $ 2.05

Fixed manufacturing overhead $ 18,000

Sales commissions $ 0.60

Variable administrative expense $ 0.50

Fixed selling and administrative expense $ 5,600

Version 1 6

Required:

a. For financial reporting purposes, what is the total amount of product costs incurred to make

4,000 units?

b. For financial reporting purposes, what is the total amount of period costs incurred to sell

4,000 units?

c. If the selling price is $24.20 per unit, what is the contribution margin per unit sold? (Round

your answer to 2 decimal places.)

d. If 5,000 units are produced, what is the total amount of direct manufacturing cost incurred?

e. If 5,000 units are produced, what is the total amount of indirect manufacturing costs

incurred?

7) Arman 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 $6.10

Direct labor $2.90

Variable manufacturing overhead $1.25

Fixed manufacturing overhead $3.00

Fixed selling expense $1.05

Fixed administrative expense $0.60

Sales commissions $1.50

Variable administrative expense $0.55

Required:

a. If 6,000 units are produced, what is the total amount of fixed manufacturing cost incurred?

b. If 6,000 units are produced, what is the total amount of manufacturing overhead cost

incurred? What is this total amount expressed on a per unit basis?

c. If 4,000 units are produced, what is the total amount of direct manufacturing cost incurred?

d. If 4,000 units are produced, what is the total amount of indirect manufacturing cost

incurred?

Version 1 7

8) Skolnick Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 5.20

Direct labor $ 3.40

Variable manufacturing overhead $ 1.50

Fixed manufacturing overhead $ 142,500

Sales commissions $ 1.30

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 42,750

Required:

a. If 9,500 units are produced, what is the total amount of direct manufacturing cost incurred?

(Do not round intermediate calculations.)

b. If 9,500 units are produced, what is the total amount of indirect manufacturing costs

incurred?

9) Skolnick Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 5.70

Direct labor $ 3.60

Variable manufacturing overhead $ 1.50

Fixed manufacturing overhead $ 121,500

Sales commissions $ 1.00

Version 1 8

Variable administrative expense $ 0.45

Fixed selling and administrative expense $ 36,450

Required:

a. If 8,000 units are produced, what is the total amount of direct manufacturing cost incurred?

(Do not round intermediate calculations.)

b. If 8,000 units are produced, what is the total amount of indirect manufacturing costs

incurred?

10) Karpowicz 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 $ 6.25

Direct labor $ 4.15

Variable manufacturing overhead $ 1.60

Fixed manufacturing overhead $ 12.60

Fixed selling expense $ 3.15

Fixed administrative expense $ 1.80

Sales commissions $ 1.50

Variable administrative expense $ 0.45

Required:

a. If the selling price is $21.40 per unit, what is the contribution margin per unit sold?

b. If 8,000 units are produced, what is the total amount of direct manufacturing cost incurred?

c. If 8,000 units are produced, what is the total amount of indirect manufacturing cost incurred?

d. What incremental manufacturing cost will the company incur if it increases production from

9,000 to 9,001 units?

Version 1 9

11) Parlavecchio 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 $5.20

Direct labor $3.40

Variable manufacturing overhead $1.35

Fixed manufacturing overhead $3.00

Fixed selling expense $0.70

Fixed administrative expense $0.40

Sales commissions $1.50

Variable administrative expense $0.45

Required:

a. For financial reporting purposes, what is the total amount of product costs incurred to make

4,000 units?

b. For financial reporting purposes, what is the total amount of period costs incurred to sell

4,000 units?

c. If 5,000 units are sold, what is the variable cost per unit sold?

d. If 5,000 units are sold, what is the total amount of variable costs related to the units sold?

e. If 5,000 units are produced, what is the average fixed manufacturing cost per unit produced?

f. If 5,000 units are produced, what is the total amount of fixed manufacturing cost incurred?

g. If 5,000 units are produced, what is the total amount of manufacturing overhead cost

incurred? What is this total amount expressed on a per unit basis?

12) Menk Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.25

Direct labor $ 3.25

Variable manufacturing overhead $ 1.45

Fixed manufacturing overhead $ 18,000

Sales commissions $ 0.50

Version 1 10

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 9,000

Required: a. If 5,000 units are sold, what is the variable cost per unit sold?

b. If 5,000 units are sold, what is the total amount of variable costs related to the units sold?

c. If 5,000 units are produced, what is the total amount of manufacturing overhead cost

incurred?

Version 1 11

13) Mary Tappin, an assistant Vice President at Galaxy Toys, was disturbed to find on her

desk a memo from her boss, Gary Resnick, to the controller of the company. The memo appears

below:

GALAXY TOYS INTERNAL MEMO

Sept 15

To: Harry Wilson, Controller

Fm: Gary Resnick, Executive Vice President

As you know, we won’t start recording many sales until October when stores start accepting

shipments from us for the Christmas season. Meanwhile, we are producing flat-out and are

building up our finished goods inventories so that we will be ready to ship next month.

Unfortunately, we are in a bind right now since it looks like the net income for the quarter

ending on Sept 30 is going to be pretty awful. This may get us in trouble with the bank since they

always review the quarterly financial reports and may call in our loan if they don’t like what they

see. Is there any possibility that we could change the classification of some of our period costs to

product costs-such as the rent on the finished goods warehouse?

Please let me know as soon as possible. The President is pushing for results.

Mary didn’t know what to do about the memo. It wasn’t intended for her, but its contents were

alarming.

Required:

a. Why has Gary Resnick suggested reclassifying some period costs as product costs?

b. Why do you think Mary was alarmed about the memo?

14) Classify the following costs for an auto manufacturer as either direct materials, direct

labor, manufacturing overhead, or period costs.

Version 1 12

Direct Materials Direct Labor Manufacturing Overhead

Period Cost

a. Steel used in automobiles

b. Assembly department employee wages

c. Utility costs used in executive building

d. Travel costs of sales personnel

e. Cost of shipping goods to customers

f. Property taxes on assembly plant

g. Glass used in automobiles

h. Factory maintenance supplies

i. Depreciation on assembly plant

j. Plant manager’s salary

k. CEO’s salary

l. Depreciation on executive building

m. Salary of marketing executive

n. Tires installed on automobiles

o. Advertising

Required:

Complete the answer sheet above by placing an “X” under each heading that identifies the cost

involved.

15) Asplund Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.25

Version 1 13

Direct labor $ 2.90

Variable manufacturing overhead $ 1.30

Fixed manufacturing overhead $ 18,000

Sales commissions $ 1.50

Variable administrative expense $ 0.45

Fixed selling and administrative expense $ 7,500

Required:

a. For financial reporting purposes, what is the total amount of product costs incurred to make

5,000 units?

b. For financial reporting purposes, what is the total amount of period costs incurred to sell

5,000 units?

16) Balerio Corporation’s relevant range of activity is 6,000 units to 10,000 units. When it

produces and sells 8,000 units, its average costs per unit are as follows:

Average Cost per Unit

Direct materials $ 6.40

Direct labor $ 3.00

Variable manufacturing overhead $ 1.30

Fixed manufacturing overhead $ 13.20

Fixed selling expense $ 2.20

Fixed administrative expense $ 1.60

Sales commissions $ 0.60

Variable administrative expense $ 0.50

Version 1 14

Required:

a. For financial reporting purposes, what is the total amount of product costs incurred to make

8,000 units? (Do not round intermediate calculations.)

b. If 9,000 units are sold, what is the variable cost per unit sold? (Round “Per unit” answer

to 2 decimal places.)

c. If 9,000 units are sold, what is the total amount of variable costs related to the units sold?

(Do not round intermediate calculations. Round “Per unit” answer to 2 decimal places.)

d. If the selling price is $18.00 per unit, what is the contribution margin per unit sold? (Round

“Per unit” answer to 2 decimal places.)

e. What incremental manufacturing cost will the company incur if it increases production from

8,000 to 8,001 units? (Round “Per unit” answer to 2 decimal places.)

17) Balerio 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 $ 6.80

Direct labor $ 3.20

Variable manufacturing overhead $ 1.60

Fixed manufacturing overhead $ 13.50

Fixed selling expense $ 2.25

Fixed administrative expense $ 1.80

Sales commissions $ 0.50

Variable administrative expense $ 0.40

Required:

a. For financial reporting purposes, what is the total amount of product costs incurred to make

9,000 units? (Do not round intermediate calculations.)

b. If 10,000 units are sold, what is the variable cost per unit sold? (Round “Per unit” answer

to 2 decimal places.)

c. If 10,000 units are sold, what is the total amount of variable costs related to the units sold?

(Do not round intermediate calculations. Round “Per unit” answer to 2 decimal places.)

d. If the selling price is $18.20 per unit, what is the contribution margin per unit sold? (Round

“Per unit” answer to 2 decimal places.)

e. What incremental manufacturing cost will the company incur if it increases production from

9,000 to 9,001 units? (Round “Per unit” answer to 2 decimal places.)

Version 1 15

18) Glisan Corporation’s relevant range of activity is 4,000 units to 8,000 units. When it

produces and sells 6,000 units, its average costs per unit are as follows:

Average Cost per Unit

Direct materials $ 5.75

Direct labor $ 3.00

Variable manufacturing overhead $ 1.60

Fixed manufacturing overhead $ 4.50

Fixed selling expense $ 0.75

Fixed administrative expense $ 0.60

Sales commissions $ 1.50

Variable administrative expense $ 0.55

Required:

a. For financial reporting purposes, what is the total amount of product costs incurred to make

6,000 units?

b. For financial reporting purposes, what is the total amount of period costs incurred to sell

6,000 units?

c. If 5,000 units are sold, what is the total amount of variable costs related to the units sold?

d. If the selling price is $19.10 per unit, what is the contribution margin per unit sold?

e. What incremental manufacturing cost will the company incur if it increases production from

6,000 to 6,001 units?

19) Morrisroe Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.65

Direct labor $ 3.30

Version 1 16

Variable manufacturing overhead $ 1.70

Fixed manufacturing overhead $ 10,000

Sales commissions $ 1.00

Variable administrative expense $ 0.50

Fixed selling and administrative expense $ 5,000

Required:

a. If the selling price is $25.90 per unit, what is the contribution margin per unit sold?

b. What incremental manufacturing cost will the company incur if it increases production from

5,000 to 5,001 units?

20) In April, Holderness Incorporated, a merchandising company, had sales of $271,000,

selling expenses of $19,000, and administrative expenses of $30,000. The cost of merchandise

purchased during the month was $165,000. The beginning balance in the merchandise inventory

account was $39,000 and the ending balance was $53,000.

Required:

Prepare a traditional format income statement for April.

21) In April, Holderness Incorporated, a merchandising company, had sales of $221,000,

selling expenses of $14,000, and administrative expenses of $25,000. The cost of merchandise

purchased during the month was $155,000. The beginning balance in the merchandise inventory

account was $34,000 and the ending balance was $48,000.

Required:

Prepare a traditional format income statement for April.

Version 1 17

22) Fanelli Corporation, a merchandising company, reported the following results for July:

Number of units sold 6,300

Selling price per unit $ 610

Unit cost of goods sold $ 415

Variable selling expense per unit $ 54

Total fixed selling expense $ 125,800

Variable administrative expense per unit $ 32

Total fixed administrative expense $ 207,700

Cost of goods sold is a variable cost in this company.

Required:

a. Prepare a traditional format income statement for July.

b. Prepare a contribution format income statement for July.

23) Fanelli Corporation, a merchandising company, reported the following results for July:

Number of units sold 5,300

Selling price per unit $ 590

Unit cost of goods sold $ 403

Variable selling expense per unit $ 58

Total fixed selling expense $ 124,400

Variable administrative expense per unit $ 22

Total fixed administrative expense $ 206,300

Version 1 18

Cost of goods sold is a variable cost in this company.

Required:

a. Prepare a traditional format income statement for July.

b. Prepare a contribution format income statement for July.

24) 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.

25) Wippert Corporation, a merchandising company, reported the following results for

December:

Sales $ 2,296,200

Cost of goods sold (all variable) $ 997,600

Total variable selling expense $ 86,000

Total fixed selling expense $ 57,100

Total variable administrative expense $ 43,000

Total fixed administrative expense $ 148,100

Version 1 19

Required:

a. Prepare a traditional format income statement for December.

b. Prepare a contribution format income statement for December.

26) 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.

27) A number of costs are listed below.

Cost Description Cost Object

1. Wages of carpenters on a home building site A particular home

2. Cost of wiring used in making a personal computer A particular

personal computer

3. Manager’s salary at a hotel run by a chain of hotels A

particular hotel guest

4. Manager’s salary at a hotel run by a chain of hotels The

particular hotel

5. Cost of aluminum mast installed in a yacht at a yacht

manufacturer A particular yacht

6. Monthly lease cost of X-ray equipment at a hospital The

Radiology (X-Ray) Department

Version 1 20

7. Cost of screws used to secure wood trim in a yacht at a yacht

manufacturer A particular yacht

8. Cost of electronic navigation system installed in a yacht at a

yacht manufacturer A particular yacht

9. Cost of a replacement battery installed in a car at the auto

repair shop of an automobile dealer The auto repair shop

10. Cost of a measles vaccine administered at an outpatient clinic

at a hospital A particular patient

Required:

For each item above, indicate whether the cost is direct or indirect with respect to the cost object

listed next to it.

28) A partial listing of costs incurred at Boylen Corporation during March appears below:

Direct materials $ 181,000

Utilities, factory $ 10,000

Sales commissions $ 69,000

Administrative salaries $ 99,000

Indirect labor $ 32,000

Advertising $ 75,000

Depreciation of production equipment $ 28,000

Direct labor $ 120,000

Depreciation of administrative equipment $ 49,000

Required:

a. What is the total amount of product cost listed above? Show your work.

b. What is the total amount of period cost listed above? Show your work.

Version 1 21

29) Marquess Corporation has provided the following partial listing of costs incurred during

May:

Marketing salaries $ 39,000

Property taxes, factory $ 8,000

Administrative travel $ 102,000

Sales commissions $ 73,000

Indirect labor $ 31,000

Direct materials $ 197,000

Advertising $ 145,000

Depreciation of production equipment $ 39,000

Direct labor $ 78,000

Required:

a. What is the total amount of product cost listed above? Show your work.

b. What is the total amount of period cost listed above? Show your work.

Garrison 17e Rechecks 2020-09-09

30) A number of costs and measures of activity are listed below.

Cost Description Possible Measure of Activity

1. Salary of production manager at a surfboard manufacturer

Surfboards produced

2. Cost of solder used in making computers Computers produced

3. Cost of dough used at a pizza shop Pizzas cooked

4. Janitorial wages at a surfboard manufacturer Surfboards produced

5. Salary of the controller at a hospital Number of patients

6. Cost of sales at an electronics store Dollar sales

7. Cost of testing materials used in a medical lab Tests run

8. Cost of heating an electronics store Dollar sales

9. Cost of electricity for production equipment at a surfboard

manufacturer Surfboards produced

10. Depreciation on shelving at a book store Dollar sales

Version 1 22

Required:

For each item above, indicate whether the cost is MAINLY fixed or variable with respect to the

possible measure of activity listed next to it.

31) At an activity level of 6,800 units, Henkes Corporation’s total variable cost is $125,188

and its total fixed cost is $164,152.

Required:

For the activity level of 7,100 units, compute: (a) the total variable cost; (b) the total fixed cost;

(c) the total cost; (d) the average variable cost per unit; (e) the average fixed cost per unit; and (f)

the average total cost per unit. Assume that this activity level is within the relevant range.

32) Hinrichs Corporation reports that at an activity level of 2,400 units, its total variable cost

is $174,504 and its total fixed cost is $55,080.

Required:

For the activity level of 2,700 units, compute: (a) the total variable cost; (b) the total fixed cost;

(c) the total cost; (d) the average variable cost per unit; (e) the average fixed cost per unit; and (f)

the average total cost per unit. Assume that this activity level is within the relevant range.

Version 1 23

33) A number of costs and measures of activity are listed below.

Cost Description Possible Measure of Activity

1. Cost of vaccine used at a clinic Vaccines administered

2. Building rent at a taco shop Dollar sales

3. Salary of production manager at a snowboard manufacturer

Snowboards produced

4. Cost of electricity for production equipment at a snowboard

manufacturer Snowboards produced

5. Ferry captain’s salary on a regularly scheduled passenger ferry

Number of passengers

6. Cost of glue used in furniture production Units produced

7. Janitorial wages at a snowboard manufacturer Snowboards produced

8. Depreciation on factory building at a snowboard manufacturer

Snowboards produced

9. Cost of advertising at a snowboard company Snowboards sold

10. Cost of shipping bags of fertilizer to a customer at a chemical

plant Bags shipped

Required:

For each item above, indicate whether the cost is MAINLY fixed or variable with respect to the

possible measure of activity listed next to it.

34) Which of the following statements concerning direct and indirect costs is NOT true?

A) Whether a particular cost is classified as direct or indirect does not depend on the

cost object.

B) A direct cost is one that can be easily traced to the particular cost object.

C) The factory manager’s salary would be classified as an indirect cost of producing one

unit of product.

D) A particular cost may be direct or indirect, depending on the cost object.

Version 1 24

35) Direct costs:

A) are incurred to benefit a particular accounting period.

B) are incurred due to a specific decision.

C) can be easily traced to a particular cost object.

D) are the variable costs of producing a product.

36) Which of the following would most likely NOT be included as manufacturing overhead

in a furniture factory?

A) The cost of the glue in a chair.

B) The amount paid to the individual who stains a chair.

C) The workman’s compensation insurance of the supervisor who oversees production.

D) The factory utilities of the department in which production takes place.

37) 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?

Direct Cost Fixed Cost

A) Yes Yes

B) Yes No

C) No Yes

D) No No

A) Choice A

B) Choice B

C) Choice C

D) Choice D

38) The costs of direct materials are classified as:

Version 1 25

Conversion cost Manufacturing cost Prime cost

A) Yes Yes Yes

B) No No No

C) Yes Yes No

D) No Yes Yes

A) Choice A

B) Choice B

C) Choice C

D) Choice D

39) Manufacturing overhead includes:

A) all direct material, direct labor and administrative costs.

B) all manufacturing costs except direct labor.

C) all manufacturing costs except direct labor and direct materials.

D) all selling and administrative costs.

40) Materials used in a factory that are not an integral part of the final product, such as

cleaning supplies, should be classified as:

A) direct materials.

B) a period cost.

C) administrative expense.

D) manufacturing overhead.

41) The salary paid to the president of a company would be classified on the income

statement as a(n):

Version 1 26

A) administrative expense.

B) direct labor cost.

C) manufacturing overhead cost.

D) selling expense.

42) Which of the following is NOT a period cost?

A) Depreciation of factory maintenance equipment.

B) Salary of a clerk who handles customer billing.

C) Insurance on a company showroom where customers can view new products.

D) Cost of a seminar concerning tax law updates that was attended by the company’s

controller.

43) The cost of electricity for running production equipment is classified as:

Conversion cost Period cost

A) Yes No

B) Yes Yes

C) No Yes

D) No No

A) Choice A

B) Choice B

C) Choice C

D) Choice D

44) The cost of lubricants used to grease a production machine in a manufacturing company

is an example of a(n):

Version 1 27

A) period cost.

B) direct material cost.

C) indirect material cost.

D) opportunity cost.

45) Wages paid to the supervisor of the warehouse where raw materials and parts are

temporarily stored before being used in production is considered an example of:

Direct Labor Period Cost

A) Yes Yes

B) Yes No

C) No Yes

D) No No

A) Choice A

B) Choice B

C) Choice C

D) Choice D

46) A factory supervisor’s wages are classified as:

Indirect labor Fixed manufacturing overhead

A) No No

B) Yes Yes

C) Yes No

D) No Yes

A) Choice A

B) Choice B

C) Choice C

D) Choice D

47) Product costs that have become expenses can be found in:

Version 1 28

A) period costs.

B) selling expenses.

C) cost of goods sold.

D) administrative expenses.

48) The cost of direct materials is classified as a:

Conversion cost Prime cost

A) No No

B) Yes No

C) No Yes

D) Yes Yes

A) Choice A

B) Choice B

C) Choice C

D) Choice D

49) Which of the following costs is classified as both a prime cost and a conversion cost?

A) Direct materials.

B) Direct labor.

C) Variable overhead.

D) Fixed overhead.

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

A) Fabric used to produce men’s pants.

B) Advertising cost for a new line of clothing.

C) Factory supervisor’s salary.

D) Monthly depreciation on production equipment.

Version 1 29

51) All of the following are examples of product costs except:

A) depreciation on the company’s retail outlets.

B) salary of the plant manager.

C) insurance on the factory equipment.

D) rental costs of factory equipment.

52) Which of the following statements about product costs is true?

A) Product costs are deducted from revenue when the production process is completed.

B) Product costs are deducted from revenue as expenditures are made.

C) Product costs associated with unsold finished goods and work in process appear on

the balance sheet as assets.

D) Product costs appear on financial statements only when products are sold.

53) Which of the following statements is correct in describing manufacturing overhead?

A) Manufacturing overhead when combined with direct materials cost forms conversion

cost.

B) Manufacturing overhead consists of all manufacturing cost except for prime cost.

C) Manufacturing overhead is a period cost.

D) Manufacturing overhead when combined with direct labor cost forms prime cost.

54) Direct labor cost is classified as:

Conversion cost Prime Cost

A) Yes Yes

B) No No

C) No Yes

D) Yes No

Version 1 30

A) Choice A

B) Choice B

C) Choice C

D) Choice D

55) The fixed portion of the cost of electricity for a manufacturing facility is classified as a:

Period cost Product Cost

A) Yes Yes

B) No No

C) No Yes

D) Yes No

A) Choice A

B) Choice B

C) Choice C

D) Choice D

56) Prime cost consists of:

A) direct labor and manufacturing overhead.

B) direct materials and manufacturing overhead.

C) direct materials and direct labor.

D) direct materials, direct labor and manufacturing overhead.

57) Depreciation on a personal computer used in the marketing department of a

manufacturing company would be classified as:

Version 1 31

A) a product cost that is fixed with respect to the company’s output.

B) a period cost that is fixed with respect to the company’s output.

C) a product cost that is variable with respect to the company’s output.

D) a period cost that is variable with respect to the company’s output.

58) Property taxes on a company’s factory building would be classified as a(n):

A) product cost.

B) opportunity cost.

C) period cost.

D) variable cost.

59) Factory overhead is typically a(n):

A) mixed cost.

B) fixed cost.

C) variable cost.

D) irrelevant cost.

60) As the level of activity increases, how will a mixed cost in total and per unit behave?

In Total Per Unit

A) Increase Decrease

B) Increase Increase

C) Increase No effect

D) Decrease Increase

E) Decrease No effect

Version 1 32

A) Choice A

B) Choice B

C) Choice C

D) Choice D

E) Choice E

61) The following data have been collected for four different cost items.

Cost Item Cost at 100 units Cost at 140 units

W $ 8,000 $ 10,560

X $ 5,000 $ 5,000

Y $ 6,500 $ 9,100

Z $ 6,700 $ 8,580

Which of the following classifications of these cost items by cost behavior is correct?

Cost W Cost X Cost Y Cost Z

A) variable fixed mixed variable

B) mixed fixed variable mixed

C) variable fixed variable variable

D) mixed fixed mixed mixed

A) Choice A

B) Choice B

C) Choice C

D) Choice D

62) Within the relevant range, variable costs can be expected to:

A) vary in total in direct proportion to changes in the activity level.

B) remain constant in total as the activity level changes.

C) increase on a per unit basis as the activity level increases.

D) increase on a per unit basis as the activity level decreases.

Version 1 33

63) The relative proportion of variable, fixed, and mixed costs in a company is known as the

company’s:

A) contribution margin.

B) cost structure.

C) product mix.

D) relevant range.

64) An example of a committed fixed cost is:

A) management training seminars.

B) a long-term equipment lease.

C) research and development.

D) advertising.

65) For the past 8 months, Jinan Corporation has experienced a steady increase in its cost per

unit even though total costs have remained stable. This cost per unit increase may be due to

_____________ costs if the level of activity at Jinan is _______________.

A) fixed, decreasing

B) fixed, increasing

C) variable, decreasing

D) variable, increasing

66) Which of the following statements is true when referring to fixed costs?

Version 1 34

A) Committed fixed costs arise from the annual decisions by management.

B) As volume increases, unit fixed cost and total fixed cost will change.

C) Fixed costs increase in total throughout the relevant range.

D) Discretionary fixed costs can often be reduced to zero for short periods of time

without seriously impairing the long-run goals of the company.

67) Which costs will change with a decrease in activity within the relevant range?

A) Total fixed costs and total variable cost.

B) Unit fixed costs and total variable cost.

C) Unit variable cost and unit fixed cost.

D) Unit fixed cost and total fixed cost.

68) Which of the following is correct concerning reactions to INCREASES in activity?

Total Variable Cost Variable Cost Per Unit

A) Increases Decreases

B) Constant Decreases

C) Decreases Constant

D) Increases Constant

Garrison 17e Rechecks 2020-09-09

A) Choice A

B) Choice B

C) Choice C

D) Choice D

69) For an automobile manufacturer, the cost of a driver’s side air bag purchased from a

supplier and installed in every automobile would best be described as a:

Version 1 35

A) fixed cost.

B) mixed cost.

C) step-variable cost.

D) variable cost.

70) Fixed costs expressed on a per unit basis:

A) increase with increases in activity.

B) decrease with increases in activity.

C) are not affected by activity.

D) should be ignored in making decisions since they cannot change.

71) Within the relevant range, a difference between variable costs and fixed costs is:

A) variable costs per unit fluctuate and fixed costs per unit remain constant.

B) variable costs per unit are constant and fixed costs per unit fluctuate.

C) both total variable costs and total fixed costs are constant.

D) both total variable costs and total fixed costs fluctuate.

72) A merchandising company typically will have a high proportion of which type of cost in

its cost structure?

A) Variable.

B) Fixed.

C) Mixed.

D) Step-variable.

Version 1 36

73) When the level of activity decreases within the relevant range, the fixed cost per unit will:

A) decrease.

B) increase.

C) remain the same.

D) The effect cannot be predicted.

74) Which of the following production costs, if expressed on a per unit basis, would be most

likely to change significantly as the production level varies?

A) Direct materials.

B) Direct labor.

C) Fixed manufacturing overhead.

D) Variable costs.

75) In the standard cost formula Y = a + bX, what does the “Y” represent?

A) total cost

B) total fixed cost

C) total variable cost

D) variable cost per unit

76) An example of a committed fixed cost would be:

A) taxes on real estate.

B) management development programs.

C) public relations costs.

D) advertising programs.

Version 1 37

77) In the standard cost formula Y = a + bX, what does the “X” represent?

A) total cost

B) total fixed cost

C) the level of activity

D) variable cost per unit

78) One full-time clerical worker is needed for every 750 accounts receivable. The total

wages of the accounts receivable clerks is an example of a:

A) fixed cost.

B) step-variable cost.

C) mixed cost.

D) curvilinear cost.

79) Which of the following is unlikely to be classified as a fixed cost with respect to the

number of units produced and sold?

A) Property taxes on a headquarters building.

B) Legal department salaries.

C) Cost of leasing the company’s mainframe computer.

D) Production supplies.

80) Which of the following costs could contain both variable and fixed cost elements with

respect to the total output of the company?

Version 1 38

A) Sales commissions.

B) Manufacturing overhead.

C) Direct materials.

D) Administrative salaries.

81) 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.

82) 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.

83) Differential costs can:

A) only be fixed costs.

B) only be variable costs.

C) be either fixed or variable.

D) be sunk costs.

84) All of the following can be differential costs except:

Version 1 39

A) variable costs.

B) sunk costs.

C) opportunity costs.

D) fixed costs.

85) 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.

86) 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

87) 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

Version 1 40

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

88) 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

89) Norred Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 7.05

Direct labor $ 3.70

Version 1 41

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

90) 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

91) The following costs were incurred in May:

Direct materials $ 39,400

Direct labor $ 34,000

Manufacturing overhead $ 21,600

Version 1 42

Selling expenses $ 19,700

Administrative expenses $ 38,600

Conversion costs during the month totaled:

A) $61,000

B) $153,300

C) $73,400

D) $55,600

92) 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

93) Abburi Company’s manufacturing overhead is 40% of its total conversion costs. If direct

labor is $86,400 and if direct materials are $23,200, the manufacturing overhead is:

A) $57,600

B) $129,600

C) $15,467

D) $73,067

Version 1 43

94) 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

95) During the month of May, direct labor cost totaled $13,600 and direct labor cost was 40%

of prime cost. If total manufacturing costs during May were $78,700, the manufacturing

overhead was:

A) $20,400

B) $34,000

C) $65,100

D) $44,700

96) 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

97) In May direct labor was 45% of conversion cost. If the manufacturing overhead for the

month was $73,700 and the direct materials cost was $25,200, the direct labor cost was:

Version 1 44

A) $90,078

B) $60,300

C) $30,800

D) $20,618

98) 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

99) The following costs were incurred in May:

Direct materials $ 39,700

Direct labor $ 23,200

Manufacturing overhead $ 24,000

Selling expenses $ 20,300

Administrative expense $ 33,900

Prime costs during the month totaled:

A) $86,900

B) $141,100

C) $62,900

D) $47,200

100) 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

Version 1 45

Prime costs during the month totaled:

A) $36,000

B) $119,000

C) $69,000

D) $46,000

101) 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

102) Perteet Corporation’s relevant range of activity is 6,300 units to 12,500 units. When it

produces and sells 9,400 units, its average costs per unit are as follows:

Average Cost per Unit

Direct materials $ 7.20

Direct labor $ 3.65

Variable manufacturing overhead $ 1.70

Fixed manufacturing overhead $ 2.90

Fixed selling expense $ 0.65

Fixed administrative expense $ 0.35

Sales commissions $ 0.45

Variable administrative expense $ 0.50

Version 1 46

If 7,000 units are produced, the total amount of manufacturing overhead cost is closest to:

A) $28,520

B) $49,890

C) $39,160

D) $22,010

103) 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

104) A manufacturing company prepays its insurance coverage for a three-year period. The

premium for the three years is $2,790 and is paid at the beginning of the first year. Seventy

percent of the premium applies to manufacturing operations and thirty 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) $ 279 $ 651

B) $ 930 $ 0

C) $ 0 $ 930

D) $ 651 $ 279

Version 1 47

A) Choice A

B) Choice B

C) Choice C

D) Choice D

105) 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

106) 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:

Version 1 48

A) $33,000

B) $9,000

C) $40,500

D) $49,500

107) 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

108) 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

Version 1 49

For financial reporting purposes, the total amount of product costs incurred to make 5,000 units

is closest to:

A) $55,750

B) $65,750

C) $10,000

D) $70,750

109) 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

110) 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. (Round intermediate calculations to 2 decimal places.)

Version 1 50

A) $1,197,658

B) $1,191,000

C) $1,179,090

D) $1,202,910

111) Wofril Corporation uses the cost formula Y = $5,300 + $0.60X for the maintenance cost,

where X is machine-hours. The August budget is based on 8,000 hours of planned machine time.

Maintenance cost expected to be incurred during August is:

A) $10,100

B) $4,800

C) $500

D) $5,300

112) At an activity level of 8,500 machine-hours in a month, Falks Corporation’s total variable

production engineering cost is $748,850 and its total fixed production engineering cost is

$177,760. What would be the total production engineering cost per machine-hour, both fixed and

variable, at an activity level of 8,800 machine-hours in a month? Assume that this level of

activity is within the relevant range. (Round intermediate calculations to 2 decimal places.)

A) $105.30

B) $109.01

C) $108.30

D) $105.65

113) At an activity level of 7,200 machine-hours in a month, Falks Corporation’s total variable

production engineering cost is $556,416 and its total fixed production engineering cost is

$226,008. What would be the total production engineering cost per machine-hour, both fixed and

variable, at an activity level of 7,300 machine-hours in a month? Assume that this level of

activity is within the relevant range. (Round intermediate calculations to 2 decimal places.)

Version 1 51

A) $107.93

B) $107.18

C) $108.67

D) $108.24

114) Mullennex 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 $ 6.55

Direct labor $ 3.50

Variable manufacturing overhead $ 1.25

Fixed manufacturing overhead $ 3.00

Fixed selling expense $ 0.50

Fixed administrative expense $ 0.40

Sales commissions $ 1.50

Variable administrative expense $ 0.40

If 5,000 units are produced, the average fixed manufacturing cost per unit produced is closest to:

A) $2.40

B) $2.70

C) $3.00

D) $3.75

115) Brault Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.85

Direct labor $ 3.85

Variable manufacturing overhead $ 1.25

Fixed manufacturing overhead $ 97,200

Sales commissions $ 1.00

Variable administrative expense $ 0.55

Fixed selling and administrative expense $ 40,500

If 10,000 units are sold, the variable cost per unit sold is closest to:

Version 1 52

A) $22.75

B) $11.95

C) $13.50

D) $28.80

116) Given the cost formula, Y = $16,000 + $3.40X, total cost for an activity level of 4,000

units would be:

A) $13,600

B) $3,600

C) $29,600

D) $16,000

117) Sparacino Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.90

Direct labor $ 3.90

Variable manufacturing overhead $ 1.70

Fixed manufacturing overhead $ 25,200

Sales commissions $ 1.50

Variable administrative expense $ 0.55

Fixed selling and administrative expense $ 8,100

If 5,000 units are produced, the total amount of manufacturing overhead cost is closest to:

A) $24,750

B) $42,650

C) $33,700

D) $29,225

Version 1 53

118) Given the cost formula Y = $23,000 + $8X, total cost at an activity level of 7,000 units

would be:

A) $33,000

B) $79,000

C) $23,000

D) $56,000

119) 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.)

A) $1,175,210

B) $1,169,685

C) $1,161,384

D) $1,168,297

120) The following data pertains to activity and costs for two months:

June July

Activity level in units 10,000 11,000

Direct materials $ 17,000 $ ?

Fixed factory rent 21,000 ?

Other production costs 20,000 ?

Total cost $ 58,000 $ 61,300

Assuming that these activity levels are within the relevant range, the other production costs for

July were: (Round intermediate calculations to 2 decimal places.)

A) $21,600

B) $20,000

C) $22,000

D) $19,500

Version 1 54

121) Paolucci Corporation’s relevant range of activity is 4,500 units to 10,500 units. When it

produces and sells 7,500 units, its average costs per unit are as follows:

Average Cost per Unit

Direct materials $ 6.45

Direct labor $ 3.35

Variable manufacturing overhead $ 1.35

Fixed manufacturing overhead $ 3.80

Fixed selling expense $ 1.30

Fixed administrative expense $ 0.85

Sales commissions $ 1.25

Variable administrative expense $ 0.75

If 6,500 units are sold, the variable cost per unit sold is closest to:

A) $19.10

B) $11.15

C) $14.95

D) $13.15

122) Paolucci Corporation’s relevant range of activity is 4,000 units to 8,000 units. When it

produces and sells 6,000 units, its average costs per unit are as follows:

Average Cost per Unit

Direct materials $ 6.45

Direct labor $ 3.30

Variable manufacturing overhead $ 1.25

Fixed manufacturing overhead $ 3.00

Fixed selling expense $ 1.05

Fixed administrative expense $ 0.60

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) $17.15

B) $11.00

C) $14.00

D) $12.50

Version 1 55

123) Schonhardt Corporation’s relevant range of activity is 3,500 units to 8,500 units. When it

produces and sells 6,000 units, its average costs per unit are as follows:

Average Cost per Unit

Direct materials $ 7.30

Direct labor $ 3.60

Variable manufacturing overhead $ 1.35

Fixed manufacturing overhead $ 3.30

Fixed selling expense $ 0.95

Fixed administrative expense $ 0.65

Sales commissions $ 0.75

Variable administrative expense $ 0.65

If 7,500 units are produced, the total amount of fixed manufacturing cost incurred is closest to:

A) $29,400

B) $25,500

C) $23,100

D) $19,800

124) Schonhardt 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 $ 7.15

Direct labor $ 3.40

Variable manufacturing overhead $ 1.35

Fixed manufacturing overhead $ 2.80

Fixed selling expense $ 0.70

Fixed administrative expense $ 0.40

Sales commissions $ 0.50

Variable administrative expense $ 0.40

If 5,000 units are produced, the total amount of fixed manufacturing cost incurred is closest to:

A) $16,800

B) $14,000

C) $12,600

D) $11,200

Version 1 56

125) 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.)

A) $35,600

B) $21,600

C) $32,000

D) $18,000

126) 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:

Average Cost per Unit

Direct materials $ 6.10

Direct labor $ 3.45

Variable manufacturing overhead $ 1.75

Fixed manufacturing overhead $ 3.30

Fixed selling expense $ 0.75

Fixed administrative expense $ 0.60

Sales commissions $ 1.50

Variable administrative expense $ 0.45

If 6,000 units are sold, the total variable cost is closest to:

A) $79,500

B) $107,400

C) $67,800

D) $87,600

127) Comparative income statements for Boggs Sports Equipment Company for the last two

months are presented below:

July August

Sales in units 11,000 10,000

Sales $ 165,000 $ 150,000

Cost of goods sold 72,600 66,000

Version 1 57

Gross margin 92,400 84,000

Selling and administrative expenses:

Rent $ 12,000 $ 12,000

Sales commissions $ 13,200 $ 12,000

Maintenance expenses $ 13,500 $ 13,000

Clerical expense $ 16,000 $ 15,000

Total selling and administrative expenses $ 54,700 $ 52,000

Net operating income $ 37,700 $ 32,000

All of the company’s costs are either fixed, variable, or a mixture of the two (i.e., mixed).

Assume that the relevant range includes all of the activity levels mentioned in this problem.

Which of the selling and administrative expenses of the company is variable?

A) Rent

B) Sales Commissions

C) Maintenance Expense

D) Clerical Expense

128) Tirri Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 7.10

Direct labor $ 4.30

Variable manufacturing overhead $ 1.60

Fixed manufacturing overhead $ 23,600

Sales commissions $ 1.20

Variable administrative expense $ 0.45

Fixed selling and administrative expense $ 8,000

If the selling price is $27.30 per unit, the contribution margin per unit sold is closest to:

A) $12.65

B) $7.40

C) $15.90

D) $10.50

Version 1 58

129) Tirri Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.85

Direct labor $ 3.90

Variable manufacturing overhead $ 1.25

Fixed manufacturing overhead $ 22,500

Sales commissions $ 1.00

Variable administrative expense $ 0.55

Fixed selling and administrative expense $ 7,500

If the selling price is $26.20 per unit, the contribution margin per unit sold is closest to:

A) $12.65

B) $6.65

C) $15.45

D) $9.70

130) Macy Corporation’s relevant range of activity is 4,200 units to 10,000 units. When it

produces and sells 7,100 units, its average costs per unit are as follows:

Average Cost per Unit

Direct materials $ 4.85

Direct labor $ 3.30

Variable manufacturing overhead $ 1.30

Fixed manufacturing overhead $ 3.70

Fixed selling expense $ 1.25

Fixed administrative expense $ 0.80

Sales commissions $ 1.20

Variable administrative expense $ 0.70

If the selling price is $25.50 per unit, the contribution margin per unit sold is closest to:

A) $9.45

B) $6.80

C) $17.35

D) $14.15

Version 1 59

131) Macy Corporation’s relevant range of activity is 4,000 units to 8,000 units. When it

produces and sells 6,000 units, its average costs per unit are as follows:

Average Cost per Unit

Direct materials $ 4.95

Direct labor $ 3.25

Variable manufacturing overhead $ 1.45

Fixed manufacturing overhead $ 4.20

Fixed selling expense $ 1.05

Fixed administrative expense $ 0.60

Sales commissions $ 1.00

Variable administrative expense $ 0.50

If the selling price is $23.50 per unit, the contribution margin per unit sold is closest to:

A) $9.65

B) $6.50

C) $15.30

D) $12.35

132) Bellucci Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.85

Direct labor $ 3.80

Variable manufacturing overhead $ 1.35

Fixed manufacturing overhead $ 108,000

Sales commissions $ 1.30

Variable administrative expense $ 0.65

Fixed selling and administrative expense $ 39,150

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):

Version 1 60

A) $26.00

B) $12.00

C) $30.30

D) $24.00

133) Bellucci Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 7.10

Direct labor $ 3.95

Variable manufacturing overhead $ 1.75

Fixed manufacturing overhead $ 105,300

Sales commissions $ 1.00

Variable administrative expense $ 0.50

Fixed selling and administrative expense $ 36,450

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) $26.75

B) $12.80

C) $30.05

D) $24.50

134) Fiori Corporation’s relevant range of activity is 2,300 units to 7,500 units. When it

produces and sells 4,900 units, its average costs per unit are as follows:

Average Cost per Unit

Direct materials $ 6.10

Direct labor $ 3.10

Variable manufacturing overhead $ 1.80

Fixed manufacturing overhead $ 3.00

Fixed selling expense $ 0.55

Fixed administrative expense $ 0.45

Sales commissions $ 1.10

Version 1 61

Variable administrative expense $ 0.60

The incremental manufacturing cost that the company will incur if it increases production from

6,500 to 6,501 units is closest to:

A) $16.70

B) $11.00

C) $14.00

D) $14.55

135) Fiori 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 $ 6.05

Direct labor $ 3.05

Variable manufacturing overhead $ 1.70

Fixed manufacturing overhead $ 3.00

Fixed selling expense $ 0.50

Fixed administrative expense $ 0.40

Sales commissions $ 1.00

Variable administrative expense $ 0.50

The incremental manufacturing cost that the company will incur if it increases production from

5,000 to 5,001 units is closest to:

A) $16.20

B) $10.80

C) $13.80

D) $14.30

136) Haack Incorporated is a merchandising company. Last month the company’s cost of

goods sold was $62,600. The company’s beginning merchandise inventory was $16,600 and its

ending merchandise inventory was $25,200. What was the total amount of the company’s

merchandise purchases for the month?

Version 1 62

A) $62,600

B) $54,000

C) $71,200

D) $104,400

137) Haack Incorporated is a merchandising company. Last month the company’s cost of

goods sold was $84,000. The company’s beginning merchandise inventory was $20,000 and its

ending merchandise inventory was $18,000. What was the total amount of the company’s

merchandise purchases for the month?

A) $86,000

B) $82,000

C) $84,000

D) $122,000

138) Gabel Incorporated is a merchandising company. Last month the company’s merchandise

purchases totaled $63,000. The company’s beginning merchandise inventory was $13,000 and its

ending merchandise inventory was $15,000. What was the company’s cost of goods sold for the

month?

A) $91,000

B) $63,000

C) $65,000

D) $61,000

139) The following cost data pertain to the operations of Quinonez Department Stores,

Incorporated, for the month of September.

Corporate headquarters building lease $ 85,600

Cosmetics Department sales commissions-Northridge Store $ 5,740

Corporate legal office salaries $ 66,500

Store manager’s salary-Northridge Store $ 18,800

Version 1 63

Heating-Northridge Store $ 17,500

Cosmetics Department cost of sales-Northridge Store $ 33,000

Central warehouse lease cost $ 8,100

Store security-Northridge Store $ 16,600

Cosmetics Department manager’s salary–Northridge Store $ 4,620

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?

A) $96,260

B) $43,360

C) $38,740

D) $33,000

140) The following cost data pertain to the operations of Quinonez Department Stores,

Incorporated, for the month of September.

Corporate headquarters building lease $ 77,000

Cosmetics Department sales commissions-Northridge Store $ 4,000

Corporate legal office salaries $ 59,000

Store manager’s salary-Northridge Store $ 11,000

Heating-Northridge Store $ 10,000

Cosmetics Department cost of sales-Northridge Store $ 37,000

Central warehouse lease cost $ 16,000

Store security-Northridge Store $ 12,000

Cosmetics Department manager’s salary–Northridge Store $ 4,000

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?

A) $78,000

B) $45,000

C) $41,000

D) $37,000

Version 1 64

141) The following cost data pertain to the operations of Quinonez Department Stores,

Incorporated, for the month of September.

Corporate headquarters building lease $ 80,100

Cosmetics Department sales commissions-Northridge Store $ 5,680

Corporate legal office salaries $ 61,900

Store manager’s salary-Northridge Store $ 19,200

Heating-Northridge Store $ 13,100

Cosmetics Department cost of sales-Northridge Store $ 38,700

Central warehouse lease cost $ 8,600

Store security-Northridge Store $ 21,100

Cosmetics Department manager’s salary–Northridge Store $ 4,460

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 NOT direct costs of the Northridge

Store?

Garrison 17e Rechecks 2020-09-09

A) $150,600

B) $53,400

C) $48,840

D) $80,100

142) The following cost data pertain to the operations of Quinonez Department Stores,

Incorporated, for the month of September.

Corporate headquarters building lease $ 77,000

Cosmetics Department sales commissions-Northridge Store $ 4,000

Corporate legal office salaries $ 59,000

Store manager’s salary-Northridge Store $ 11,000

Heating-Northridge Store $ 10,000

Cosmetics Department cost of sales-Northridge Store $ 37,000

Central warehouse lease cost $ 16,000

Store security-Northridge Store $ 12,000

Cosmetics Department manager’s salary–Northridge Store $ 4,000

Version 1 65

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 NOT direct costs of the Northridge

Store?

A) $152,000

B) $33,000

C) $45,000

D) $77,000

143) The following cost data pertain to the operations of Ladwig Department Stores,

Incorporated, for the month of December.

Corporate legal office salaries $ 68,000

Shoe Department cost of sales-Brentwood Store $ 66,000

Corporate headquarters building lease $ 86,000

Store manager’s salary-Brentwood Store $ 10,000

Shoe Department sales commissions-Brentwood Store $ 5,000

Store utilities-Brentwood Store $ 11,000

Shoe Department manager’s salary-Brentwood Store $ 3,000

Central warehouse lease cost $ 3,000

Janitorial costs-Brentwood Store $ 11,000

The Brentwood Store is just one of many stores owned and operated by the company. The Shoe

Department is one of many departments at the Brentwood 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 Shoe Department?

A) $66,000

B) $74,000

C) $106,000

D) $71,000

144) The following cost data pertain to the operations of Ladwig Department Stores,

Incorporated, for the month of December.

Corporate legal office salaries $ 68,000

Shoe Department cost of sales-Brentwood Store $ 66,000

Version 1 66

Corporate headquarters building lease $ 86,000

Store manager’s salary-Brentwood Store $ 10,000

Shoe Department sales commissions-Brentwood Store $ 5,000

Store utilities-Brentwood Store $ 11,000

Shoe Department manager’s salary-Brentwood Store $ 3,000

Central warehouse lease cost $ 3,000

Janitorial costs-Brentwood Store $ 11,000

The Brentwood Store is just one of many stores owned and operated by the company. The Shoe

Department is one of many departments at the Brentwood Store. The central warehouse serves

all of the company’s stores.

What is the total amount of the costs listed above that are NOT direct costs of the Brentwood

Store?

A) $74,000

B) $32,000

C) $157,000

D) $86,000

145) Dake Corporation’s relevant range of activity is 3,000 units to 5,000 units. When it

produces and sells 4,000 units, its average costs per unit are as follows:

Average Cost per Unit

Direct materials $ 6.45

Direct labor $ 3.60

Variable manufacturing overhead $ 2.05

Fixed manufacturing overhead $ 2.60

Fixed selling expense $ 0.95

Fixed administrative expense $ 0.65

Sales commissions $ 0.75

Variable administrative expense $ 0.65

For financial reporting purposes, the total amount of product costs incurred to make 4,000 units

is closest to:

A) $58,800

B) $48,400

C) $62,800

D) $10,400

Version 1 67

146) Dake 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 $ 6.55

Direct labor $ 3.50

Variable manufacturing overhead $ 1.40

Fixed manufacturing overhead $ 2.60

Fixed selling expense $ 0.70

Fixed administrative expense $ 0.40

Sales commissions $ 1.50

Variable administrative expense $ 0.45

For financial reporting purposes, the total amount of product costs incurred to make 4,000 units

is closest to:

A) $56,200

B) $45,800

C) $60,200

D) $10,400

147) Dake 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 $ 6.55

Direct labor $ 3.50

Variable manufacturing overhead $ 1.40

Fixed manufacturing overhead $ 2.60

Fixed selling expense $ 0.70

Fixed administrative expense $ 0.40

Sales commissions $ 1.50

Variable administrative expense $ 0.45

For financial reporting purposes, the total amount of period costs incurred to sell 4,000 units is

closest to:

Version 1 68

A) $7,800

B) $8,100

C) $4,400

D) $12,200

148) Dake Corporation’s relevant range of activity is 2,500 units to 5,500 units. When it

produces and sells 4,000 units, its average costs per unit are as follows:

Average Cost per Unit

Direct materials $ 6.90

Direct labor $ 2.90

Variable manufacturing overhead $ 1.65

Fixed manufacturing overhead $ 2.90

Fixed selling expense $ 0.95

Fixed administrative expense $ 0.65

Sales commissions $ 0.75

Variable administrative expense $ 0.65

If 3,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

A) $29,400

B) $34,350

C) $43,050

D) $36,450

149) Dake 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 $ 6.55

Direct labor $ 3.50

Variable manufacturing overhead $ 1.40

Fixed manufacturing overhead $ 2.60

Fixed selling expense $ 0.70

Fixed administrative expense $ 0.40

Sales commissions $ 1.50

Variable administrative expense $ 0.45

If 3,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

Version 1 69

A) $30,150

B) $34,350

C) $42,150

D) $34,650

150) Dake Corporation’s relevant range of activity is 2,300 units to 5,500 units. When it

produces and sells 3,900 units, its average costs per unit are as follows:

Average Cost per Unit

Direct materials $ 6.80

Direct labor $ 4.00

Variable manufacturing overhead $ 1.55

Fixed manufacturing overhead $ 2.50

Fixed selling expense $ 1.15

Fixed administrative expense $ 0.85

Sales commissions $ 0.95

Variable administrative expense $ 0.85

If 2,900 units are produced, the total amount of indirect manufacturing cost incurred is closest to:

A) $4,495

B) $9,750

C) $14,245

D) $11,745

151) Dake 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 $ 6.55

Direct labor $ 3.50

Variable manufacturing overhead $ 1.40

Fixed manufacturing overhead $ 2.60

Fixed selling expense $ 0.70

Fixed administrative expense $ 0.40

Sales commissions $ 1.50

Variable administrative expense $ 0.45

If 3,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:

Version 1 70

A) $4,200

B) $10,400

C) $14,600

D) $12,000

152) Glew Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.00

Direct labor $ 3.35

Variable manufacturing overhead $ 1.75

Fixed manufacturing overhead $ 8,800

Sales commissions $ 1.00

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 4,000

For financial reporting purposes, the total amount of product costs incurred to make 4,000 units

is closest to:

A) $57,200

B) $8,800

C) $44,400

D) $53,200

153) Glew Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.00

Direct labor $ 3.35

Variable manufacturing overhead $ 1.75

Fixed manufacturing overhead $ 8,800

Sales commissions $ 1.00

Variable administrative expense $ 0.40

Version 1 71

Fixed selling and administrative expense $ 4,000

For financial reporting purposes, the total amount of period costs incurred to sell 4,000 units is

closest to:

A) $6,400

B) $9,600

C) $4,000

D) $5,600

154) Glew Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.00

Direct labor $ 3.35

Variable manufacturing overhead $ 1.75

Fixed manufacturing overhead $ 8,800

Sales commissions $ 1.00

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 4,000

If 3,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

A) $33,300

B) $31,050

C) $28,050

D) $39,900

155) Glew Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.00

Direct labor $ 3.35

Variable manufacturing overhead $ 1.75

Fixed manufacturing overhead $ 8,800

Sales commissions $ 1.00

Version 1 72

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 4,000

If 3,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:

A) $5,250

B) $11,850

C) $8,800

D) $14,050

156) Schwiesow Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 7.05

Direct labor $ 3.50

Variable manufacturing overhead $ 1.65

Fixed manufacturing overhead $ 11,000

Sales commissions $ 1.00

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 5,500

For financial reporting purposes, the total amount of product costs incurred to make 5,000 units

is closest to:

A) $72,000

B) $77,000

C) $11,000

D) $61,000

157) Schwiesow Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 7.05

Direct labor $ 3.50

Variable manufacturing overhead $ 1.65

Version 1 73

Fixed manufacturing overhead $ 11,000

Sales commissions $ 1.00

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 5,500

For financial reporting purposes, the total amount of period costs incurred to sell 5,000 units is

closest to:

A) $12,500

B) $8,300

C) $7,000

D) $5,500

158) Schwiesow Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 7.05

Direct labor $ 3.50

Variable manufacturing overhead $ 1.65

Fixed manufacturing overhead $ 11,000

Sales commissions $ 1.00

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 5,500

If 4,000 units are sold, the variable cost per unit sold is closest to:

A) $13.60

B) $12.20

C) $14.40

D) $16.90

159) Schwiesow Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 7.05

Direct labor $ 3.50

Version 1 74

Variable manufacturing overhead $ 1.65

Fixed manufacturing overhead $ 11,000

Sales commissions $ 1.00

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 5,500

If 4,000 units are sold, the total variable cost is closest to:

A) $54,400

B) $48,800

C) $57,600

D) $67,600

160) Schwiesow Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 7.95

Direct labor $ 4.10

Variable manufacturing overhead $ 1.55

Fixed manufacturing overhead $ 16,500

Sales commissions $ 1.00

Variable administrative expense $ 0.30

Fixed selling and administrative expense $ 6,700

If 6,000 units are produced, the total amount of manufacturing overhead cost is closest to:

A) $21,300

B) $25,800

C) $16,800

D) $38,400

161) Schwiesow Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 7.05

Version 1 75

Direct labor $ 3.50

Variable manufacturing overhead $ 1.65

Fixed manufacturing overhead $ 11,000

Sales commissions $ 1.00

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 5,500

If 4,000 units are produced, the total amount of manufacturing overhead cost is closest to:

A) $14,600

B) $17,600

C) $11,600

D) $23,600

162) Schwiesow Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 7.05

Direct labor $ 3.50

Variable manufacturing overhead $ 1.65

Fixed manufacturing overhead $ 11,000

Sales commissions $ 1.00

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 5,500

If the selling price is $18.70 per unit, the contribution margin per unit sold is closest to:

A) $5.10

B) $1.80

C) $4.30

D) $8.15

163) Schwiesow Corporation has provided the following information:

Cost per Unit Cost per Period

Version 1 76

Direct materials $ 7.05

Direct labor $ 3.50

Variable manufacturing overhead $ 1.65

Fixed manufacturing overhead $ 11,000

Sales commissions $ 1.00

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 5,500

If 6,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

A) $73,200

B) $69,300

C) $86,400

D) $63,300

164) Schwiesow Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 7.05

Direct labor $ 3.50

Variable manufacturing overhead $ 1.65

Fixed manufacturing overhead $ 11,000

Sales commissions $ 1.00

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 5,500

If 6,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:

A) $23,100

B) $9,900

C) $11,000

D) $20,900

Version 1 77

165) Schwiesow Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 7.05

Direct labor $ 3.50

Variable manufacturing overhead $ 1.65

Fixed manufacturing overhead $ 11,000

Sales commissions $ 1.00

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 5,500

The incremental manufacturing cost that the company will incur if it increases production from

5,000 to 5,001 units is closest to:

Garrison 17e Rechecks 2020-09-09

A) $14.40

B) $15.10

C) $16.90

D) $12.20

166) Lambeth Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 4.90

Direct labor $ 2.95

Variable manufacturing overhead $ 1.25

Fixed manufacturing overhead $ 8,000

Sales commissions $ 1.00

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 4,000

If 3,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

Version 1 78

A) $26,550

B) $23,550

C) $33,300

D) $27,300

167) Lambeth Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 4.90

Direct labor $ 2.95

Variable manufacturing overhead $ 1.25

Fixed manufacturing overhead $ 8,000

Sales commissions $ 1.00

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 4,000

If 3,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:

A) $8,000

B) $11,750

C) $9,750

D) $3,750

168) Mccaskell 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 $ 6.30

Direct labor $ 3.65

Variable manufacturing overhead $ 1.75

Fixed manufacturing overhead $ 9.90

Fixed selling expense $ 2.25

Fixed administrative expense $ 1.80

Sales commissions $ 1.00

Variable administrative expense $ 0.50

Version 1 79

If 8,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

A) $79,600

B) $93,600

C) $87,600

D) $172,800

169) Mccaskell 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 $ 6.30

Direct labor $ 3.65

Variable manufacturing overhead $ 1.75

Fixed manufacturing overhead $ 9.90

Fixed selling expense $ 2.25

Fixed administrative expense $ 1.80

Sales commissions $ 1.00

Variable administrative expense $ 0.50

If 8,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:

A) $14,000

B) $93,200

C) $89,100

D) $103,100

170) Kesterson Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.20

Direct labor $ 3.10

Variable manufacturing overhead $ 1.35

Fixed manufacturing overhead $ 14,000

Sales commissions $ 1.50

Variable administrative expense $ 0.40

Version 1 80

Fixed selling and administrative expense $ 4,500

If 4,000 units are produced, the total amount of manufacturing overhead cost is closest to:

A) $16,300

B) $25,600

C) $19,400

D) $13,200

171) Kesterson Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.20

Direct labor $ 3.10

Variable manufacturing overhead $ 1.35

Fixed manufacturing overhead $ 14,000

Sales commissions $ 1.50

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 4,500

If the selling price is $21.90 per unit, the contribution margin per unit sold is closest to:

A) $9.35

B) $12.60

C) $8.45

D) $5.65

172) Kesterson Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.20

Direct labor $ 3.10

Variable manufacturing overhead $ 1.35

Fixed manufacturing overhead $ 14,000

Sales commissions $ 1.50

Version 1 81

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 4,500

If 6,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

A) $55,800

B) $63,900

C) $80,700

D) $64,800

173) Kesterson Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.50

Direct labor $ 3.70

Variable manufacturing overhead $ 1.45

Fixed manufacturing overhead $ 23,200

Sales commissions $ 1.70

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 4,800

If 9,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:

A) $13,050

B) $31,440

C) $36,250

D) $23,200

174) Kesterson Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.20

Direct labor $ 3.10

Variable manufacturing overhead $ 1.35

Fixed manufacturing overhead $ 14,000

Version 1 82

Sales commissions $ 1.50

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 4,500

If 6,000 units are produced, the total amount of indirect manufacturing cost incurred is closest to:

A) $8,100

B) $24,900

C) $22,100

D) $14,000

175) Kesterson Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.65

Direct labor $ 4.00

Variable manufacturing overhead $ 1.60

Fixed manufacturing overhead $ 20,900

Sales commissions $ 2.00

Variable administrative expense $ 0.70

Fixed selling and administrative expense $ 5,700

The incremental manufacturing cost that the company will incur if it increases production from

9,500 to 9,501 units is closest to:

A) $12.25

B) $14.20

C) $17.75

D) $16.95

176) Kesterson Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.20

Direct labor $ 3.10

Version 1 83

Variable manufacturing overhead $ 1.35

Fixed manufacturing overhead $ 14,000

Sales commissions $ 1.50

Variable administrative expense $ 0.40

Fixed selling and administrative expense $ 4,500

The incremental manufacturing cost that the company will incur if it increases production from

5,000 to 5,001 units is closest to:

A) $10.65

B) $13.45

C) $16.25

D) $13.95

177) Vignana Corporation manufactures and sells hand-painted clay figurines of popular

sports heroes. Shown below are some of the costs incurred by Vignana for last year:

Cost of clay used in production $ 79,000

Wages paid to the workers who paint the figurines $ 88,000

Wages paid to the sales manager’s secretary $ 40,000

Cost of junk mail advertising $ 57,000

What is the total of the direct costs above?

A) $79,000

B) $128,000

C) $167,000

D) $224,000

178) Vignana Corporation manufactures and sells hand-painted clay figurines of popular

sports heroes. Shown below are some of the costs incurred by Vignana for last year:

Cost of clay used in production $ 65,000

Wages paid to the workers who paint the figurines $ 90,000

Wages paid to the sales manager’s secretary $ 22,000

Cost of junk mail advertising $ 47,000

What is the total of the direct costs above?

Version 1 84

A) $65,000

B) $112,000

C) $155,000

D) $202,000

179) Vignana Corporation manufactures and sells hand-painted clay figurines of popular

sports heroes. Shown below are some of the costs incurred by Vignana for last year:

Cost of clay used in production $ 64,000

Wages paid to the workers who paint the figurines $ 93,000

Wages paid to the sales manager’s secretary $ 25,000

Cost of junk mail advertising $ 42,000

What is the total of the product costs above?

A) $0

B) $67,000

C) $157,000

D) $160,000

180) Vignana Corporation manufactures and sells hand-painted clay figurines of popular

sports heroes. Shown below are some of the costs incurred by Vignana for last year:

Cost of clay used in production $ 65,000

Wages paid to the workers who paint the figurines $ 90,000

Wages paid to the sales manager’s secretary $ 22,000

Cost of junk mail advertising $ 47,000

What is the total of the product costs above?

A) $0

B) $69,000

C) $155,000

D) $159,000

Version 1 85

181) Vignana Corporation manufactures and sells hand-painted clay figurines of popular

sports heroes. Shown below are some of the costs incurred by Vignana for last year:

Cost of clay used in production $ 83,000

Wages paid to the workers who paint the figurines $ 90,000

Wages paid to the sales manager’s secretary $ 42,000

Cost of junk mail advertising $ 59,000

What is the total of the conversion costs above?

A) $83,000

B) $101,000

C) $90,000

D) $173,000

182) Vignana Corporation manufactures and sells hand-painted clay figurines of popular

sports heroes. Shown below are some of the costs incurred by Vignana for last year:

Cost of clay used in production $ 65,000

Wages paid to the workers who paint the figurines $ 90,000

Wages paid to the sales manager’s secretary $ 22,000

Cost of junk mail advertising $ 47,000

What is the total of the conversion costs above?

A) $65,000

B) $69,000

C) $90,000

D) $155,000

183) A partial listing of costs incurred at Archut Corporation during September appears below:

Direct materials $ 113,000

Utilities, factory $ 5,000

Administrative salaries $ 81,000

Indirect labor $ 25,000

Sales commissions $ 48,000

Depreciation of production equipment $ 20,000

Depreciation of administrative equipment $ 30,000

Direct labor $ 129,000

Advertising $ 135,000

The total of the manufacturing overhead costs listed above for September is:

Version 1 86

A) $586,000

B) $50,000

C) $292,000

D) $30,000

184) A partial listing of costs incurred at Archut Corporation during September appears below:

Direct materials $ 113,000

Utilities, factory $ 5,000

Administrative salaries $ 81,000

Indirect labor $ 25,000

Sales commissions $ 48,000

Depreciation of production equipment $ 20,000

Depreciation of administrative equipment $ 30,000

Direct labor $ 129,000

Advertising $ 135,000

The total of the product costs listed above for September is:

A) $292,000

B) $294,000

C) $50,000

D) $586,000

185) A partial listing of costs incurred at Archut Corporation during September appears below:

Direct materials $ 113,000

Utilities, factory $ 5,000

Administrative salaries $ 81,000

Indirect labor $ 25,000

Sales commissions $ 48,000

Depreciation of production equipment $ 20,000

Depreciation of administrative equipment $ 30,000

Direct labor $ 129,000

Advertising $ 135,000

The total of the period costs listed above for September is:

Version 1 87

A) $294,000

B) $344,000

C) $292,000

D) $50,000

186) A partial listing of costs incurred during March at Febbo Corporation appears below:

Factory supplies $ 9,000

Administrative wages and salaries $ 85,000

Direct materials $ 126,000

Sales staff salaries $ 30,000

Factory depreciation $ 33,000

Corporate headquarters building rent $ 43,000

Indirect labor $ 26,000

Marketing $ 65,000

Direct labor $ 99,000

The total of the period costs listed above for March is:

A) $68,000

B) $293,000

C) $291,000

D) $223,000

187) A partial listing of costs incurred during March at Febbo Corporation appears below:

Factory supplies $ 9,000

Administrative wages and salaries $ 85,000

Direct materials $ 126,000

Sales staff salaries $ 30,000

Factory depreciation $ 33,000

Corporate headquarters building rent $ 43,000

Indirect labor $ 26,000

Marketing $ 65,000

Direct labor $ 99,000

The total of the manufacturing overhead costs listed above for March is:

Version 1 88

A) $68,000

B) $35,000

C) $516,000

D) $293,000

188) A partial listing of costs incurred during March at Febbo Corporation appears below:

Factory supplies $ 9,000

Administrative wages and salaries $ 85,000

Direct materials $ 126,000

Sales staff salaries $ 30,000

Factory depreciation $ 33,000

Corporate headquarters building rent $ 43,000

Indirect labor $ 26,000

Marketing $ 65,000

Direct labor $ 99,000

The total of the product costs listed above for March is:

A) $516,000

B) $68,000

C) $293,000

D) $223,000

189) Fasheh 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 $ 5.50

Direct labor $ 3.90

Variable manufacturing overhead $ 1.30

Fixed manufacturing overhead $ 13.50

Fixed selling expense $ 2.25

Fixed administrative expense $ 1.80

Sales commissions $ 0.50

Variable administrative expense $ 0.45

If 10,000 units are produced, the average fixed manufacturing cost per unit produced is closest

to:

Version 1 89

A) $15.00

B) $12.83

C) $13.50

D) $12.15

190) Fasheh 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 $ 5.50

Direct labor $ 3.90

Variable manufacturing overhead $ 1.30

Fixed manufacturing overhead $ 13.50

Fixed selling expense $ 2.25

Fixed administrative expense $ 1.80

Sales commissions $ 0.50

Variable administrative expense $ 0.45

If 10,000 units are produced, the total amount of fixed manufacturing cost incurred is closest to:

A) $128,250

B) $121,500

C) $148,500

D) $135,000

191) Fasheh 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 $ 5.50

Direct labor $ 3.90

Variable manufacturing overhead $ 1.30

Fixed manufacturing overhead $ 13.50

Fixed selling expense $ 2.25

Fixed administrative expense $ 1.80

Sales commissions $ 0.50

Variable administrative expense $ 0.45

If 10,000 units are produced, the total amount of manufacturing overhead cost is closest to:

Version 1 90

A) $180,500

B) $134,500

C) $157,500

D) $146,000

192) 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:

Average Cost per Unit

Direct materials $ 5.40

Direct labor $ 3.55

Variable manufacturing overhead $ 1.70

Fixed manufacturing overhead $ 3.00

Fixed selling expense $ 0.60

Fixed administrative expense $ 0.40

Sales commissions $ 1.00

Variable administrative expense $ 0.40

If 5,000 units are sold, the variable cost per unit sold is closest to:

A) $13.65

B) $10.65

C) $16.05

D) $12.05

193) 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:

Average Cost per Unit

Direct materials $ 5.40

Direct labor $ 3.55

Variable manufacturing overhead $ 1.70

Fixed manufacturing overhead $ 3.00

Fixed selling expense $ 0.60

Fixed administrative expense $ 0.40

Sales commissions $ 1.00

Variable administrative expense $ 0.40

If 5,000 units are sold, the total variable cost is closest to:

Version 1 91

A) $53,250

B) $68,250

C) $80,250

D) $60,250

194) 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:

Average Cost per Unit

Direct materials $ 5.40

Direct labor $ 3.55

Variable manufacturing overhead $ 1.70

Fixed manufacturing overhead $ 3.00

Fixed selling expense $ 0.60

Fixed administrative expense $ 0.40

Sales commissions $ 1.00

Variable administrative expense $ 0.40

If 5,000 units are produced, the average fixed manufacturing cost per unit produced is closest to:

A) $3.75

B) $2.40

C) $2.70

D) $3.00

195) 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:

Average Cost per Unit

Direct materials $ 5.40

Direct labor $ 3.55

Variable manufacturing overhead $ 1.70

Fixed manufacturing overhead $ 3.00

Fixed selling expense $ 0.60

Fixed administrative expense $ 0.40

Sales commissions $ 1.00

Variable administrative expense $ 0.40

If 5,000 units are produced, the total amount of fixed manufacturing cost incurred is closest to:

Version 1 92

A) $13,500

B) $18,000

C) $12,000

D) $15,000

196) 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:

Average Cost per Unit

Direct materials $ 5.40

Direct labor $ 3.55

Variable manufacturing overhead $ 1.70

Fixed manufacturing overhead $ 3.00

Fixed selling expense $ 0.60

Fixed administrative expense $ 0.40

Sales commissions $ 1.00

Variable administrative expense $ 0.40

If 5,000 units are produced, the total amount of manufacturing overhead cost is closest to:

A) $20,500

B) $23,000

C) $18,000

D) $19,250

197) Wessner Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.20

Direct labor $ 2.80

Variable manufacturing overhead $ 1.45

Fixed manufacturing overhead $ 12,000

Sales commissions $ 1.00

Variable administrative expense $ 0.55

Fixed selling and administrative expense $ 4,000

If 5,000 units are produced, the total amount of manufacturing overhead cost is closest to:

Version 1 93

A) $18,000

B) $19,250

C) $18,625

D) $20,500

198) Wessner Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.20

Direct labor $ 2.80

Variable manufacturing overhead $ 1.45

Fixed manufacturing overhead $ 12,000

Sales commissions $ 1.00

Variable administrative expense $ 0.55

Fixed selling and administrative expense $ 4,000

If the selling price is $25.00 per unit, the contribution margin per unit sold is closest to:

A) $9.00

B) $16.00

C) $11.55

D) $13.00

199) Wessner Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.20

Direct labor $ 2.80

Variable manufacturing overhead $ 1.45

Fixed manufacturing overhead $ 12,000

Sales commissions $ 1.00

Variable administrative expense $ 0.55

Version 1 94

Fixed selling and administrative expense $ 4,000

The incremental manufacturing cost that the company will incur if it increases production from

4,000 to 4,001 units is closest to:

A) $16.00

B) $14.05

C) $10.45

D) $13.45

200) Pedregon Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.35

Direct labor $ 3.75

Variable manufacturing overhead $ 1.50

Fixed manufacturing overhead $ 15,000

Sales commissions $ 0.50

Variable administrative expense $ 0.55

Fixed selling and administrative expense $ 4,500

If 4,000 units are sold, the variable cost per unit sold is closest to:

A) $16.55

B) $11.60

C) $12.65

D) $14.60

201) Pedregon Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 7.25

Direct labor $ 4.10

Variable manufacturing overhead $ 1.50

Fixed manufacturing overhead $ 20,900

Sales commissions $ 0.70

Version 1 95

Variable administrative expense $ 0.80

Fixed selling and administrative expense $ 3,900

If 5,500 units are sold, the total variable cost is closest to:

A) $87,175

B) $106,700

C) $78,925

D) $70,675

202) Pedregon Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.35

Direct labor $ 3.75

Variable manufacturing overhead $ 1.50

Fixed manufacturing overhead $ 15,000

Sales commissions $ 0.50

Variable administrative expense $ 0.55

Fixed selling and administrative expense $ 4,500

If 4,000 units are sold, the total variable cost is closest to:

A) $58,400

B) $66,200

C) $50,600

D) $46,400

203) Pedregon Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.45

Direct labor $ 3.30

Variable manufacturing overhead $ 1.25

Fixed manufacturing overhead $ 16,500

Version 1 96

Sales commissions $ 0.45

Variable administrative expense $ 0.50

Fixed selling and administrative expense $ 4,200

If 5,000 units are produced, the total amount of manufacturing overhead cost is closest to:

A) $22,750

B) $14,750

C) $18,450

D) $30,750

204) Pedregon Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.35

Direct labor $ 3.75

Variable manufacturing overhead $ 1.50

Fixed manufacturing overhead $ 15,000

Sales commissions $ 0.50

Variable administrative expense $ 0.55

Fixed selling and administrative expense $ 4,500

If 4,000 units are produced, the total amount of manufacturing overhead cost is closest to:

A) $21,000

B) $14,000

C) $28,000

D) $17,500

205) Pedregon Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.80

Direct labor $ 4.00

Variable manufacturing overhead $ 1.60

Version 1 97

Fixed manufacturing overhead $ 12,000

Sales commissions $ 0.80

Variable administrative expense $ 0.85

Fixed selling and administrative expense $ 5,700

If the selling price is $21.00 per unit, the contribution margin per unit sold is closest to:

A) $4.85

B) $7.20

C) $6.95

D) $10.20

206) Pedregon Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 6.35

Direct labor $ 3.75

Variable manufacturing overhead $ 1.50

Fixed manufacturing overhead $ 15,000

Sales commissions $ 0.50

Variable administrative expense $ 0.55

Fixed selling and administrative expense $ 4,500

If the selling price is $20.60 per unit, the contribution margin per unit sold is closest to:

A) $4.05

B) $6.00

C) $7.95

D) $10.50

207) Fassino Corporation reported the following data for the month of November:

Direct materials $ 51,000

Direct labor cost $ 54,000

Manufacturing overhead $ 82,000

Selling expense $ 18,000

Version 1 98

Administrative expense $ 42,000

The conversion cost for November was:

A) $187,000

B) $112,000

C) $136,000

D) $140,000

208) Fassino Corporation reported the following data for the month of November:

Direct materials $ 51,000

Direct labor cost $ 54,000

Manufacturing overhead $ 82,000

Selling expense $ 18,000

Administrative expense $ 42,000

The prime cost for November was:

A) $136,000

B) $60,000

C) $105,000

D) $112,000

209) 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 conversion cost for November was:

A) $116,000

B) $79,000

C) $87,000

D) $129,000

Version 1 99

210) 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:

A) $79,000

B) $59,000

C) $67,000

D) $87,000

211) Barredo 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 $ 6.60

Direct labor $ 3.65

Variable manufacturing overhead $ 1.65

Fixed manufacturing overhead $ 2.80

Fixed selling expense $ 0.70

Fixed administrative expense $ 0.40

Sales commissions $ 0.50

Variable administrative expense $ 0.45

If 4,000 units are sold, the variable cost per unit sold is closest to:

A) $16.75

B) $12.85

C) $11.90

D) $14.70

212) Barredo 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 $ 6.60

Direct labor $ 3.65

Variable manufacturing overhead $ 1.65

Fixed manufacturing overhead $ 2.80

Fixed selling expense $ 0.70

Version 1 100

Fixed administrative expense $ 0.40

Sales commissions $ 0.50

Variable administrative expense $ 0.45

If 4,000 units are sold, the total variable cost is closest to:

A) $67,000

B) $47,600

C) $51,400

D) $58,800

213) Varela 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 $ 5.95

Direct labor $ 3.30

Variable manufacturing overhead $ 1.60

Fixed manufacturing overhead $ 3.00

Fixed selling expense $ 0.50

Fixed administrative expense $ 0.40

Sales commissions $ 1.50

Variable administrative expense $ 0.50

For financial reporting purposes, the total amount of product costs incurred to make 4,000 units

is closest to:

A) $43,400

B) $55,400

C) $59,400

D) $12,000

214) Varela 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 $ 5.95

Direct labor $ 3.30

Variable manufacturing overhead $ 1.60

Version 1 101

Fixed manufacturing overhead $ 3.00

Fixed selling expense $ 0.50

Fixed administrative expense $ 0.40

Sales commissions $ 1.50

Variable administrative expense $ 0.50

For financial reporting purposes, the total amount of period costs incurred to sell 4,000 units is

closest to:

A) $7,700

B) $11,600

C) $3,600

D) $8,000

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 product costs incurred to make 4,000 units

is closest to:

A) $46,200

B) $38,200

C) $8,000

D) $50,200

216) Lagle Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 5.15

Version 1 102

Direct labor $ 3.70

Variable manufacturing overhead $ 1.30

Fixed manufacturing overhead $ 6,300

Sales commissions $ 1.60

Variable administrative expense $ 0.60

Fixed selling and administrative expense $ 3,600

For financial reporting purposes, the total amount of period costs incurred to sell 3,500 units is

closest to:

Garrison 17e Rechecks 2020-09-09

A) $11,300

B) $7,700

C) $3,600

D) $6,300

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

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

Version 1 103

218) Lagle Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 4.55

Direct labor $ 3.30

Variable manufacturing overhead $ 1.25

Fixed manufacturing overhead $ 11,000

Sales commissions $ 1.30

Variable administrative expense $ 0.35

Fixed selling and administrative expense $ 4,200

If 6,000 units are sold, the variable cost per unit sold is closest to:

A) $13.88

B) $10.75

C) $9.10

D) $11.15

219) 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:

Version 1 104

A) $14.60

B) $11.50

C) $9.55

D) $11.55

220) Lagle Corporation has provided the following information:

Cost per Unit Cost per Period

Direct materials $ 4.90

Direct labor $ 4.00

Variable manufacturing overhead $ 1.60

Fixed manufacturing overhead $ 8,700

Sales commissions $ 2.00

Variable administrative expense $ 0.35

Fixed selling and administrative expense $ 5,700

If 3,000 units are sold, the total variable cost is closest to:

Garrison 17e Rechecks 2020-09-09

A) $31,500

B) $53,250

C) $38,550

D) $38,700

221) 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

Version 1 105

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

222) 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

223) 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

Version 1 106

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

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.

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

225) 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

Version 1 107

226) 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

227) 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

228) 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

Version 1 108

229) 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

230) 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

231) 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.)

(Round intermediate calculations to 2 decimal places.)

A) $442,545

B) $452,500

C) $473,326

D) $432,590

Version 1 109

232) 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

233) 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

234) 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

Version 1 110

235) 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

236) 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

237) At a sales volume of 34,500 units, Choice Corporation’s sales commissions (a cost that is

variable with respect to sales volume) total $455,400.

To the nearest whole dollar, what should be the total sales commissions at a sales volume of

33,400 units? (Assume that this sales volume is within the relevant range.) (Round intermediate

calculations to 2 decimal places.)

A) $448,140

B) $455,400

C) $440,880

D) $470,398

Version 1 111

238) 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.) (Round intermediate

calculations to 2 decimal places.)

A) $126,720

B) $132,000

C) $121,440

D) $143,478

239) At a sales volume of 35,500 units, Choice Corporation’s sales commissions (a cost that is

variable with respect to sales volume) total $727,750.

To the nearest whole cent, what should be the average sales commission per unit at a sales

volume of 45,300 units? (Assume that this sales volume is within the relevant range.)

A) $20.50

B) $17.07

C) $21.28

D) $16.07

240) 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

241) 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:

Version 1 112

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

242) 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

Version 1 113

243) 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

244) 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

245) 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. (Round intermediate calculations to 2 decimal places.)

A) $137,020

B) $131,750

C) $162,950

D) $32,448

Version 1 114

246) 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

247) 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 total variable maintenance cost at an activity level of 9,300 machine-hours

in a month? Assume that this level of activity is within the relevant range. (Round intermediate

calculations to 2 decimal places.)

A) $758,520

B) $403,248

C) $390,240

D) $380,556

248) 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.

A) $40.92

B) $84.28

C) $39.60

D) $54.93

Version 1 115

249) At a sales volume of 40,000 units, Lonnie Company’s total fixed costs are $40,000 and

total variable costs are $60,000. The relevant range is 30,000 to 50,000 units.

If Lonnie were to sell 42,000 units, the total expected cost would be:

A) $105,000

B) $100,000

C) $103,000

D) $102,000

250) At a sales volume of 40,000 units, Lonnie Company’s total fixed costs are $40,000 and

total variable costs are $60,000. The relevant range is 30,000 to 50,000 units.

If Lonnie were to sell 50,000 units, the total expected cost per unit would be: (Round

intermediate calculations to 2 decimal places.)

A) $2.20

B) $2.30

C) $2.50

D) $2.00

251) Erkkila Incorporated reports that at an activity level of 6,900 machine-hours in a month,

its total variable inspection cost is $424,430 and its total fixed inspection cost is $174,888.

What would be the average fixed inspection cost per unit at an activity level of 7,200 machine-

hours in a month? Assume that this level of activity is within the relevant range.

A) $86.86

B) $25.35

C) $37.22

D) $24.29

252) ErkkilaIncorporated reports that at an activity level of 2,100 machine-hours in a month,

its total variable inspection cost is $69,846 and its total fixed inspection cost is $9,072.

What would be the average fixed inspection cost per unit at an activity level of 2,400 machine-

hours in a month? Assume that this level of activity is within the relevant range.

Version 1 116

A) $37.58

B) $4.32

C) $15.23

D) $3.78

253) ErkkilaIncorporated reports that at an activity level of 2,100 machine-hours in a month,

its total variable inspection cost is $69,846 and its total fixed inspection cost is $9,072.

What would be the total variable inspection cost at an activity level of 2,400 machine-hours in

a month? Assume that this level of activity is within the relevant range. (Round intermediate

calculations to 2 decimal places.)

A) $78,918

B) $69,846

C) $79,824

D) $10,368

254) Kogler 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 $ 5.10

Direct labor $ 5.20

Variable manufacturing overhead $ 1.90

Fixed manufacturing overhead $ 11.00

Fixed selling expense $ 3.70

Fixed administrative expense $ 2.00

Sales commissions $ 0.50

Variable administrative expense $ 0.45

If the selling price is $29.00 per unit, the contribution margin per unit sold is closest to:

A) $15.85

B) ($0.85)

C) $5.80

D) $18.70

Version 1 117

255) Kogler 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 $ 4.85

Direct labor $ 4.20

Variable manufacturing overhead $ 1.55

Fixed manufacturing overhead $ 9.00

Fixed selling expense $ 3.15

Fixed administrative expense $ 1.80

Sales commissions $ 0.50

Variable administrative expense $ 0.45

If the selling price is $25.00 per unit, the contribution margin per unit sold is closest to:

A) $13.45

B) ($0.50)

C) $5.40

D) $15.95

256) Kogler 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 $ 4.85

Direct labor $ 4.20

Variable manufacturing overhead $ 1.55

Fixed manufacturing overhead $ 9.00

Fixed selling expense $ 3.15

Fixed administrative expense $ 1.80

Sales commissions $ 0.50

Variable administrative expense $ 0.45

The incremental manufacturing cost that the company will incur if it increases production from

9,000 to 9,001 units is closest to:

A) $10.60

B) $22.75

C) $19.60

D) $25.50

Version 1 118

257) 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:

University Store, Incorporated

Income Statement

For the Quarter Ended March 31

Sales $ 800,000

Cost of goods sold 560,000

Gross margin 240,000

Selling and administrative expenses:

Selling $ 100,000

Administrative 110,000 210,000

Net operating income $ 30,000

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 contribution margin for the University Store for the first quarter is:

A) $660,000

B) $700,000

C) $180,000

D) $140,000

258) 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:

University Store, Incorporated

Income Statement

For the Quarter Ended March 31

Sales $ 800,000

Cost of goods sold 560,000

Gross margin 240,000

Selling and administrative expenses

Selling $ 100,000

Administrative 110,000 210,000

Net operating income $ 30,000

Version 1 119

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 net operating income computed using the contribution approach for the first quarter is:

A) $30,000

B) $180,000

C) $140,000

D) $0

259) 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:

University Store, Incorporated

Income Statement

For the Quarter Ended March 31

Sales $ 800,000

Cost of goods sold 560,000

Gross margin 240,000

Selling and administrative expenses

Selling $ 100,000

Administrative 110,000 210,000

Net operating income $ 30,000

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

260) 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:

Version 1 120

University Store, Incorporated

Income Statement

For the Quarter Ended March 31

Sales $ 800,000

Cost of goods sold 560,000

Gross margin 240,000

Selling and administrative expenses

Selling $ 100,000

Administrative 110,000 210,000

Net operating income $ 30,000

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.

If 25,000 books are sold during the second quarter and this activity is within the relevant range,

the company’s expected contribution margin would be:

A) $875,000

B) $300,000

C) $175,000

D) $65,000

261) An income statement for Sam’s Bookstore for the first quarter of the year is presented

below:

Sam’s Bookstore

Income Statement

For Quarter Ended March 31

Sales $ 910,000

Cost of goods sold 530,000

Gross margin 380,000

Selling and administrative expenses

Selling $ 113,000

Administrative 130,000 243,000

Net operating income $ 137,000

Version 1 121

On average, a book sells for $70. Variable selling expenses are $5 per book with the remaining

selling expenses being fixed. The variable administrative expenses are 3% of sales with the

remainder being fixed.

The contribution margin for Sam’s Bookstore for the first quarter is: Garrison 17e Rechecks

2020-09-09

A) $315,000

B) $817,700

C) $287,700

D) $622,300

262) An income statement for Sam’s Bookstore for the first quarter of the year is presented

below:

Sam’s Bookstore

Income Statement

For Quarter Ended March 31

Sales $ 900,000

Cost of goods sold 630,000

Gross margin 270,000

Selling and administrative expenses

Selling $ 100,000

Administrative 104,000 204,000

Net operating income $ 66,000

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 contribution margin for Sam’s Bookstore for the first quarter is:

A) $180,000

B) $774,000

C) $144,000

D) $756,000

263) An income statement for Sam’s Bookstore for the first quarter of the year is presented

below:

Version 1 122

Sam’s Bookstore

Income Statement

For Quarter Ended March 31

Sales $ 910,000

Cost of goods sold 560,000

Gross margin 350,000

Selling and administrative expenses

Selling $ 119,000

Administrative 142,000 261,000

Net operating income $ 89,000

On average, a book sells for $65. Variable selling expenses are $4 per book with the remaining

selling expenses being fixed. The variable administrative expenses are 3% of sales with the

remainder being fixed.

The net operating income using the contribution approach for the first quarter is:

A) $350,000

B) $294,000

C) $266,700

D) $89,000

264) An income statement for Sam’s Bookstore for the first quarter of the year is presented

below:

Sam’s Bookstore

Income Statement

For Quarter Ended March 31

Sales $ 900,000

Cost of goods sold 630,000

Gross margin 270,000

Selling and administrative expenses

Selling $ 100,000

Administrative 104,000 204,000

Net operating income $ 66,000

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 net operating income using the contribution approach for the first quarter is:

Version 1 123

A) $270,000

B) $180,000

C) $144,000

D) $66,000

265) An income statement for Sam’s Bookstore for the first quarter of the year is presented

below:

Sam’s Bookstore

Income Statement

For Quarter Ended March 31

Sales $ 1,000,000

Cost of goods sold 665,000

Gross margin 335,000

Selling and administrative expenses

Selling $ 107,000

Administrative 118,000 225,000

Net operating income $ 110,000

On average, a book sells for $50. Variable selling expenses are $4 per book with the remaining

selling expenses being fixed. The variable administrative expenses are 3% 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:

A) Y = $140,000 + $4.00X

B) Y = $140,000 + $5.50X

C) Y = $115,000 + $5.50X

D) Y = $115,000 + $7.00X

266) An income statement for Sam’s Bookstore for the first quarter of the year is presented

below:

Sam’s Bookstore

Income Statement

For Quarter Ended March 31

Sales $ 900,000

Version 1 124

Cost of goods sold 630,000

Gross margin 270,000

Selling and administrative expenses

Selling $ 100,000

Administrative 104,000 204,000

Net operating income $ 66,000

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:

A) Y = $102,000 + $5X

B) Y = $102,000 + $7X

C) Y = $78,000 + $7X

D) Y = $78,000 + $9X

267) An income statement for Sam’s Bookstore for the first quarter of the year is presented

below:

Sam’s Bookstore

Income Statement

For Quarter Ended March 31

Sales $ 900,000

Cost of goods sold 630,000

Gross margin 270,000

Selling and administrative expenses

Selling $ 100,000

Administrative 104,000 204,000

Net operating income $ 66,000

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.

If 20,000 books are sold during the second quarter and this activity is within the relevant range,

the company’s expected contribution margin would be:

Version 1 125

A) $300,000

B) $160,000

C) $860,000

D) $58,000

268) 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:

A) $95,000

B) $5,000

C) $77,000

D) $18,000

269) 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

sunk cost was:

Version 1 126

A) $545,000

B) $450,000

C) $527,000

D) $532,000

270) 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 invest in the model 240 machine, the opportunity cost was:

A) $545,000

B) $450,000

C) $532,000

D) $527,000

271) Management of Plascencia Corporation is considering whether to purchase a new model

370 machine costing $446,000 or a new model 220 machine costing $408,000 to replace a

machine that was purchased 9 years ago for $426,000. The old machine was used to make

product I43L until it broke down last week. Unfortunately, the old machine cannot be repaired.

Management has decided to buy the new model 220 machine. It has less capacity than the new

model 370 machine, but its capacity is sufficient to continue making product I43L.

Management also considered, but rejected, the alternative of simply dropping product I43L. If

that were done, instead of investing $408,000 in the new machine, the money could be invested

in a project that would return a total of $440,000.

In making the decision to buy the model 220 machine rather than the model 370 machine, the

sunk cost was:

Version 1 127

A) $426,000

B) $408,000

C) $446,000

D) $440,000

272) Management of Plascencia Corporation is considering whether to purchase a new model

370 machine costing $360,000 or a new model 220 machine costing $340,000 to replace a

machine that was purchased 7 years ago for $348,000. The old machine was used to make

product I43L until it broke down last week. Unfortunately, the old machine cannot be repaired.

Management has decided to buy the new model 220 machine. It has less capacity than the new

model 370 machine, but its capacity is sufficient to continue making product I43L.

Management also considered, but rejected, the alternative of simply dropping product I43L. If

that were done, instead of investing $340,000 in the new machine, the money could be invested

in a project that would return a total of $411,000.

In making the decision to buy the model 220 machine rather than the model 370 machine, the

sunk cost was:

A) $348,000

B) $340,000

C) $360,000

D) $411,000

273) Management of Plascencia Corporation is considering whether to purchase a new model

370 machine costing $511,000 or a new model 220 machine costing $471,000 to replace a

machine that was purchased 7 years ago for $503,000. The old machine was used to make

product I43L until it broke down last week. Unfortunately, the old machine cannot be repaired.

Management has decided to buy the new model 220 machine. It has less capacity than the new

model 370 machine, but its capacity is sufficient to continue making product I43L.

Management also considered, but rejected, the alternative of simply dropping product I43L. If

that were done, instead of investing $471,000 in the new machine, the money could be invested

in a project that would return a total of $8,000.

In making the decision to buy the model 220 machine rather than the model 370 machine, the

differential cost was:

Version 1 128

A) $40,000

B) $32,000

C) $8,000

D) $24,000

274) Management of Plascencia Corporation is considering whether to purchase a new model

370 machine costing $360,000 or a new model 220 machine costing $340,000 to replace a

machine that was purchased 7 years ago for $348,000. The old machine was used to make

product I43L until it broke down last week. Unfortunately, the old machine cannot be repaired.

Management has decided to buy the new model 220 machine. It has less capacity than the new

model 370 machine, but its capacity is sufficient to continue making product I43L.

Management also considered, but rejected, the alternative of simply dropping product I43L. If

that were done, instead of investing $340,000 in the new machine, the money could be invested

in a project that would return a total of $411,000.

In making the decision to buy the model 220 machine rather than the model 370 machine, the

differential cost was:

A) $20,000

B) $8,000

C) $12,000

D) $63,000

275) Management of Plascencia Corporation is considering whether to purchase a new model

370 machine costing $451,000 or a new model 220 machine costing $421,000 to replace a

machine that was purchased 9 years ago for $437,000. The old machine was used to make

product I43L until it broke down last week. Unfortunately, the old machine cannot be repaired.

Management has decided to buy the new model 220 machine. It has less capacity than the new

model 370 machine, but its capacity is sufficient to continue making product I43L.

Management also considered, but rejected, the alternative of simply dropping product I43L. If

that were done, instead of investing $421,000 in the new machine, the money could be invested

in a project that would return a total of $443,000.

In making the decision to invest in the model 220 machine, the opportunity cost was:

Version 1 129

A) $437,000

B) $421,000

C) $451,000

D) $443,000

276) Management of Plascencia Corporation is considering whether to purchase a new model

370 machine costing $360,000 or a new model 220 machine costing $340,000 to replace a

machine that was purchased 7 years ago for $348,000. The old machine was used to make

product I43L until it broke down last week. Unfortunately, the old machine cannot be repaired.

Management has decided to buy the new model 220 machine. It has less capacity than the new

model 370 machine, but its capacity is sufficient to continue making product I43L.

Management also considered, but rejected, the alternative of simply dropping product I43L. If

that were done, instead of investing $340,000 in the new machine, the money could be invested

in a project that would return a total of $411,000.

In making the decision to invest in the model 220 machine, the opportunity cost was:

A) $348,000

B) $340,000

C) $360,000

D) $411,000

277) Bolka Corporation, a merchandising company, reported the following results for October:

Sales $ 418,000

Cost of goods sold (all variable) $ 175,500

Total variable selling expense $ 23,700

Total fixed selling expense $ 21,800

Total variable administrative expense $ 16,200

Total fixed administrative expense $ 34,300

The gross margin for October is:

A) $202,600

B) $242,500

C) $146,500

D) $361,900

Version 1 130

278) Bolka Corporation, a merchandising company, reported the following results for October:

Sales $ 4,096,400

Cost of goods sold (all variable) $ 2,194,500

Total variable selling expense $ 238,700

Total fixed selling expense $ 144,700

Total variable administrative expense $ 238,700

Total fixed administrative expense $ 282,900

The gross margin for October is:

A) $1,424,500

B) $1,901,900

C) $996,900

D) $3,668,800

279) Bolka Corporation, a merchandising company, reported the following results for October:

Sales $ 490,000

Cost of goods sold (all variable) $ 169,700

Total variable selling expense $ 24,200

Total fixed selling expense $ 21,700

Total variable administrative expense $ 13,200

Total fixed administrative expense $ 33,600

The contribution margin for October is:

A) $282,900

B) $434,700

C) $320,300

D) $227,600

280) Bolka Corporation, a merchandising company, reported the following results for October:

Sales $ 4,096,400

Cost of goods sold (all variable) $ 2,194,500

Total variable selling expense $ 238,700

Total fixed selling expense $ 144,700

Total variable administrative expense $ 238,700

Version 1 131

Total fixed administrative expense $ 282,900

The contribution margin for October is:

A) $1,424,500

B) $3,191,400

C) $1,901,900

D) $996,900

281) Streif Incorporated, a local retailer, has provided the following data for the month of

June:

Merchandise inventory, beginning balance $ 46,000

Merchandise inventory, ending balance $ 52,000

Sales $ 260,000

Purchases of merchandise inventory $ 128,000

Selling expense $ 13,000

Administrative expense $ 40,000

The cost of goods sold for June was:

Garrison 17e Rechecks 2020-09-09

A) $128,000

B) $181,000

C) $122,000

D) $134,000

282) Streif Incorporated, a local retailer, has provided the following data for the month of

June:

Merchandise inventory, beginning balance $ 46,000

Merchandise inventory, ending balance $ 52,000

Sales $ 260,000

Purchases of merchandise inventory $ 128,000

Selling expense $ 13,000

Administrative expense $ 40,000

The net operating income for June was:

Garrison 17e Rechecks 2020-09-09

Version 1 132

A) $132,000

B) $126,000

C) $85,000

D) $79,000

283) Boersma Sales, Incorporated, a merchandising company, reported sales of 7,100 units in

September at a selling price of $682 per unit. Cost of goods sold, which is a variable cost, was

$317 per unit. Variable selling expenses were $44 per unit and variable administrative expenses

were $22 per unit. The total fixed selling expenses were $157,200 and the total administrative

expenses were $338,000.

The contribution margin for September was:

Garrison 17e Rechecks 2020-09-09

A) $3,878,400

B) $2,122,900

C) $2,591,500

D) $1,627,700

284) Boersma Sales, Incorporated, a merchandising company, reported sales of 7,100 units in

September at a selling price of $682 per unit. Cost of goods sold, which is a variable cost, was

$317 per unit. Variable selling expenses were $44 per unit and variable administrative expenses

were $22 per unit. The total fixed selling expenses were $157,200 and the total administrative

expenses were $338,000.

The gross margin for September was:

Garrison 17e Rechecks 2020-09-09

A) $2,122,900

B) $2,591,500

C) $1,627,700

D) $4,347,000

285) Delongis Corporation, a merchandising company, reported the following results for June:

Version 1 133

Number of units sold 1,200 units

Selling price per unit $ 221 per unit

Unit cost of goods sold $ 97 per unit

Variable selling expense per unit $ 12 per unit

Total fixed selling expense $ 7,300

Variable administrative expense per unit $ 8 per unit

Total fixed administrative expense $ 15,300

Cost of goods sold is a variable cost in this company.

The gross margin for June is:

Garrison 17e Rechecks 2020-09-09

A) $242,600

B) $148,800

C) $124,800

D) $102,200

286) Delongis Corporation, a merchandising company, reported the following results for June:

Number of units sold 1,200 units

Selling price per unit $ 221 per unit

Unit cost of goods sold $ 97 per unit

Variable selling expense per unit $ 12 per unit

Total fixed selling expense $ 7,300

Variable administrative expense per unit $ 8 per unit

Total fixed administrative expense $ 15,300

Cost of goods sold is a variable cost in this company.

The contribution margin for June is:

Garrison 17e Rechecks 2020-09-09

A) $148,800

B) $102,200

C) $218,600

D) $124,800

Version 1 134

287) 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:

Garrison 17e Rechecks 2020-09-09

A) $530,400

B) $227,700

C) $1,252,800

D) $362,100

288) 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 gross margin for December is:

A) $530,400

B) $227,700

C) $362,100

D) $1,421,100

289) A factory supervisor’s salary would be classified as an indirect cost with respect to a unit

of product.

⊚ true

⊚ false

290) A direct cost is a cost that can be easily traced to the particular cost object under

consideration.

Version 1 135

⊚ true

⊚ false

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

⊚ true

⊚ false

292) Wages paid to production supervisors would be classified as manufacturing overhead.

⊚ true

⊚ false

293) Selling costs are indirect costs.

⊚ true

⊚ false

294) The sum of all manufacturing costs except for direct materials and direct labor is called

manufacturing overhead.

⊚ true

⊚ false

295) The three cost elements ordinarily included in product costs are direct materials, direct

labor, and manufacturing overhead.

⊚ true

⊚ false

296) Administrative costs are indirect costs.

Version 1 136

⊚ true

⊚ false

297) Depreciation is always considered a period cost for external financial reporting purposes

in a manufacturing company.

⊚ true

⊚ false

298) Opportunity costs at a manufacturing company are not part of manufacturing overhead.

⊚ true

⊚ false

299) Conversion cost is the sum of direct labor cost and manufacturing overhead cost.

⊚ true

⊚ false

300) In a manufacturing company, all costs are period costs.

⊚ true

⊚ false

301) Advertising is not considered as a product cost even if it promotes a specific product.

⊚ true

⊚ false

302) Selling and administrative expenses are period costs under generally accepted accounting

principles.

Version 1 137

⊚ true

⊚ false

303) Conversion cost equals product cost less direct materials cost.

⊚ true

⊚ false

304) Prime cost is the sum of direct materials cost and direct labor cost.

⊚ true

⊚ false

305) Product costs are also known as inventoriable costs.

⊚ true

⊚ false

306) Prime cost equals manufacturing overhead cost.

⊚ true

⊚ false

307) Conversion cost is the same thing as manufacturing overhead.

⊚ true

⊚ false

308) The cost of shipping parts from a supplier is considered a period cost.

Version 1 138

⊚ true

⊚ false

309) Depreciation on equipment a company uses in its selling and administrative activities

would be classified as a period cost.

⊚ true

⊚ false

310) Indirect costs, such as manufacturing overhead, are variable costs.

⊚ true

⊚ false

311) If the activity level increases, then one would expect the fixed cost per unit to increase as

well.

⊚ true

⊚ false

312) A fixed cost is a cost whose cost per unit varies as the activity level rises and falls.

⊚ true

⊚ false

313) Cost behavior is considered curvilinear whenever a straight line is a reasonable

approximation for the relation between cost and activity.

⊚ true

⊚ false

Version 1 139

314) A decrease in production will ordinarily result in a decrease in fixed production costs per

unit.

⊚ true

⊚ false

315) As activity decreases within the relevant range, fixed costs remain constant on a per unit

basis.

⊚ true

⊚ false

316) The variable cost per unit depends on how many units are produced.

⊚ true

⊚ false

317) In account analysis, an account is classified as either variable or fixed based on an

analyst’s prior knowledge of how the cost in the account behaves.

⊚ true

⊚ false

318) 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.

⊚ true

⊚ false

Version 1 140

319) Committed fixed costs remain largely unchanged in the short run.

⊚ true

⊚ false

320) Fixed costs expressed on a per unit basis do not change with changes in activity.

⊚ true

⊚ false

321) A fixed cost is constant if expressed on a per unit basis but the total dollar amount

changes as the number of units increases or decreases.

⊚ true

⊚ false

322) 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.

⊚ true

⊚ false

323) Within the relevant range, a change in activity results in a change in variable cost per unit

and total fixed cost.

⊚ true

⊚ false

324) When operations are interrupted or cut back, committed fixed costs are cut in the short

term because the costs of restoring them later are likely to be far less than the short-run savings

that are realized.

Version 1 141

⊚ true

⊚ false

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

⊚ true

⊚ false

326) The cost of napkins put on each person’s tray at a fast food restaurant is a variable cost

with respect to how many persons are served.

⊚ true

⊚ false

327) A fixed cost fluctuates in total as activity changes but remains constant on a per unit basis

over the relevant range.

⊚ true

⊚ false

328) The relevant range is the range of activity within which the assumption that cost behavior

is strictly linear is reasonably valid.

⊚ true

⊚ false

329) Variable costs per unit are not affected by changes in activity.

⊚ true

⊚ false

Version 1 142

330) The relevant range concept is applicable to mixed costs.

⊚ true

⊚ false

331) A variable cost remains constant if expressed on a unit basis.

⊚ true

⊚ false

332) Committed fixed costs represent organizational investments with a one-year planning

horizon.

⊚ true

⊚ false

333) The following costs are all examples of committed fixed costs: depreciation on buildings,

salaries of highly trained engineers, real estate taxes, and insurance expenses.

⊚ true

⊚ false

334) A fixed cost is not constant per unit of product.

⊚ true

⊚ false

335) Differential costs can only be variable.

Version 1 143

⊚ true

⊚ false

336) The potential benefit that is given up when one alternative is selected over another is

called a sunk cost.

⊚ true

⊚ false

337) The amount that a manufacturing company could earn by renting unused portions of its

warehouse is an example of an opportunity cost.

⊚ true

⊚ false

338) A cost that differs from one month to another is known as a sunk cost.

⊚ true

⊚ false

339) In a traditional format income statement, the gross margin is sales minus cost of goods

sold.

⊚ true

⊚ false

340) In a traditional format income statement for a merchandising company, cost of goods sold

is a variable cost that is included in the “Variable expenses” portion of the income statement.

⊚ true

⊚ false

Version 1 144

341) In a contribution format income statement for a merchandising company, the cost of

goods sold reports the product costs attached to the merchandise sold during the period.

⊚ true

⊚ false

342) Contribution format income statements are prepared primarily for external reporting

purposes.

⊚ true

⊚ false

343) Contribution margin and gross margin mean the same thing.

⊚ true

⊚ false

344) In a traditional format income statement, the gross margin minus selling and

administrative expenses equals net operating income.

⊚ true

⊚ false

345) Most companies use the contribution approach in preparing financial statements for

external reporting purposes.

⊚ true

⊚ false

Version 1 145

346) Although the traditional format income statement is useful for external reporting

purposes, it has serious limitations when used for internal purposes because it does not

distinguish between fixed and variable costs.

⊚ true

⊚ false

347) The contribution format income statement is used as an internal planning and decision-

making tool. Its emphasis on cost behavior aids cost-volume-profit analysis, management

performance appraisals, and budgeting.

⊚ true

⊚ false

348) A contribution format income statement separates costs into fixed and variable

categories, first deducting variable expenses from sales to obtain the contribution margin.

⊚ true

⊚ false

349) Traditional format income statements are widely used for preparing external financial

statements.

⊚ true

⊚ false

Version 1 146

Answer Key

Test name: chapter 1

Version 1 147

Version 1 148

Version 1 149

Version 1 150

Version 1 151

Version 1 152

Version 1 153

Version 1 154

Version 1 155

Version 1 156