Question

1. Mahogany Company manufactures computer keyboards. The total cost of producing 14,000 keyboards is $468,000. The total fixed cost amounts to $160,000. Determine the total cost of manufacturing 25,000 keyboards.

a.$710,000

b.$776,000

c.$550,000

d.$792,000

3. The range of output over which the assumed fixed and variable cost relationships are valid for the normal operations of a firm is called:

a.the relevant range.

b.the cost driver range.

c.the discretionary range.

d.the fixed costs range.

4. The cost of purchase of plant and equipment is an example of a(n):

a.unavoidable variable cost.

b.discretionary fixed cost.

c.committed fixed cost.

d.discretionary variable cost.

5. Step costs are also called:

a.committed fixed costs.

b.scattered costs.

c.discretionary fixed costs.

d.semi-fixed costs.

6. Which of the following is true of mixed costs?

a.Mixed costs are variable costs that can be changed or avoided easily in the short run.

b.Mixed costs are costs that have both a fixed cost and a variable cost component.

c.Mixed costs are variable costs whose rate of change is not constant.

d.Mixed costs are costs that have both a discretionary fixed cost and a committed fixed cost component.

7. Gamma Company manufactures power transmission grids. It has 7 sales representatives, each earning a salary of $40,000 plus a commission of $220 per grid sold. The total cost associated with the sales representatives is an example of a:

a.variable cost.

b.fixed cost.

c.step cost.

d.mixed cost.

8. In the high-low method, the high and low points are identified by looking at the:

a.associated costs.

b.activity levels.

c.revenue drivers.

d.opportunity cost levels.

9. In the mixed cost equation: Total Cost = Fixed Cost + (Variable Rate × Units of Output), the dependent variable is _____.

a.fixed cost

b.total cost

c.units of output

d.variable rate

10. Food Service Corp. offers a meal service for commuting college students. In the month of January, 1,800 meals were served at a total cost of $9,000. In February, 1,450 meals were served at a total cost of $7,800, and the total number of meals served for March were 1,300 at a total cost of $7,000. Using the high-low method, the variable cost per unit is $4.00. What is the total fixed cost and the total variable cost for January?

a.The total fixed cost is $7,200, and the variable cost is $1,800.

b.The total fixed cost is $1,800, and the variable cost is $7,200.

c.The total fixed cost is $6,000, and the variable cost is $3,000.

d.The total fixed cost is $3,000, and the variable cost is $6,000.

11. The following data relates to Alpha Company.

Units in beginning inventory	—
Units produced	26,000
Units sold ($350 per unit)	19,000
Variable costs per unit:
Direct materials	$35
Direct labor	70
Variable overhead	30
Fixed costs:
Fixed overhead per unit produced	$50
Fixed selling and administrative expenses	140,000

Determine the value of ending inventory under variable costing.

a.$735,000

b.$945,000

c.$805,000

d.$1,295,000

12. The difference between variable costing and absorption costing hinges on the treatment of:

a.fixed selling overhead.

b.variable manufacturing overhead.

c.variable selling overhead.

d.fixed manufacturing overhead.

13. Which of the following costs is classified as a period cost under absorption costing?

a.The cost of direct labor

b.The cost of direct materials

c.Fixed manufacturing overhead

d.Administrative expenses

14. If the cost equation yields a coefficient of determination of 77%, it means that the:

a.independent variable explains 23% of the variability in cost.

b.dependent variable explains 23% of the variability in cost.

c.dependent variable explains 77% of the variability in cost.

d.independent variable explains 77% of the variability in cost.

15. he closer the coefficient of determination (R²) is to _____, the better.

a.0.5

b.0

c.–1

d.1

16. Which of the following is true of a coefficient of determination?

a.It is depicted using the symbol D².

b.It is the percentage of variability in the independent variable explained by a dependent variable.

c.It has a value of 1 if the independent variable completely explains the variability of the dependent variable.

d.Its value always lies between 1 and 100.

Answer 1

1. (a) $ 710000