Question

1. Instead of a production budget, a merchandiser will prepare a

Select one:

a. sales forecast

b. master time sheet

c. pseudo-production budget

d. merchandise purchases budget

2. A cost which remains constant per unit at various levels of activity is a

Select one:

a. fixed cost

b. variable cost

c. mixed cost

d. sales discounts

3. A fixed cost is a cost which

Select one:

a. varies in total with changes in the level of activity.

b. remains constant in total with changes in the level of activity

c. varies inversely in total with changes in the level of activity

d. remains constant per unit with changes in the level of activity

4. Which of the following is not a fixed cost?

Select one:

a. lease expense

b. property taxes

c. direct materials

d. straight-line depreciation

5. At the high level of activity in November, 7,000 machine hours were run and power costs were $16,000. In April, a month of low activity, 2,000 machine hours were run and power costs amounted to $8,000. Using the high-low method, the estimated fixed cost element of power costs is

Select one:

a. $11,200

b. $4,800

c. $8,000

d. $16,000

Answer 1

Q1.
Answer is d. Merchandise Purchase budget.
Q2.
Answer is b. Variable cost
Q3.
Answer is b. remains constant in total with change in level of activity.
Q4.
Answer is c. direct material
Q5.
Answer is b. 4800
Explanation
		Power cost	MH
HIGh		16000	7000
Low		8000	2000
Change		8000	5000
Variable cost per MH: Change in cost/ Change in MH
		8000 /5000 = 1.60 per mH
Fixed cost = 16000 -7000 *1.6 = 4800