Question 1

At an activity level of 6,000 units the cost for maintenance is $7,200 and at 10,000 units the cost for maintenance is $11,600.Using the high-low method,the cost formula for maintenance is?

Accepted Answer

A)   $1.16 per unit.
B)   $1.20 per unit.
C)   $600 plus $1.10 per unit.
D)   $1,200 plus $1.10 per unit.E) B) and C)
F) None of the above

Question 2

What is the best estimate of the company's variable operating expenses per unit?

Accepted Answer

A)   $35.00 per unit.
B)   $44.22 per unit.
C)   $65.95 per unit.
D)   $71.11 per unit.E) A) and D)
F) C) and D)

Question 3

If the contribution margin is $70,000 and the total of variable expenses is $50,000,then total sales is $120,000.

Accepted Answer

A) True 
 B)False

Question 4

Expense A is a fixed cost;expense B is a variable cost.During the current year the activity level has increased,but is still within the relevant range.In terms of cost per unit of activity,we would expect that:

Accepted Answer

A)   expense A has remained unchanged.
B)   expense B has decreased.
C)   expense A has decreased.
D)   expense B has increased.E) A) and D)
F) A) and C)

Question 5

The term "relevant range" means the range within which:

Accepted Answer

A)   costs may fluctuate.
B)   a particular cost formula is valid.
C)   production may vary.
D)   relevant costs are incurred.E) B) and D)
F) All of the above

Question 6

If 110,000 machine hours of activity are projected for next period,total expected overhead cost would be?

Accepted Answer

A)   $242,500.
B)   $256,000.
C)   $263,500.
D)   $306,625.E) B) and D)
F) A) and B)

Question 7

An example of a committed fixed cost is:

Accepted Answer

A)   a training program for salespersons.
B)   executive travel expenses.
C)   property taxes on the factory building.
D)   new product research and development.E) A) and D)
F) All of the above

Question 8

The following data pertains to activity and utility costs for two recent years:  Using the high-low method,the cost formula for utilities is?

Accepted Answer

A)   $1.20 per unit.
B)   $1.50 per unit.
C)   $3,000 plus $3.00 per unit.
D)   $4,500 plus $0.75 per unit.E) C) and D)
F) B) and D)

Question 9

The best estimate of the variable cost per unit for Maxwell Company is?

Accepted Answer

A)   $0.56.
B)   $1.79.
C)   $1.95.
D)   $2.00.E) A) and B)
F) A) and C)

Question 10

The expected contribution margin next month is?

Accepted Answer

A)   $11,200.
B)   $14,400.
C)   $16,000.
D)   $17,600.E) A) and D)
F) B) and D)

Question 11

Significant reductions in committed fixed costs can usually be made on a temporary basis without seriously impairing the long-term goals of a firm.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following classifications best describes the behaviour of Cost B?

Accepted Answer

A)   Mixed.
B)   Variable.
C)   Fixed.
D)   Direct.E) C) and D)
F) A) and C)

Question 13

What is the best estimate of the company's variable operating expenses per unit?

Accepted Answer

A)   $0.24 per unit.
B)   $0.71 per unit.
C)   $0.90 per unit.
D)   $4.17 per unit.E) All of the above
F) B) and C)

Question 14

In describing the cost formula equation Y = a + bX,which of the following statements is correct:

Accepted Answer

A)   "X" is the dependent variable.
B)   "a" is the fixed component.
C)   "b" is the fixed component.
D)   as "X" increases "Y" decreases.E) A) and D)
F) B) and D)

Exam 3: Systems Design: Activity-Based Costing

Which of the following classifications best describes the behaviour of Cost B?

Correct Answer
verified

Significant reductions in committed fixed costs can usually be made on a temporary basis without seriously impairing the long-term goals of a firm.

Correct Answer
verified

The best estimate of the variable cost per unit for Maxwell Company is?

Correct Answer
verified

In describing the cost formula equation Y = a + bX,which of the following statements is correct:

Correct Answer
verified

What is the best estimate of the company's variable operating expenses per unit?

Correct Answer
verified

At an activity level of 6,000 units the cost for maintenance is $7,200 and at 10,000 units the cost for maintenance is $11,600.Using the high-low method,the cost formula for maintenance is?

Correct Answer
verified

If the contribution margin is $70,000 and the total of variable expenses is $50,000,then total sales is $120,000.

Correct Answer
verified

An example of a committed fixed cost is:

Correct Answer
verified

Expense A is a fixed cost;expense B is a variable cost.During the current year the activity level has increased,but is still within the relevant range.In terms of cost per unit of activity,we would expect that:

Correct Answer
verified

If 110,000 machine hours of activity are projected for next period,total expected overhead cost would be?

Correct Answer
verified

The following data pertains to activity and utility costs for two recent years: Using the high-low method,the cost formula for utilities is?

Correct Answer
verified

The term "relevant range" means the range within which:

Correct Answer
verified

The expected contribution margin next month is?

Correct Answer
verified

What is the best estimate of the company's variable operating expenses per unit?

Correct Answer
verified

Exam 3: Systems Design: Activity-Based Costing

Which of the following classifications best describes the behaviour of Cost B?

Correct AnswerverifiedShow Answer

Significant reductions in committed fixed costs can usually be made on a temporary basis without seriously impairing the long-term goals of a firm.

Correct AnswerverifiedShow Answer

The best estimate of the variable cost per unit for Maxwell Company is?

Correct AnswerverifiedShow Answer

In describing the cost formula equation Y = a + bX,which of the following statements is correct:

Correct AnswerverifiedShow Answer

What is the best estimate of the company's variable operating expenses per unit?

Correct AnswerverifiedShow Answer

At an activity level of 6,000 units the cost for maintenance is $7,200 and at 10,000 units the cost for maintenance is $11,600.Using the high-low method,the cost formula for maintenance is?

Correct AnswerverifiedShow Answer

If the contribution margin is $70,000 and the total of variable expenses is $50,000,then total sales is $120,000.

Correct AnswerverifiedShow Answer

An example of a committed fixed cost is:

Correct AnswerverifiedShow Answer

Expense A is a fixed cost;expense B is a variable cost.During the current year the activity level has increased,but is still within the relevant range.In terms of cost per unit of activity,we would expect that:

Correct AnswerverifiedShow Answer

If 110,000 machine hours of activity are projected for next period,total expected overhead cost would be?

Correct AnswerverifiedShow Answer

The following data pertains to activity and utility costs for two recent years: Using the high-low method,the cost formula for utilities is?

Correct AnswerverifiedShow Answer

The term "relevant range" means the range within which:

Correct AnswerverifiedShow Answer

The expected contribution margin next month is?

Correct AnswerverifiedShow Answer

What is the best estimate of the company's variable operating expenses per unit?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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