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Hiss Company's activity for the last six months is as follows: Hiss Company's activity for the last six months is as follows: -Using the high-low method,the estimated variable electrical cost per machine hour is: A) $0.40 B) $0.65 C) $0.70 D) $0.67 -Using the high-low method,the estimated variable electrical cost per machine hour is:


A) $0.40
B) $0.65
C) $0.70
D) $0.67

E) C) and D)
F) A) and B)

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The management of Harlow Corporation,a manufacturing company,would like your help in contrasting the traditional and contribution approaches to the income statement.The company has provided the following financial data for January: The management of Harlow Corporation,a manufacturing company,would like your help in contrasting the traditional and contribution approaches to the income statement.The company has provided the following financial data for January: The company had no beginning or ending inventories. -The contribution margin for January was: A) $172,000 B) $42,000 C) $166,000 D) $110,000 The company had no beginning or ending inventories. -The contribution margin for January was:


A) $172,000
B) $42,000
C) $166,000
D) $110,000

E) B) and C)
F) None of the above

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The following production and average cost data for two levels of monthly production volume have been supplied by a company that produces a single product: The following production and average cost data for two levels of monthly production volume have been supplied by a company that produces a single product: -The best estimate of the total variable manufacturing cost per unit is: A) $116.40 B) $137.20 C) $20.80 D) $76.70 -The best estimate of the total variable manufacturing cost per unit is:


A) $116.40
B) $137.20
C) $20.80
D) $76.70

E) A) and B)
F) All of the above

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The following information was collected for one of the costs at Demetra Manufacturing Corporation over the past two years: The following information was collected for one of the costs at Demetra Manufacturing Corporation over the past two years: Assuming that there has been no change in the cost structure over the last two years and this activity is within the relevant range,this cost at Demetra would best be described as a: A) fixed cost B) mixed cost C) step-variable cost D) true variable cost Assuming that there has been no change in the cost structure over the last two years and this activity is within the relevant range,this cost at Demetra would best be described as a:


A) fixed cost
B) mixed cost
C) step-variable cost
D) true variable cost

E) None of the above
F) B) and D)

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Rymore Company would like to classify the following costs according to their cost behavior: Rymore Company would like to classify the following costs according to their cost behavior: -Which of the following classifications best describes the behavior of Cost A? A) Mixed B) Variable C) Fixed D) none of the above -Which of the following classifications best describes the behavior of Cost A?


A) Mixed
B) Variable
C) Fixed
D) none of the above

E) A) and B)
F) A) and D)

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In October,Haldeman Corporation,a manufacturing company,reported the following financial data: In October,Haldeman Corporation,a manufacturing company,reported the following financial data: The company had no beginning or ending inventories. -The gross margin for October was: A) $282,000 B) $183,000 C) $264,000 D) $5,000 The company had no beginning or ending inventories. -The gross margin for October was:


A) $282,000
B) $183,000
C) $264,000
D) $5,000

E) B) and C)
F) A) and D)

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A cost that is obtained in large chunks and that increases or decreases only in response to fairly wide changes in the activity level is known as a step-variable cost.

A) True
B) False

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At an activity level of 7,900 machine-hours in a month,Manchester Corporation's total variable maintenance cost is $430,550 and its total fixed maintenance cost is $417,120. -What would be the total variable maintenance cost at an activity level of 8,000 machine-hours in a month? Assume that this level of activity is within the relevant range.


A) $847,670
B) $422,400
C) $430,550
D) $436,000

E) A) and B)
F) B) and C)

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The _______________ approach to the income statement organizes costs by function.


A) contribution
B) traditional
C) comparable
D) None of the above is true.

E) A) and B)
F) A) and C)

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Gargymal Company would like to estimate the variable and fixed components of its electrical costs and has compiled the following data for the last five months of operations. Gargymal Company would like to estimate the variable and fixed components of its electrical costs and has compiled the following data for the last five months of operations. -Using the high-low method of analysis,the estimated fixed cost per month for electricity is closest to: A) $1,306.50 B) $870.00 C) $1,290.00 D) $1,150.00 -Using the high-low method of analysis,the estimated fixed cost per month for electricity is closest to:


A) $1,306.50
B) $870.00
C) $1,290.00
D) $1,150.00

E) B) and D)
F) B) and C)

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The contribution approach to the income statement:


A) organizes costs on a functional basis.
B) is useful to managers in planning and decision making.
C) shows a contribution margin rather than a net operating income figure at the bottom of the statement.
D) can be used only by manufacturing companies.

E) B) and D)
F) All of the above

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Kalbach Corporation,a manufacturing company,has provided the following financial data for November: Kalbach Corporation,a manufacturing company,has provided the following financial data for November: The company had no beginning or ending inventories.The contribution margin for November was: A) $285,000 B) $166,000 C) $310,000 D) $36,000 The company had no beginning or ending inventories.The contribution margin for November was:


A) $285,000
B) $166,000
C) $310,000
D) $36,000

E) C) and D)
F) A) and D)

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Carbert Corporation has provided the following production and average cost data for two levels of monthly production volume.The company produces a single product. Carbert Corporation has provided the following production and average cost data for two levels of monthly production volume.The company produces a single product. The best estimate of the total cost to manufacture 4,300 units is closest to: A) $899,345 B) $951,160 C) $847,530 D) $915,010 The best estimate of the total cost to manufacture 4,300 units is closest to:


A) $899,345
B) $951,160
C) $847,530
D) $915,010

E) A) and D)
F) All of the above

Correct Answer

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Stewart Company is attempting to classify costs according to their cost behavior.Data concerning activity and costs are listed below: Stewart Company is attempting to classify costs according to their cost behavior.Data concerning activity and costs are listed below: -The costs that Stewart Company would classify as variable would be: A) maintenance and supplies. B) maintenance,supplies,utilities,lubrication and advertising. C) supplies and advertising. D) maintenance,utilities and advertising. -The costs that Stewart Company would classify as variable would be:


A) maintenance and supplies.
B) maintenance,supplies,utilities,lubrication and advertising.
C) supplies and advertising.
D) maintenance,utilities and advertising.

E) C) and D)
F) B) and C)

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Callaham Corporation is a wholesaler that sells a single product.Management has provided the following cost data for two levels of monthly sales volume.The company sells the product for $115.80 per unit. Callaham Corporation is a wholesaler that sells a single product.Management has provided the following cost data for two levels of monthly sales volume.The company sells the product for $115.80 per unit. -The best estimate of the total contribution margin when 4,300 units are sold is: A) $134,590 B) $43,430 C) $64,070 D) $38,270 -The best estimate of the total contribution margin when 4,300 units are sold is:


A) $134,590
B) $43,430
C) $64,070
D) $38,270

E) B) and C)
F) A) and D)

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Electrical costs at one of Noyd Corporation's factories are listed below: Electrical costs at one of Noyd Corporation's factories are listed below: Management believes that electrical cost is a mixed cost that depends on machine-hours. -Using the high-low method,the estimate of the variable component of electrical cost per machine-hour is closest to: A) $0.11 B) $8.92 C) $94.27 D) $8.56 Management believes that electrical cost is a mixed cost that depends on machine-hours. -Using the high-low method,the estimate of the variable component of electrical cost per machine-hour is closest to:


A) $0.11
B) $8.92
C) $94.27
D) $8.56

E) All of the above
F) A) and D)

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Contribution margin is the excess of revenues over:


A) cost of goods sold.
B) manufacturing cost.
C) all direct costs.
D) all variable costs.

E) A) and D)
F) B) and D)

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Stewart Company is attempting to classify costs according to their cost behavior.Data concerning activity and costs are listed below: Stewart Company is attempting to classify costs according to their cost behavior.Data concerning activity and costs are listed below: -The cost(s) that Stewart Company would classify as fixed would be: A) insurance. B) insurance and lubrication. C) supplies and lubrication. D) insurance and advertising. -The cost(s) that Stewart Company would classify as fixed would be:


A) insurance.
B) insurance and lubrication.
C) supplies and lubrication.
D) insurance and advertising.

E) C) and D)
F) B) and C)

Correct Answer

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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:


A) $1.20 per unit
B) $1.16 per unit
C) $1,200 plus $1.10 per unit
D) $600 plus $1.10 per unit

E) A) and B)
F) A) and C)

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A cost driver is:


A) the largest single category of cost in a company.
B) a fixed cost that cannot be avoided.
C) a factor that causes variations in a cost.
D) an indirect cost that is essential to the business.

E) All of the above
F) None of the above

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