Question : 11) Which of the following statements a fixed cost in : 1186151

 

11) Which of the following statements is a fixed cost in a clothing store?

A) store manager’s salary

B) electricity

C) sales commissions

D) inventory

E) paper for the cash register

12) If each furnace required a hose that costs $20 and 2,000 furnaces are produced for the month, the $40,000 total cost for hoses

A) is considered to be a direct fixed cost.

B) is considered to be a direct variable cost.

C) is considered to be an indirect fixed cost.

D) is considered to be an indirect variable cost.

E) is considered to be variable or fixed, depending on the relevant range.

 

Use the information below to answer the following question(s).

 

Macadamia Co. produced and sold 40,000 units last year. Per unit revenue and costs were as follows:

 

Revenue

 

$100.00

Cost of Goods Sold:

 

 

Direct Materials

$15.00

 

Direct Labour

30.00

 

Variable Manufacturing Overhead

20.00

 

Fixed Manufacturing Overhead

10.00

 

Total Cost of Goods Sold

 

$75.00

Gross Margin

 

$25.00

Selling and Administrative Costs:

 

 

Sales Commissions (10% of Sales)

$10.00

 

Administrative Salaries

 20.00

 

Total Selling and Administrative

 

$30.00

Operating Income

 

<$5.00>

 

Fixed manufacturing overhead and administrative salaries are fixed costs. The per unit amounts are based on last year’s production.

 

13) Calculate last year’s operating income when the company produced and sold 40,000 units.

A) $0

B) $<200,000>

C) $<500,000>

D) $<800,000>

E) $<1,000,000>

14) Calculate this year’s operating income if the company plans to produce and sell 50,000 units.

A) $50,000

B) $0

C) $<250,000>

D) $<550,000>

E) $250,000

 

15) Calculate this year’s operating income if the company plans to produce and sell 60,000 units.

A) $150,000

B) $0

C) $<300,000>

D) $<650,000>

E) $300,000

 

16) Cost behaviour refers to

A) how costs react to a change in the level of activity.

B) whether a cost is incurred in a manufacturing, merchandising, or service company.

C) classifying costs as either inventoriable or period costs.

D) whether a particular expense has been ethically incurred.

E) how costs react to a change in selling price.

 

17) A mixed cost is

A) a fixed cost.

B) a cost with fixed and variable elements.

C) a variable cost.

D) always an indirect cost.

E) a cost with direct and indirect elements.

18) Variable costs

A) are always indirect costs.

B) increase in total when the actual level of activity increases.

C) include most personnel costs and depreciation on machinery.

D) can always be traced directly to the cost object.

E) change in relation to selling price.

 

19) The relevant range is important because

A) it specifies which costs should be used for a given decision.

B) it provides a basis for determining a range of acceptable cost alternatives.

C) it is required to determine inventoriable costs under Canadian GAAP.

D) it specifies the limits beyond which the relationship of cost to cost drivers may not be valid.

E) it determines the time horizon.

 

20) Which of the following statements about the key features of cost accounting and cost management is true?

A) When making decisions about what products to produce, managers need to know how revenue and costs vary with changes in output levels.

B) Managers need to understand that period costs remain the same from one period to the next.

C) The costing system allocates direct costs and traces indirect costs to products.

D) When making decisions, managers must understand that all revenue and costs are relevant.

E) Cost accounting is used for managerial decision making, not for financial statements.