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As production decreases, fixed costs per unit ____.


A) increase
B) decrease
C) remain the same
D) cannot be predicted

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

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George's Ice Cream Shop believes most of its utilities costs are mixed. George has collected the following data on gallons of ice cream used and related utilities costs for the past six months: George's Ice Cream Shop believes most of its utilities costs are mixed. George has collected the following data on gallons of ice cream used and related utilities costs for the past six months: George has run a regression analysis on the above information and has come up with the following data: Using regression analysis, which of the following formulas would be the best predictor of total estimated mixed costs? A) Y = $300 + $20x B) Y = $329.50 + $19.57x C) Y = $900 + $30x D) Y = $19.56 + $329.50x George has run a regression analysis on the above information and has come up with the following data: George's Ice Cream Shop believes most of its utilities costs are mixed. George has collected the following data on gallons of ice cream used and related utilities costs for the past six months: George has run a regression analysis on the above information and has come up with the following data: Using regression analysis, which of the following formulas would be the best predictor of total estimated mixed costs? A) Y = $300 + $20x B) Y = $329.50 + $19.57x C) Y = $900 + $30x D) Y = $19.56 + $329.50x Using regression analysis, which of the following formulas would be the best predictor of total estimated mixed costs?


A) Y = $300 + $20x
B) Y = $329.50 + $19.57x
C) Y = $900 + $30x
D) Y = $19.56 + $329.50x

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

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You are given the following cost and volume information: You are given the following cost and volume information: Which type of cost is given? A) Variable B) Fixed C) Mixed D) Cannot be determined Which type of cost is given?


A) Variable
B) Fixed
C) Mixed
D) Cannot be determined

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

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Which of the following is most likely to be classified as a fixed cost?


A) Factory utilities
B) Factory supplies
C) Direct labor
D) Factory insurance

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

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D

When comparing a "pre-tax cost" and an "after-tax cost", which of the following is true?


A) The after-tax cost will be greater than the pretax cost.
B) They will be the same amount.
C) The pre-tax cost will be greater than the after-tax cost.
D) The higher the tax rate, the lower the difference in the amount between them.

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

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When using the high/low method, the change in cost divided by the change in volume is:


A) the fixed cost per unit.
B) the mixed cost per unit.
C) the variable cost per unit.
D) the total cost per unit.

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

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Label whether each of the following costs is most likely fixed (F) or variable (V). Label whether each of the following costs is most likely fixed (F) or variable (V).

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Jansen Inc. currently produces and sells 9,000 units per year with the following cost data: Jansen Inc. currently produces and sells 9,000 units per year with the following cost data: Next year, Jansen plans to increase its advertising budget, which will increase fixed costs by 7%. With increased advertising, the company expects the number of units produced and sold to increase by 12%. Determine the budgeted total cost for next year. A) $70,500 B) $78,060 C) $78,585 D) $71,025 Next year, Jansen plans to increase its advertising budget, which will increase fixed costs by 7%. With increased advertising, the company expects the number of units produced and sold to increase by 12%. Determine the budgeted total cost for next year.


A) $70,500
B) $78,060
C) $78,585
D) $71,025

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

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You are trying to determine whether machine hours or direct labor dollars would be the best cost driver for overhead costs. You run two regression analyses and obtain the following results: You are trying to determine whether machine hours or direct labor dollars would be the best cost driver for overhead costs. You run two regression analyses and obtain the following results: Which variable would be the best selection for a cost driver and why? You are trying to determine whether machine hours or direct labor dollars would be the best cost driver for overhead costs. You run two regression analyses and obtain the following results: Which variable would be the best selection for a cost driver and why? Which variable would be the best selection for a cost driver and why?

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Direct labor dollars would be the best c...

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Bob's Burgers Bob's Burgers currently produces and sells 12,000 burgers per month with the following costs: Bob's Burgers Bob's Burgers currently produces and sells 12,000 burgers per month with the following costs: Bob has recently switched food suppliers and anticipates that variable costs will decrease by $0.35 per unit. In addition, Bob has renegotiated his store lease and fixed costs will be dropping by $8,000 per month. Refer to the information provided for Bob's Burgers. What will be Bob's new cost equation? A) Total costs = $60,000 + $2.75x B) Total costs = $60,000 + $2.05x C) Total costs = $8,000 + $0.35x D) Total costs = $52,000 + $2.05x Bob has recently switched food suppliers and anticipates that variable costs will decrease by $0.35 per unit. In addition, Bob has renegotiated his store lease and fixed costs will be dropping by $8,000 per month. Refer to the information provided for Bob's Burgers. What will be Bob's new cost equation?


A) Total costs = $60,000 + $2.75x
B) Total costs = $60,000 + $2.05x
C) Total costs = $8,000 + $0.35x
D) Total costs = $52,000 + $2.05x

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

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A manager is considering a special project. Corporate policy dictates that all special projects must generate an after-tax profit of $21,000. If the company expects costs related to the project to be equal to $43,000, what is the before-tax cash sales price that should be charged in order to adhere to corporate policy assuming the company has a tax rate of 30%?

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Before-tax sales price needs to be $73,000. After-tax profit = Before-tax profit ´ (1 - tax rate) 21,000 = (x - 43,000) ´ (1 - .30) 21,000 = .70(x - 43,000) 21,000 = .70x - 30,100 51,100 = .70x x = $73,000

The after-tax benefit of a taxable cash receipt can be calculated as follows:


A) After-tax benefit = Pretax receipt ´ tax rate
B) After-tax benefit = Pretax receipt ´ (1 - tax rate)
C) After-tax benefit = Pretax receipt ´ (1 + tax rate)
D) After-tax benefit = Pretax receipt ¸ tax rate

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

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Under absorption costing, which of the following is not considered a product cost?


A) Direct labor
B) Fixed manufacturing overhead
C) Variable manufacturing overhead
D) Administrative costs

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

Correct Answer

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Speedy Couriers Speedy Couriers documented the miles driven and total vehicle costs for the past five months as follows: Speedy Couriers Speedy Couriers documented the miles driven and total vehicle costs for the past five months as follows: Refer to the Speedy Couriers information above. Using the high/low method, if Speedy expects to drive 1,750 miles in June, what will be expected total vehicle costs? A) $3,825.00 B) $4,585.00 C) $8,087.50 D) $3,855.00 Refer to the Speedy Couriers information above. Using the high/low method, if Speedy expects to drive 1,750 miles in June, what will be expected total vehicle costs?


A) $3,825.00
B) $4,585.00
C) $8,087.50
D) $3,855.00

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

Correct Answer

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Regression Analysis 2 You run a regression analysis and receive the following results: Regression Analysis 2 You run a regression analysis and receive the following results: Refer to the Regression Analysis 2 above. To the nearest dollar, what would be the estimated total costs if 500 units were produced? A) $ 544 B) $4,236 C) $3,692 D) $3,147 Refer to the Regression Analysis 2 above. To the nearest dollar, what would be the estimated total costs if 500 units were produced?


A) $ 544
B) $4,236
C) $3,692
D) $3,147

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

Correct Answer

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____ are costs that do not change in total when production volume increases or decreases within the relevant range.


A) Variable costs
B) Relevant costs
C) Fixed costs
D) Period costs

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

Correct Answer

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C

As production increases, variable costs per unit ____.


A) increase
B) decrease
C) remain the same
D) can not be predicted

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

Correct Answer

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Label whether each of the following costs is most likely fixed (F) or variable (V). Label whether each of the following costs is most likely fixed (F) or variable (V).

Correct Answer

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Under variable costing, which of the following is not considered a product cost?


A) Direct materials
B) Direct labor
C) Fixed manufacturing overhead
D) Variable manufacturing overhead

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

Correct Answer

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Which of the following descriptions would not be found on an income statement prepared using variable costing?


A) Sales
B) Fixed costs
C) Cost of goods sold
D) Net operating income

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

Correct Answer

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