Question
1. Tasty Treats is a snow cone stand near the local park. To plan for the future, Tasty Treats wants to determine its cost behavior
1. Tasty Treats is a snow cone stand near the local park. To plan for the future, Tasty Treats wants to determine its cost behavior patterns. It has the following information available about its operating costs and the number of snow cones served.
Month | Number of snow cones | Total operating costs |
January | 6,400 | $5,980 |
February | 7,000 | $6,400 |
March | 6,200 | $5,840 |
April | 6,900 | $6,330 |
May | 7,600 | $6,820 |
June | 7,250 | $6,575 |
The variable cost per snow cone using the highlow method is
A.$0.90.
B.$0.70.
C.$0.94.
D.$1.43.
2. Mario Company has total fixed costs of $600,000. Total fixed and variable costs are $612,500 at a production level of 175,000 units. The fixed cost per unit at a production level of 300,000 units is
A.$2.00.
B.$3.50.
C.$1.75.
D.$2.04.
3. What are scatter plots useful for?
A.Determining the overall strength of the relationship between historical cost and volume
B.Identifying potential outliers
C.Both of the above
D.Neither of the above
4. The managerial accountant at Pembroke Manufacturing reported the following data:
Units: | |
Beginning WIP | 54,500 |
75% for materials | |
45% for conversion | |
Transferredin | 225,000 |
Completed | 232,000 |
Ending WIP | |
60% for materials | |
20% for conversion | 47,500 |
Costs: | |
Beginning WIP | |
Direct materials | $67,500 |
Conversion | 145,400 |
Transferredin | 99,000 |
Transferredin from department 1 | $1,550,050 |
Direct materials added | 909,375 |
Conversion added | 542,875 |
Costs of units transferred to Finished Goods Inventory would be closest to
A.$3,314,200.
B.$1,531,200.
C.$3,002,300.
D.$2,900,000.
5. When predicting costs at other volumes using a cost equation derived from either the highlow method or regression analysis, managers should consider?
A.general inflation.
B.seasonality.
C.outliers.
D.all of the above.
6. At Sunrise Corporation, direct materials are added at the beginning of the process and conversions costs are uniformly applied. Other details include:
WIP beginning (50% for conversion) | 19,200 units |
Units started | 120,500 units |
Units completed and transferred out | 116,700 units |
WIP ending (60% for conversion) | 23,000 units |
Beginning WIP direct materials | $35,000 |
Beginning WIP conversion costs | $22,500 |
Costs of materials added | $384,100 |
Costs of conversion added | $271,125 |
What is the cost per equivalent unit for conversion costs?
A.$2.25
B.$2.08
C.$2.10
D.$2.32
7. A shampoo manufacturer offers the following information:
WIP Inventory, January 1 | 0 units |
Units started | 25,600 units |
Units completed and transferred out | 19,200 units |
WIP Inventory, December 31 | 6,400 units |
Direct materials | $276,480 |
Direct labor | $585,000 |
Manufacturing Overhead | $328,920 |
The units in ending WIP Inventory were 60% complete for materials and 40% complete for conversion costs.
On December 31, the cost per equivalent unit for materials would be closest to
A.$14.28.
B.$9.39.
C.$12.00.
D.$12.71
8. Fun Stuff Manufacturing produces frisbees using a threestep
sequential process that includes molding, coloring and finishing. When the frisbees and associated costs are transferred from the molding process to the coloring process, which account is debited?
A.Raw Materials Inventory
B.WIP InventoryminusMolding
C.WIP InventoryminusColoring
D.WIP Inventorylong dashFinishing
9. Which of the following is a measure of the amount of work done, expressed in complete units of output?
A.Job costing
B.Process costing
C.Equivalent units
D.Conversion costs
10. It costs Homer's Manufacturing $0.75 to produce baseballs and Homer sells them for $4.00 a piece. Homer pays a sales commission of 5% of sales revenue to his sales staff. Homer also pays $12,000 a month rent for his factory and store, and also pays $75,000 a month to his staff in addition to the commissions. Homer sold67,500 baseballs in June. If Homer prepares a contribution margin income statement for the month of June, what would be his operating income?
A.$118,875
B.$292,875
C.$64,125
D.$270,000
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