What will result from an increase in the activity level within the relevant range?

Select one:

a. A decrease in fixed cost per unit.

b. An unchanged fixed cost per unit.

c. A proportionate increase in total fixed costs.

d. An increase in fixed cost per unit.

The linear equation Y = a + bX is often used to express cost formulas. Which of the following representations in this equation is correct?

Select one:

a. The Y term represents total fixed costs.

b. The b term represents variable cost per unit of activity.

c. The a term represents variable cost in total.

d. The X term represents total costs.

The following data pertain to activity and costs for two months:

June July

Activity level in units10,000 20,000

Variable costs $20,000 ?

Fixed costs 15,000 ?

Mixed costs 10,000 ?

Total costs $45,000 $70,000

Assuming that these activity levels are within the relevant range, what were the mixed costs for July?

Select one:

a. $10,000.

b. $40,000.

c. $15,000.

d. $35,000.

A company has sales of $87,500 at the break-even point and fixed costs are $35,000. Assuming cost behaviour does not change if sales increase by $20,000 how much will operating income will increase by?

Select one:

a. $4,000.00.

b. $8,000.00.

c. $12,000.00.

d. $20,000.00.

When interpreting a CVP graph which of the following is NOT correct?

Select one:

a. When sales are below the breakeven intersection the company incurs a loss.

b. The total revenue line starts at the origin.

c. The breakeven point is where the total revenue line meets the fixed cost line.

d. The anticipated profit or loss at any given level of sales is measured by the vertical distance between the total revenue line and the total expense line.

The Work in Process inventory account of a manufacturing company shows a balance of $2,400 at the end of an accounting period. The job cost sheets of two uncompleted jobs show charges of $400 and $200 for direct materials and charges of $300 and $500 for direct labour. From this information, what predetermined overhead rate, as a percentage of direct labour costs, does the company appear to be using?

Select one:

a. 80%.

b. 300%.

c. 125%.

d. 240%.

The Watts Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labour cost in Department A and on machine hours in Department B. At the beginning of the year, the company made the following estimates:

Department A Department B

Direct labour cost$30,000 $40,000

Manufacturing overhead$60,000 $50,000

Direct labour hours6,000 8,000

Machine hours 2,000 10,000

What predetermined overhead rates would be used in Departments A and B, respectively?

Select one:

a. 50% and $5.00.

b. 200% and $5.00.

c. 110% and $15.00.

d. 50% and $8.00.

Simplex Company has the following estimated costs for next year:

Direct materials $15,000

Direct labour 55,000

Sales commissions 75,000

Salary of production supervisor 35,000

Indirect materials 5,000

Advertising expenses 11,000

Rent on factory equipment6,000

Simplex estimates that 10,000 direct labour and 16,000 machine hours will be worked during the year. If overhead is applied on the basis of machine hours, what will be the overhead rate per hour?

Select one:

a. $3.50.

b. $6.94.

c. $7.63.

d. $8.56.