Score 100 Three Most Common Cost Behavior Classifications Are Fixed Costs Variable Costs And

Published by James Muriuki on

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The three most common cost behavior classifications are:

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a. fixed costs, variable costs, and mixed costs.  

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b. variable costs, product costs, and sunk costs.  

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c. variable costs, sunk costs, and opportunity costs.  

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d. variable costs, period costs, and differential costs.

 

Manley Co. manufactures office furniture. During the most productive month of the year, 4,500 desks were manufactured at a total cost of $86,625. In its slowest month, the company made 1,800 desks at a cost of $49,500. Using the high-low method of cost estimation, total fixed costs are:

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a. $61,875  

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b. $33,875  

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c. $24,750  

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d. cannot be determined from the data given

 

If fixed costs increased and variable costs per unit decreased, the break-even point would:

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a. decrease.  

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b. remain the same.  

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c. increase.  

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d. cannot be determined from the data provided

 

If sales are $808,258, variable costs are 65% of sales, and operating income is $222,866, what is the contribution margin ratio?

Select the correct answer.

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35%  

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28%  

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65%  

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72%

 

Which of the following conditions would cause the break-even point to decrease?

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a. Unit variable cost increases  

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b. Unit selling price decreases  

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c. Total fixed costs increase  

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d. Unit variable cost decreases

 

In cost-volume-profit analysis, all costs are classified into the following two categories:

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a. variable costs and fixed costs  

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b. mixed costs and variable costs  

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c. sunk costs and fixed costs  

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d. discretionary costs and sunk costs

 

Zeke Company sells 25,000 units at $21 per unit. Variable costs are $10 per unit, and fixed costs are $75,000. The contribution margin ratio and the unit contribution margin are:

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a. 47% and $11 per unit.  

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b. 52% and $11 per unit.  

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c. 47% and $8 per unit.  

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d. 53% and $7 per unit

 

Which of the graphs in Figure 20-1 illustrates the behavior of a total variable cost?

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a. Graph 2  

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b. Graph 4  

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c. Graph 1  

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d. Graph 3

 

Contribution margin is:

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a. the same as sales revenue.  

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b. another term for volume in the “cost-volume-profit” analysis.  

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c. the excess of sales revenue over variable cost.  

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d. profit.

 

Forde Co. has an operating leverage of 4. Sales are expected to increase by 12% next year. Operating income is:

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a. expected to increase by 3%  

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b. unaffected  

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c. expected to increase by 4 %  

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d. expected to increase by 48%

 

If sales are $861,399, variable costs are $421,360, and operating income is $276,326, what is the contribution margin ratio?

Select the correct answer.

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81%  

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32%  

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49%  

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51%

 

Carter Co. sells two products, Arks and Bins. Last year Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are:

What was Carter Co.’s weighted average variable cost?

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a. $ 70  

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b. $ 64  

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c. $140  

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d. $ 60

 

If fixed costs are $241,258, the unit selling price is $115, and the unit variable costs are $73, what is the break-even sales (units)?

Select the correct answer.

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73 units  

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5,744 units  

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2,098 units  

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4,825 units

 

Which of the following is an example of a cost that varies in total as the number of units produced changes?

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a. Straight-line depreciation on factory equipment  

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b. Direct materials cost  

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c. Salary of a production supervisor  

[removed] d. Property taxes on factory buildings

Carter Co. sells two products, Arks and Bins. Last year Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are:

What was Carter Co.’s weighted average unit selling price?

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a. $200  

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b. $100  

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c. $ 88  

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d. $ 80

 

Ingram Co. manufactures office furniture. During the most productive month of the year, 3,271 desks were manufactured at a total cost of $84,759. In its slowest month, the company made 1,211 desks at a cost of $39,935. Using the high-low method of cost estimation determine total fixed costs are.

Select the correct answer.

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$39,935  

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$44,824  

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$84,759  

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$13,585

 

The systematic examination of the relationships among selling prices, volume of sales and production, costs, and profits is termed:

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a. budgetary analysis.  

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b. gross profit analysis.  

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c. contribution margin analysis.  

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d. cost-volume-profit analysis.

 

If sales are $500,000, variable costs are 75% of sales, and operating income is $40,000, what is the operating leverage?

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a. 3.1  

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b. 1.3  

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c. 1.25  

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d. 0

 

 

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