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Exam 1: Managerial Accounting and Cost Concepts

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Question 21

Multiple Choice

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Corcetti Company manufactures and sells prewashed denim jeans. Large rolls of denim cloth are purchased and are first washed in a giant washing machine. After the cloth is dried, it is cut up into jean pattern shapes and then sewn together. The completed jeans are sold to various retail chains. Which of the following terms could be used to correctly describe the cost of the soap used to wash the denim cloth?

A) Option A
B) Option B
C) Option C
D) Option D

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Question 22

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Rent on a factory building used in the production process would be classified as a product cost and as a fixed cost.

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Question 23

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Emerton Corporation leases its corporate headquarters building. This lease cost is fixed with respect to the company's sales volume. In a recent month in which the sales volume was 32,000 units, the lease cost was $716,800. To the nearest whole dollar, what should be the total lease cost at a sales volume of 30,900 units in a month? (Assume that this sales volume is within the relevant range.)

Direct labor is a part of prime cost, but not conversion cost.

A soft drink bottler incurred the following factory utility cost: $3,936 for 800 cases bottled and $3,988 for 900 cases bottled. Factory utility cost is a mixed cost containing both fixed and variable components. The variable factory utility cost per case bottled is closest to:

The contribution margin is the amount remaining from sales revenues after variable expenses have been deducted.

A partial listing of costs incurred during December at Rooks Corporation appears below: The total of the period costs listed above for December is:

Which of the following companies would have the highest proportion of variable costs in its cost structure?

Farnor, Inc., would like to estimate the variable and fixed components of its electrical costs and has compiled the following data for the last four months of operations. Using the high-low method of analysis, the estimated fixed cost per month for electricity is closest to:

Contribution margin means:

Inspection costs at one of Iuliano Corporation's factories are listed below: Management believes that inspection cost is a mixed cost that depends on units produced. Using the high-low method, the estimate of the fixed component of inspection cost per month is closest to:

Depreciation on office equipment would be included in product costs.

Nieman Inc., a local retailer, has provided the following data for the month of March: The net operating income for March was:

A partial listing of costs incurred at Gilhooly Corporation during September appears below: The total of the product costs listed above for September is:

Gabat Inc. is a merchandising company. Last month the company's merchandise purchases totaled $67,000. The company's beginning merchandise inventory was $19,000 and its ending merchandise inventory was $22,000. What was the company's cost of goods sold for the month?

A partial listing of costs incurred during December at Rooks Corporation appears below: The total of the manufacturing overhead costs listed above for December is:

Hadrana Corporation reports that at an activity level of 5,500 units, its total variable cost is $275,330 and its total fixed cost is $86,240. What would be the total variable cost at an activity level of 5,600 units? Assume that this level of activity is within the relevant range.

Comparative income statements for Tudor Retailing Company for the last two months are presented below: If the Tudor Retailing Company uses the high-low method of analysis, the total monthly fixed cost for Tudor Retailing Company would be estimated to be:

Total variable cost is expected to remain unchanged as activity changes within the relevant range.

Oaklis Company has provided the following data for maintenance cost: Maintenance cost is a mixed cost with variable and fixed components. The fixed and variable components of maintenance cost are closest to: