Quiz 2 (Managerial Accounting)

Name:

ID:

First: TRUE/FALSE
1. Fixed costs vary with the level of production or sales volume.

2. Actual costs and budgeted costs are two different terms referring to the same thing.

3. Accountants define a cost as a resource to be sacrificed to achieve a specific objective.

4. A cost object is always either a product or a service.

5. The same cost may be direct for one cost object and indirect for another cost object.

6. Some fixed costs may be classified as direct manufacturing costs.

7. Currently, most administrative personnel costs would be classified as fixed costs.

8. When 50,000 units are produced the fixed cost is $10 per unit. Therefore, when
100,000 units are produced fixed costs will remain at $10 per unit.

9. Merchandising companies purchase products and sell them to customers without

changing their basic form.

10. Conversion costs include all direct manufacturing costs.

Second: MULTIPLE CHOICES

1. Budgeted costs are:
a. the costs incurred this year
b. the costs incurred last year
c. planned or forecasted costs
d. competitor’s costs

2. Indirect manufacturing costs:

a. can be traced to the product that created the costs
b. can be easily identified with the cost object
c. generally include the cost of material and the cost of labor
d. may include both variable and fixed costs

3. Variable costs:
a. are always indirect costs
b. increase in total when the actual level of activity increases
c. include most personnel costs and depreciation on machinery
d. can always be traced directly to the cost object

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4. Which one of the following is a variable cost for an insurance company?
a. rent
b. president's salary
c. sales commissions
d. property taxes

5. Christi Manufacturing provided the following information for last month:

Sales $10,000
Variable costs 3,000
Fixed costs 5,000
Operating income $2,000

If sales double next month, what is the projected operating income?

a. $4,000
b. $7,000
c. $9,000
d. $12,000

THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 6THROUGH 7:

The West Company manufactures several different products. Unit costs associated with
Product ORD203 are as follows:
Direct materials $ 40
Direct manufacturing labor 8
Variable manufacturing overhead 12
Fixed manufacturing overhead 23
Sales commissions (2% of sales) 6
Administrative salaries 9
Total $98

6. What are the variable costs per unit associated with Product ORD203?
a. $60
b. $83
c. $66
d. $48

7. What are the fixed costs per unit associated with Product ORD203?
a. $23
b. $32
c. $35
d. $44

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8. The controller of JoyCo has requested a quick estimate of the manufacturing supplies
needed for the Morton Plant for the month of July when production is expected to be
470,000 units to meet the ending inventory requirements and sales of 475,000 units.
JoyCo’s budget analyst has the following actual data for the last 3 months:

Production Manufacturing
Month in Units Supplies
March 450,000 $723,060
April 540,000 853,560
May 480,000 766,560
Using these data and the high-low method to develop a cost estimating equation, the
estimate of needed manufacturing supplies for July would be

A $652,500
.B $681,500
.
C $749,180
D. $752,060

9. Butteco has the following cost components for 100,000 units of product for the year:

Direct materials $200,000

Direct labor 100,000
Manufacturing overhead 200,000
Selling and administrative expense 150,000
All costs are variable except for $100,000 of manufacturing overhead and $100,000 of
selling and administrative expenses. The total costs to produce and sell 110,000 units
for the year are
A $650,000
.B $715,000
.C $695,000
D . $540,000
.

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10. Fowler Co. provides the following summary of its total budgeted production costs at
three production levels:
Volume in Units
1,000 1,500 2,000
Cost A $1,420 $2,130 $2,840
Cost B 1,550 2,200 2,900
Cost C 1,000 1,000 1,000
Cost D 1,630 2,445 3,260
The cost behavior of each of the Costs A through D, respectively, is

A. Semivariable, variable, fixed, and variable.

B. Variable, semivariable, fixed, and semivariable.
C. Variable, fixed, fixed, and variable.
D. Variable, semivariable, fixed, and variable.

❖ Post your choices at the following table.

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- Send the file after answer the questions to one of the following e mails:
haybat.abdelkader@alexu.edu.eg
haybat555@yahoo.com

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