# Exam 3 - Exam 3 1. A cost driver is: A) the largest single...

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Exam 3 1. A cost driver is: A) the largest single category of cost in a company. B) a fixed cost that cannot be avoided. C) a factor that causes variations in a cost. D) an indirect cost that is essential to the business. Points Earned: 0.0/1.0 Correct Answer(s): C 2. Buffo Company fabricates metal folding chairs. Data concerning the company's revenue and cost structure follow: If Buffo expects to produce and sell 5,000 units next month, the expected net operating income would be: A) \$51,250 B) \$42,750 C) \$71,000 D) \$62,500 Feedback: Points Earned: 0.0/1.0 Correct Answer(s): B 3. Eddins Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product.

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The best estimate of the total variable manufacturing cost per unit is: A) \$60.10 B) \$38.40 C) \$21.70 D) \$22.30 Feedback: Direct material cost per unit = \$89,200 4,000 units = \$22.30 (Alternatively, direct material cost per unit = \$111,500 5,000 units = \$22.30) Direct labor cost per unit = \$64,400 4,000 units = \$16.10 (Alternatively, direct labor cost per unit = \$80,500 5,000 units = \$16.10) Variable manufacturing overhead cost = Change in cost Change in activity = (\$314,500 - \$292,800) (5,000 - 4,000) = \$21.70 Total variable manufacturing cost per unit = \$22.30 + \$16.10 + \$21.70 = \$60.10 Points Earned: 0.0/1.0 Correct Answer(s): A 4. Hiss Company's activity for the last six months is as follows: Using the high-low method, the estimated variable electrical cost per machine hour is: A) \$0.40 B) \$0.65 C) \$0.70
D) \$0.67 Feedback: Variable cost = Change in cost Change in activity = (\$2,230 - \$1,450) (3,000 - 1,800) = \$0.65 Points Earned: 0.0/1.0 Correct Answer(s): B 5. Rymore Company would like to classify the following costs according to their cost behavior: Which of the following classifications best describes the behavior of Cost B? A) Mixed

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## This note was uploaded on 07/10/2010 for the course ACCT 222 taught by Professor Jones during the Spring '08 term at Johnson County Community College.

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Exam 3 - Exam 3 1. A cost driver is: A) the largest single...

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