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# I-Rev5 - LESSON 5 Review material Review questions Question...

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LESSON 5 Review material Review questions Question 1 — Multiple choice a. Upsilon Company operates a cafeteria for its employees. The number of meals served each week over the last seven weeks, along with the total costs of operating the cafeteria, are given below: Week Meals served Cafeteria costs 1 1,500 €4,800 2 1,600 5,080 3 1,800 5,280 4 1,450 4,900 5 1,200 4,000 6 1,650 5,100 7 1,900 5,400 Assume that the cafeteria expects to serve 1,850 meals during Week 8. Using the high-low method, what would be the expected cafeteria costs for Week 8? 1) €4,375 2) €5,180 3) €5,300 4) €5,340 b. Chang Company has two divisions, True and West. The company’s overall contribution margin ratio is 40% when combined sales in the two divisions total €900,000. If variable costs are €200,000 in Division True, and if Division West’s contribution margin ratio is 20%, what must be the sales in Division West? 1) €200,000 2) €340,000 3) €425,000 4) €700,000 c. Which of the following statements concerning the high-low method of mixed cost analysis is true? 1) The high-low method of mixed cost analysis provides the best fit for all of the data. 2) The high-low method of mixed cost analysis always shows the fixed cost component of mixed costs to be zero. 3) The high-low method of mixed cost analysis can be influenced by extreme values or outliers. 4) The cost formula resulting from the high-low method of mixed cost analysis is based on least squares. Management Accounting Fundamentals Review material 5 1

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d. Omega Co. had the following data for the first five months of 20X7: Machine-hours (X) Lubrication cost (Y) January 120 hours €750 February 160 800 March 200 870 April 150 790 May 170 840 Omega Co. expects to work 180 machine-hours in June. What would be the variable rate per machine-hour expected in June, using the high-low method? 1) €0.67 2) €1.25 3) €1.40 4) €1.50 e. Upsilon Co., a manufacturer of widgets, had the following data for 20X6: Sales 2,400 units Sales price €40 per unit Variable costs €14 per unit Fixed costs €19,500 If the company wishes to increase its total euro contribution margin by 40% in 20X7, all other factors remaining constant, by how much will it need to increase its sales? 1) €17,160 2) €24,960 3) €26,400 4) €38,400 f. ABC Manufacturing produces and sells Xenon. During the year 20X6, Xenon had sales of €500,000, a contribution margin of 20%, and a margin of safety of €200,000. What is Xenon’s fixed cost? 1) €60,000 2) €100,000 3) €120,000 4) €200,000 g. The difference between the sales price and the variable costs is referred to as which of the following? 1) Cost-volume-profit analysis 2) Gross margin 3) Marginal cost 4) Contribution margin Management Accounting Fundamentals Review material 5 2
h. Which of the following is an equation of a mixed cost function? 1) Y = a + b 2) Y = a + bX 3) Y = a 4) Y = bX i. Triton Printing employs 85 individuals. Fifteen employees receive a fixed salary, 60 employees are paid on an hourly basis, ranging from €10 to €18 per hour, and 10 salespersons are paid a €1,000 fixed amount per month and 5% commission on sales. How would total cost of personnel be classified?

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