ACCT 2302 exam 2 V2_key

# ACCT 2302 exam 2 V2_key - Acct 2302 Exam 2 1 A is a fixed...

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Acct 2302 Exam 2 1. A is a fixed cost; B is a variable cost. During the current year the level of activity has decreased but is still within the relevant range. We would expect that: A) The cost per unit of A has remained unchanged. B) The cost per unit of B has decreased. C) The cost per unit of A has decreased. D) The cost per unit of B has remained unchanged. Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Medium 2. Which costs will change with an increase in activity within the relevant range? A) Unit fixed cost and total fixed cost B) Unit variable cost and total variable cost C) Unit fixed cost and total variable cost D) Unit fixed cost and unit variable cost Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Medium 3. Salaries of accounts receivable clerks when one clerical worker is needed for every 750 accounts receivable is an example of a: A) fixed cost B) step-variable cost C) mixed cost D) curvilinear cost Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Medium 4. Limousine Conversion Company purchases ordinary Cadillacs, cuts them in half, and then adds a middle section to the vehicles to create stretch limousines. With respect to the number of cars converted, the cost of the Cadillacs purchased for conversion by Limousine Conversion Company would best be described as a: A) fixed cost B) mixed cost C) step-variable cost D) variable cost Ans: D AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 5. In the standard cost formula Y = a + bX, what does the “b” represent?

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A) total cost B) total fixed cost C) total variable cost D) variable cost per unit Ans: D AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Medium 6. Shipping cost at Junk Food Imports is a mixed cost with variable and fixed components. Past records indicate total shipping cost was \$18,000 for 16,000 pounds shipped and \$22,500 for 22,000 pounds shipped. Assuming that this activity is within the relevant range, if the company plans to ship 18,000 pounds next month, the expected shipping cost is: A) \$18,500 B) \$20,400 C) \$19,500 D) \$24,000 Ans: C AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1,3 Level: Medium Solution: Pounds Shipped Shipping Cost High activity level. .... 22,000 \$22,500 Low activity level. ..... 16,000 \$18,000 Variable cost = Change in cost ÷ Change in activity = (\$22,500 − \$18,000) ÷ (22,000 − 16,000) = \$0.75 Fixed cost element = Total cost − Variable cost element = \$22,500 − (\$0.75 × 22,000) = \$6,000 Therefore, the cost formula for total shipping cost is \$6,000 per period plus \$0.75 per pound shipped, or Y = \$6,000 + \$0.75X.
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ACCT 2302 exam 2 V2_key - Acct 2302 Exam 2 1 A is a fixed...

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