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Test 2 spring 2011 sample questions with correct answers

# Test 2 spring 2011 sample questions with correct answers -...

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Test 2- Spring 2011 Sample questions with solutions: Chapter 6 1. Within the relevant range, as the number of units produced increases: A) variable costs increase in total. B) the variable cost per unit remains the same. C) fixed costs in total remain the same. D) all of the above . E) none of the above 2. The high-low method is generally more accurate than the least-squares regression method in analyzing cost behavior? A) TRUE B) FALSE 3. 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: 4. Utility costs at Service, Inc. are a mixture of fixed and variable components. Records indicate that utility costs are an average of \$0.33 per hour at an activity level of 6,620 machine hours and \$0.25 per hour at an activity level of 14,770 machine hours. Assuming that this activity is within the relevant range, what is the expected total utility cost of the company works 10,000 machine hours? 5. Farah Corporation has provided the following information and total cost data for two levels of monthly production volume. The company produces a single product. Production volume (units) 1,600 2,380 Direct materials \$87,984 \$130,876 Direct labor \$23,440 \$34,867 Manufacturing overhead \$120,720 \$136,050 The best estimate of the total cost to manufacture 1,920 units is closest to:

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Chapter 7 6. Stewart Company sells a single product. The product has a selling price of \$50 per unit and variable expenses of 80% of sales. If the company's fixed expenses total \$150,000 per year, then it will have a break-even of: a. \$750,000 b. \$187,500 c. \$15,000 d. \$3,750 7. The following is Carter Corporation's contribution format income statement for last month: Sales \$4,000,000 Less variable expenses 2,800,000 Contribution margin 1,200,000 Less fixed expenses 720,000 Net income \$ 480,000 The company has no beginning or ending inventories. A total of 80,000 units were produced and sold last month. What is the company's break-even in units?
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