Cma adapted a fixed cost that would be considered a

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____1. (CMA adapted) A fixed cost that would be considered a direct cost is: a. a controller’s salary if the cost object is a unit of product. b. the cost of renting a warehouse to store inventory if the cost object is the Purchasing Department. AN INTRODUCTION TO COST TERMS AND PURPOSES      15
c. an order clerk’s salary if the cost object is the Purchasing Department. d. the cost of electricity if the cost object is the Internal Audit Department. ____2. Booth Company has total fixed costs of $64,000 if 8,000 units are produced. The relevant range is 8,000 units to 16,000 units. If 10,000 units are produced, fixed costs are: ____3. In general, costs that can be most reliably predicted are: ____4. Oxley Company has total variable costs of $120,000 if 15,000 units are produced. The relevant range is 10,000 units to 20,000 units. If 12,000 units are produced, variable costs are: a. $10 per unit. b. $120,000 in total. c. $8 per unit. d. $90,000 in total. ____5. (CPA adapted) The monthly cost of renting a manufacturing plant is: ____6. (CPA adapted) Anthony Company has budgeted its cost of goods sold at $4,000,000, including fixed costs of $800,000. The variable cost of goods sold is expected to be 75% of revenues. Budgeted revenues are: ____7. (CPA) For 2002, the gross margin of Dumas Company is $96,000; the cost of goods manufactured is $340,000; the beginning inventories of work in process and finished goods are $28,000 and $45,000, respectively; and the ending inventories of work in process and finished goods are $38,000 and $52,000, respectively. The revenues of Dumas Company for 2005 are: ____8. Using the traditional three-part classification of manufacturing costs, prime costs and conversion costs have the common component of: a. direct material costs. b. direct manufacturing labor costs. c. variable manufacturing overhead costs. d. fixed manufacturing overhead costs. ____9. An assembly worker at a manufacturing company earns $12 per hour for straight time and $18 per hour for time over 40 hours per week. In a given week, the assembler worked 47 hours. The overtime premium for the week is: 16      CHAPTER 2
Review Exercises Solutions for these Review Exercises are at the end of the chapter. Check figures are given at the end of each of the exercises.

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