Difficulty: 1 Easy
Topic: Cost Classifications for Predicting Cost Behavior
Learning Objective: 01-04 Understand cost classifications used to predict cost behavior: variable costs, fixed costs, and mixed costs.
Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Measurement
139) At an activity level of 8,400 units in a month, Braughton Corporation's total variable maintenance and repair cost is $697,284 and its total fixed maintenance and repair cost is $464,100. What would be the total maintenance and repair cost, both fixed and variable, at an activity level of 8,500 units in a month? Assume that this level of activity is within the relevant range. (Round intermediate calculations to 2 decimal places.)
A) $1,175,210
B) $1,169,685
C) $1,161,384
D) $1,168,297
Answer: B
Explanation: Variable cost per unit = $697,284 ÷ 8,400 units = $83.01 per unit
Total cost = Total fixed cost + Total variable cost
= $464,100 + ($83.01 per unit × 8,500 units)
= $464,100 + $705,585
= $1,169,685
Difficulty: 2 Medium
Topic: Cost Classifications for Predicting Cost Behavior
Learning Objective: 01-04 Understand cost classifications used to predict cost behavior: variable costs, fixed costs, and mixed costs.
Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Measurement
140) The following data pertains to activity and costs for two months:
June
July
Activity level in units
10,000
11,000
Direct materials
$
17,000
$
?
Fixed factory rent
21,000
?
Other production costs
20,000
?
Total cost
$
58,000
$
61,300
Assuming that these activity levels are within the relevant range, the other production costs for July were: (Round intermediate calculations to 2 decimal places.)
A) $21,600
B) $20,000
C) $22,000
D) $19,500
Answer: A
Explanation: Direct materials per unit = $17,000 ÷ 10,000 units = $1.70 per unit
Total direct materials cost in July = $1.70 per unit × 11,000 units = $18,700
Fixed factory rent = $21,000 (given)
Total cost = Direct materials + Fixed factory rent + Other production costs
$61,300 = $18,700 + $21,000 + Other production costs
Other production costs = $61,300 − ($18,700 + $21,000)
= $61,300 − $39,700
= $21,600
Difficulty: 3 Hard
Topic: Cost Classifications for Predicting Cost Behavior
Learning Objective: 01-04 Understand cost classifications used to predict cost behavior: variable costs, fixed costs, and mixed costs.
Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Measurement
141) Paolucci Corporation's relevant range of activity is 4,000 units to 8,000 units. When it produces and sells 6,000 units, its average costs per unit are as follows:
Average Cost per Unit
Direct materials
$
6.45
Direct labor
$
3.30
Variable manufacturing overhead
$
1.25
Fixed manufacturing overhead
$
3.00
Fixed selling expense
$
1.05
Fixed administrative expense
$
0.60
Sales commissions
$
1.00
Variable administrative expense
$
0.50
If 5,000 units are sold, the variable cost per unit sold is closest to:
A) $17.15
B) $11.00
C) $14.00
D) $12.50
Answer: D
Explanation:
Direct materials
$
6.45
Direct labor
3.30
Variable manufacturing overhead
1.25
Sales commissions
1.00
Variable administrative expense
0.50
Variable cost per unit sold
$
12.50
Difficulty: 1 Easy
Topic: Cost Classifications for Predicting Cost Behavior
Learning Objective: 01-04 Understand cost classifications used to predict cost behavior: variable costs, fixed costs, and mixed costs.