2.80
Variable manufacturing overhead
$
1.55
Fixed manufacturing overhead
$
2.40
Fixed selling expense
$
0.50
Fixed administrative expense
$
0.40
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) $13.00
B) $10.60
C) $12.10
D) $15.40
Answer: C
Explanation:
Direct materials
$
6.25
Direct labor
2.80
Variable manufacturing overhead
1.55
Sales commissions
1.00
Variable administrative expense
0.50
Variable cost per unit sold
$
12.10
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
236) Adens Corporation's relevant range of activity is 2,000 units to 6,000 units. When it produces and sells 4,000 units, its average costs per unit are as follows:
Average
Cost per Unit
Direct materials
$
6.25
Direct labor
$
2.80
Variable manufacturing overhead
$
1.55
Fixed manufacturing overhead
$
2.40
Fixed selling expense
$
0.50
Fixed administrative expense
$
0.40
Sales commissions
$
1.00
Variable administrative expense
$
0.50
If 5,000 units are sold, the total variable cost is closest to:
A) $53,000
B) $65,000
C) $60,500
D) $77,000
Answer: C
Explanation:
Direct materials
$
6.25
Direct labor
2.80
Variable manufacturing overhead
1.55
Sales commissions
1.00
Variable administrative expense
0.50
Variable cost per unit sold
$
12.10
Variable cost per unit sold (a)
$
12.10
Number of units sold (b)
5,000
Total variable costs (a) × (b)
$
60,500
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
237) Batterson Corporation leases its corporate headquarters building. This lease cost is fixed with respect to the company's sales volume. In a recent month in which the sales volume was 28,000 units, the lease cost was $697,200.
To the nearest whole dollar, what should be the total lease cost at a sales volume of 29,200 units in a month? (Assume that this sales volume is within the relevant range.)
A) $712,140
B) $697,200
C) $727,080
D) $668,548
Answer: B
Explanation: $697,200; A fixed cost is constant in total within the relevant range.
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
238) Batterson Corporation leases its corporate headquarters building. This lease cost is fixed with respect to the company's sales volume. In a recent month in which the sales volume was 28,000 units, the lease cost was $697,200.
To the nearest whole cent, what should be the average lease cost per unit at a sales volume of 26,400 units in a month? (Assume that this sales volume is within the relevant range.)
A) $25.66
B) $24.90
C) $23.88
D) $26.41
Answer: D
Explanation: Average lease cost per unit = Total lease cost ÷ Unit sales
= $697,200 ÷ 26,400 units
= $26.41 per unit
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.