Total cost = Fixed cost + (Variable cost per unit × Units) = $40,000 + ($1.50 per unit × 42,000 units) = $103,000
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
244) At a sales volume of 40,000 units, Lonnie Company's total fixed costs are $40,000 and total variable costs are $60,000. The relevant range is 30,000 to 50,000 units.
If Lonnie were to sell 50,000 units, the total expected cost per unit would be: (Round intermediate calculations to 2 decimal places.)
A) $2.20
B) $2.30
C) $2.50
D) $2.00
Answer: B
Explanation:
Variable cost per unit = Total variable cost ÷ Units = $60,000 ÷ 40,000 = $1.50 per unit
Total cost = Fixed cost + (Variable cost per unit × Units) = $40,000 + ($1.50 per unit × 50,000 units) = $115,000
Cost per unit = $115,000 ÷ 50,000 units = $2.30 per unit
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
245) Erkkila Inc. reports that at an activity level of 2,100 machine-hours in a month, its total variable inspection cost is $69,846 and its total fixed inspection cost is $9,072.
What would be the average fixed inspection cost per unit at an activity level of 2,400 machine-hours in a month? Assume that this level of activity is within the relevant range.
A) $37.58
B) $4.32
C) $15.23
D) $3.78
Answer: D
Explanation: Average fixed inspection cost = Total fixed inspection cost ÷ Total activity
= $9,072 ÷ 2,400 machine-hours
= $3.78 per machine-hour
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
246) Erkkila Inc. reports that at an activity level of 2,100 machine-hours in a month, its total variable inspection cost is $69,846 and its total fixed inspection cost is $9,072.
What would be the total variable inspection cost at an activity level of 2,400 machine-hours in a month? Assume that this level of activity is within the relevant range. (Round intermediate calculations to 2 decimal places.)
A) $78,918
B) $69,846
C) $79,824
D) $10,368
Answer: C
Explanation: Variable inspection cost per unit = Total variable inspection cost ÷ Total activity
= $69,846 ÷ 2,100 machine-hours
= $33.26 per machine-hour
Total variable inspection cost = Variable inspection cost per unit × Total activity
= $33.26 per machine-hour × 2,400 machine-hours
= $79,824
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
247) Kogler Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows:
Average
Cost per Unit
Direct materials
$
4.85
Direct labor
$
4.20
Variable manufacturing overhead
$
1.55
Fixed manufacturing overhead
$
9.00
Fixed selling expense
$
3.15
Fixed administrative expense
$
1.80
Sales commissions
$
0.50
Variable administrative expense
$
0.45
If the selling price is $25.00 per unit, the contribution margin per unit sold is closest to:
A) $13.45
B) ($0.50)
C) $5.40
D) $15.95
Answer: A
Explanation:
Selling price per unit