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CHAPTER 5
1. A variable cost remains constant in total amount, but varies per unit of activity. T / F
2. Fixed cost remains constant if expressed on a unit basis. T / F
3. On an income statement prepared by the traditional approach, costs are organized and presented according to function. T / F
4. Quartz Manufacturing Company has developed the following overhead cost formulas:
|Overhead Cost |Cost Formulas |
|Insurance |$400 |
|Depreciation |$900 |
|Maintenance materials |$0.15 per machine hour |
|Utilities |$600 plus $0.20 per machine hour |
Based on these cost formulas, the total overhead cost expected for Quartz Manufacturing Company if 1,500 hours are worked is:
5. At an activity level of 20,000 units produced, fixed costs total $30,000 and variable costs total $67,000. Assuming that this activity is within the relevant range, if 25,000 units are produced, then: A) total fixed costs are expected to be $37,500. B) variable cost per unit is expected to equal $2.68. C) fixed cost per unit is expected to equal $1.20. D) total cost per unit is expected to equal $3.88.
6. Sales for Kallas Company, a retail store, were $300,000. Net operating income totaled $50,000 and cost of goods sold was $132,000. If Kallas Company 's contribution margin equals $120,000, total variable selling and administrative expenses must equal: A) $70,000. B) $180,000. C) $118,000. D) $48,000.
Use the
1. A variable cost remains constant in total amount, but varies per unit of activity. T / F
2. Fixed cost remains constant if expressed on a unit basis. T / F
3. On an income statement prepared by the traditional approach, costs are organized and presented according to function. T / F
4. Quartz Manufacturing Company has developed the following overhead cost formulas:
|Overhead Cost |Cost Formulas |
|Insurance |$400 |
|Depreciation |$900 |
|Maintenance materials |$0.15 per machine hour |
|Utilities |$600 plus $0.20 per machine hour |
Based on these cost formulas, the total overhead cost expected for Quartz Manufacturing Company if 1,500 hours are worked is:
5. At an activity level of 20,000 units produced, fixed costs total $30,000 and variable costs total $67,000. Assuming that this activity is within the relevant range, if 25,000 units are produced, then: A) total fixed costs are expected to be $37,500. B) variable cost per unit is expected to equal $2.68. C) fixed cost per unit is expected to equal $1.20. D) total cost per unit is expected to equal $3.88.
6. Sales for Kallas Company, a retail store, were $300,000. Net operating income totaled $50,000 and cost of goods sold was $132,000. If Kallas Company 's contribution margin equals $120,000, total variable selling and administrative expenses must equal: A) $70,000. B) $180,000. C) $118,000. D) $48,000.
Use the