ACG 2071 Exam 3 Review Chapters 5, 6, and 7

Assuming inventory increased by 4,000 units during April, what is Flint Enterprise's net operating income under full absorption costing?

• $1,285,000

• $1,365,000

• $1,745,000

• $1,785,000

The unit contribution margin tells how much each additional unit sold will contribute to covering variable costs.

• True

• False

Which of the following is a fixed cost?

• A cost that is $28.00 per unit when production is 70,000, and $28.00 per unit when production is 112,000.

• A cost that is $28.00 per unit when production is 70,000, and $17.50 per unit when production is 112,000.

• A cost that is $28.00 per unit when production is 70,000, and $56.00 per unit when production is 112,000.

• A cost that is $56.00 per unit when production is 70,000, and $56.00 per unit when production is 112,000.

Step costs are fixed over some range of activity and then increase like a variable cost as the level of activity increases.

• True

• False

A cost driver:

• Is the same as a fixed cost.

• Is an activity that causes total costs to change.

• Is the same as margin of safety.

• Is a method of calculating mixed costs.

A mixed cost has:

• Either fixed or variable cost components, but not both.

• Only variable cost components, both within and outside of the relevant range.

• Only fixed cost components, both within and outside of the relevant range.

• Both fixed and variable cost components.

What is one way a manager can improve the contribution margin ratio?

• Eliminate salaried positions allocated to creating products.

• Have purchasing buy higher quality materials to increase sales volume.

• Lower prices to increase sales volume.

• Promote hourly workers in the factory to salaried positions.

Regression analysis is a cost-estimating approach that uses __________ to find the cost line.

• Only two data points.

• All available data points.

• Only four data points.

• Personal intuition.

When Carter, Incorporated, sells 48,000 units, its total variable cost is $115,200. What is its total variable cost when it sells 54,000 units?

• $100,800.

• $115,200.

• $129,600.

• $134,800.

Fremont, Incorporated, which uses the high-low method, reported total costs of $10 per unit at its lowest production level, 5,000 units. When production tripled to its highest level, the total cost per unit dropped to $5. What would Fremont estimate its total fixed cost as?

• $5

• $15

• $50,000

• $37,500