Deck 5: Cost Estimation and Manufacturing Cost Classification

Question 1

Joint products are:

A) Any set of products that can use the same resources
B) Products that create production bottlenecks
C) Products that increase in value if sold as a package
D) Two or more products simultaneously produced from a common set of inputs by a single process

Answer 1

Two or more products simultaneously produced from a common set of inputs by a single process

Question 2

The following information applies to questions below
Really Fast Delivery Services has the collected the following information about operating expenditures for its delivery truck fleet for the past five years:
$\begin{array}{ccc}\text { Year } & \text { Miles } & \text { Operating Costs } \\ 2013 & 55,000 & \$ 195,000 \\ 2014 & 70,000 & \$ 210,000 \\ 2015 & 50,000 & \$ 180,000 \\ 2016 & 65,000 & \$ 205,000 \\ 2017 & 85,000 & \$ 225,150\end{array}$

-Using the high-low method, what is the cost estimate for variable costs for 2018?

A) $1.29
B) $2.00
C) $1.60
D) $1.50

Answer 2

$1.29

Question 3

The following information applies to questions below
Really Fast Delivery Services has the collected the following information about operating expenditures for its delivery truck fleet for the past five years:
$\begin{array}{ccc}\text { Year } & \text { Miles } & \text { Operating Costs } \\ 2013 & 55,000 & \$ 195,000 \\ 2014 & 70,000 & \$ 210,000 \\ 2015 & 50,000 & \$ 180,000 \\ 2016 & 65,000 & \$ 205,000 \\ 2017 & 85,000 & \$ 225,150\end{array}$

-Using the high-low method, what is the cost estimate for fixed costs for 2018?

A) $100,000
B) $ 70,000
C) $115,500
D) $109,650

Answer 3

$115,500

Question 4

The following information applies to questions below
Really Fast Delivery Services has the collected the following information about operating expenditures for its delivery truck fleet for the past five years:
$\begin{array}{ccc}\text { Year } & \text { Miles } & \text { Operating Costs } \\ 2013 & 55,000 & \$ 195,000 \\ 2014 & 70,000 & \$ 210,000 \\ 2015 & 50,000 & \$ 180,000 \\ 2016 & 65,000 & \$ 205,000 \\ 2017 & 85,000 & \$ 225,150\end{array}$

-What is the estimated total cost per hour at a volume of 8,000 hours?

A) $12.50
B) $14.25
C) $18.00
D) $15.25

Question 5

The following information applies to questions below
Really Fast Delivery Services has the collected the following information about operating expenditures for its delivery truck fleet for the past five years:
$\begin{array}{ccc}\text { Year } & \text { Miles } & \text { Operating Costs } \\ 2013 & 55,000 & \$ 195,000 \\ 2014 & 70,000 & \$ 210,000 \\ 2015 & 50,000 & \$ 180,000 \\ 2016 & 65,000 & \$ 205,000 \\ 2017 & 85,000 & \$ 225,150\end{array}$

-What is the estimated total fixed cost per hour at a volume 8,000 hours?

A) $10.25
B) $28.00
C) $24.00
D) $37.60

Question 6

The following information applies to questions below
The following data was input into a spreadsheet program to determine the Intercept, Slope and R² (RSQ) for Patient Days and Maintenance Costs for a local hospital:
$\begin{array}{lcc} \text {Month }&\text { Patient Days \( (X) \) }& \text {Maintenance costs \( (Y) \)}\\\text {January} & 3,300 &\$ 4,450 \\\text {February} & 4,050 &\$ 4,750 \\\text {March }& 3,000 &\$4,200\\\text {April }& 3,750 &\$4,600 \\\text {May} & 4,150 &\$5,050\\\text {June} & 4,500 &\$5,400 \\\text {July} & 2,600 &\$4,400 \\& & \\\text {Intercept }&\$2,734 \\\text {Slope} & \$0.541 \\\text {RSQ} & 0.793\end{array}$

-The estimated fixed maintenance cost for the hospital is:

A) $5,468
B) $2,734
C) $0.793
D) $0.541

Question 7

The cost of maintaining general facilities such as buildings and grounds would best be classified as what type of activity?

A) A unit-level activity
B) A batch-level activity
C) A product-level activity
D) A facility-level activity

Question 8

The following information relates to questions below
Rock Bottom's Brew is a successful brewery engaged in the development and production of specialty micro brews. It uses manufacturing cost hierarchy to allocate costs to various activities. During the past year, it has incurred:
$\begin{array}{|l|l|}\hline \text { Cost }& \text { Description} \\\hline\$ 725,000 & \text {product development costs} \\\hline \$ 475,000 & \text { materials handling costs} \\\hline \$ 1,250,000 & \text {production line labor costs} \\\hline \$ 450,000 & \text { production setup costs }\\\hline\$ 250,000 & \text { power costs (for cooling beer and running equipment) }\\\hline\$ 875,000 & \text {manufacturing facility management costs} \\\hline\end{array}$

-Using the manufacturing cost hierarchy, what is the total cost that would be classified as unit-level activity costs?

A) $ 425,000
B) $1,250,000
C) $1,975,000
D) $1,945,000

Question 9

The following information relates to questions below
Rock Bottom's Brew is a successful brewery engaged in the development and production of specialty micro brews. It uses manufacturing cost hierarchy to allocate costs to various activities. During the past year, it has incurred:
$\begin{array}{|l|l|}\hline \text { Cost }& \text { Description} \\\hline\$ 725,000 & \text {product development costs} \\\hline \$ 475,000 & \text { materials handling costs} \\\hline \$ 1,250,000 & \text {production line labor costs} \\\hline \$ 450,000 & \text { production setup costs }\\\hline\$ 250,000 & \text { power costs (for cooling beer and running equipment) }\\\hline\$ 875,000 & \text {manufacturing facility management costs} \\\hline\end{array}$

-Using the manufacturing cost hierarchy, what is the total cost that would be classified as batch-level activity costs?

A) $ 450,000
B) $ 350,000
C) $ 600,000
D) $ 625,000

Question 10

The following information relates to questions below
Rock Bottom's Brew is a successful brewery engaged in the development and production of specialty micro brews. It uses manufacturing cost hierarchy to allocate costs to various activities. During the past year, it has incurred:
$\begin{array}{|l|l|}\hline \text { Cost }& \text { Description} \\\hline\$ 725,000 & \text {product development costs} \\\hline \$ 475,000 & \text { materials handling costs} \\\hline \$ 1,250,000 & \text {production line labor costs} \\\hline \$ 450,000 & \text { production setup costs }\\\hline\$ 250,000 & \text { power costs (for cooling beer and running equipment) }\\\hline\$ 875,000 & \text {manufacturing facility management costs} \\\hline\end{array}$

-Using the manufacturing cost hierarchy, what is the total cost that would be classified as product-level activity costs?

A) $ 460,000
B) $1,250,000
C) $1,825,000
D) $ 725,000

Question 11

The following information relates to questions below
Rock Bottom's Brew is a successful brewery engaged in the development and production of specialty micro brews. It uses manufacturing cost hierarchy to allocate costs to various activities. During the past year, it has incurred:
$\begin{array}{|l|l|}\hline \text { Cost }& \text { Description} \\\hline\$ 725,000 & \text {product development costs} \\\hline \$ 475,000 & \text { materials handling costs} \\\hline \$ 1,250,000 & \text {production line labor costs} \\\hline \$ 450,000 & \text { production setup costs }\\\hline\$ 250,000 & \text { power costs (for cooling beer and running equipment) }\\\hline\$ 875,000 & \text {manufacturing facility management costs} \\\hline\end{array}$

-Using the manufacturing cost hierarchy, what is the total cost that would be classified as facility-level activity costs?

A) $ 500,000
B) $1,750,000
C) $ 875,000
D) $2,000,000

Question 12

The following information relates to questions below
Rock Bottom's Brew is a successful brewery engaged in the development and production of specialty micro brews. It uses manufacturing cost hierarchy to allocate costs to various activities. During the past year, it has incurred:
$\begin{array}{|l|l|}\hline \text { Cost }& \text { Description} \\\hline\$ 725,000 & \text {product development costs} \\\hline \$ 475,000 & \text { materials handling costs} \\\hline \$ 1,250,000 & \text {production line labor costs} \\\hline \$ 450,000 & \text { production setup costs }\\\hline\$ 250,000 & \text { power costs (for cooling beer and running equipment) }\\\hline\$ 875,000 & \text {manufacturing facility management costs} \\\hline\end{array}$

-What is the total manufacturing cost for inspections?

A) $1,100
B) $1,400
C) $ 900
D) $ 700

Question 13

The following information relates to questions below
Rock Bottom's Brew is a successful brewery engaged in the development and production of specialty micro brews. It uses manufacturing cost hierarchy to allocate costs to various activities. During the past year, it has incurred:
$\begin{array}{|l|l|}\hline \text { Cost }& \text { Description} \\\hline\$ 725,000 & \text {product development costs} \\\hline \$ 475,000 & \text { materials handling costs} \\\hline \$ 1,250,000 & \text {production line labor costs} \\\hline \$ 450,000 & \text { production setup costs }\\\hline\$ 250,000 & \text { power costs (for cooling beer and running equipment) }\\\hline\$ 875,000 & \text {manufacturing facility management costs} \\\hline\end{array}$

-What is the total manufacturing cost for the period?

A) $80,675
B) $10,625
C) $32,100
D) $17,250

Question 14

The following information relates to questions below
Rock Bottom's Brew is a successful brewery engaged in the development and production of specialty micro brews. It uses manufacturing cost hierarchy to allocate costs to various activities. During the past year, it has incurred:
$\begin{array}{|l|l|}\hline \text { Cost }& \text { Description} \\\hline\$ 725,000 & \text {product development costs} \\\hline \$ 475,000 & \text { materials handling costs} \\\hline \$ 1,250,000 & \text {production line labor costs} \\\hline \$ 450,000 & \text { production setup costs }\\\hline\$ 250,000 & \text { power costs (for cooling beer and running equipment) }\\\hline\$ 875,000 & \text {manufacturing facility management costs} \\\hline\end{array}$

-What is the per unit manufacturing cost for the period?

A) $806.75
B) $106.25
C) $321.00
D) $172.50

Question 15

Classify the total costs of each of the following as

-Wages of machine operator who is paid based on number of units produced on the machine

A) Variable
B) Fixed
C) Mixed
D) Step

Question 16

Classify the total costs of each of the following as

-Keyboards purchased from a subcontract supplier in a computer assembly plant

A) Variable
B) Fixed
C) Mixed
D) Step

Question 17

Classify the total costs of each of the following as

-Property taxes

A) Variable
B) Fixed
C) Mixed
D) Step

Question 18

Classify the total costs of each of the following as

-Salaries of quality inspectors when each inspector can evaluate a maximum of 500 units per day

A) Variable
B) Fixed
C) Mixed
D) Step

Question 19

Classify the total costs of each of the following as

-Annual salary for the vice president of manufacturing

A) Variable
B) Fixed
C) Mixed
D) Step

Question 20

Classify the total costs of each of the following as

-Electric power in a factory

A) Variable
B) Fixed
C) Mixed
D) Step

Question 21

Classify the total costs of each of the following as

-Raw materials used in production

A) Variable
B) Fixed
C) Mixed
D) Step

Question 22

Classify the total costs of each of the following as

-Water consumed by the plant, which is based on a flat fee plus actual consumption

A) Variable
B) Fixed
C) Mixed
D) Step

Question 23

Classify the total costs of each of the following as

-Overhead costs in the factory for incidental components such as small screws and rivets.

A) Variable
B) Fixed
C) Mixed
D) Step

Question 24

Classify the total costs of each of the following as

-Fire insurance on factory building

A) Variable
B) Fixed
C) Mixed
D) Step