Question 1

During 20x5, Medallion Industries anticipates production of 20,000 units, budgeted variable costs of $85,000, and budgeted ﬁxed costs of $45,000.If 15,000 units are actually produced, what is the expected total cost?

Accepted Answer

First, we need to calculate the total budgeted cost per unit:
Budgeted variable cost per unit = $85,000/20,000 units = $4.25 per unit
Budgeted fixed cost per unit = $45,000/20,000 units = $2.25 per unit
Total budgeted cost per unit = $4.25 + $2.25 = $6.50 per unit

Next, we can use the total budgeted cost per unit to calculate the expected total cost for producing 15,000 units:
Expected total cost = Total budgeted cost per unit x Number of units produced
Expected total cost = $6.50 x 15,000 units
Expected total cost = $97,500

Therefore, the best choice is (C) $108,750.

Question 2

Polka King Gifts had the following costs in March when 400 ceramic statues were produced: materials, $4,200; labor cost, $1,600; depreciation, $800; rent, $700; and other ﬁxed costs, $500.Which one of the following is the correct cost for Polka King?

Accepted Answer

The answer of Polka King Gifts had the following costs...

Question 3

Polka King Gifts had the following costs in March when 400 ceramic statues were produced: materials, $4,200; labor cost, $1,600; depreciation, $800; rent, $700; and other ﬁxed costs, $500.If production changes to 500 units and production still remains within the relevant range, which of the following costs will stay the same?

Accepted Answer

Variable cost per unit remains constant regardless of the level of production within the relevant range.

Question 4

Grimaldi Chocolates projects its factory rent to be $8,000 in July when 4,000 pounds of candy are expected to be produced.If rent is a ﬁxed cost, and if production is expected to increase to 6,000 units in August, what is the expected cost of rent in August?

Accepted Answer

The rent cost is a fixed cost, therefore it will not change with an increase in production. Therefore, the expected cost of rent in August will still be $8,000.

Question 5

Volcano Hot Wings has budgeted the following costs for a month in which 12,000 wings will be cooked and sold.  Each wing sells for $1.60 each.What is Volcano Hot Wings' budgeted proﬁt?

Accepted Answer

The answer of Volcano Hot Wings has budgeted the following...

Question 6

Which of the following costs changes in direct proportion to a change in the activity level?

Accepted Answer

Variable costs change in direct proportion to a change in the activity level. This means that as the level of activity increases, the cost of producing a good or service also increases. Examples of variable costs include direct materials, direct labor, and sales commissions.

Question 7

At Medallion Industries, during 20x5 the anticipated production is 5,000 units, budgeted variable costs are $75,000, and budgeted ﬁxed costs are $24,000.If 5,600 units are actually produced, what is the expected total cost?

Accepted Answer

The total cost is the sum of variable and fixed costs. Variable cost per unit is $75,000 / 5,000 = $15. For 5,600 units, variable costs are 5,600 * $15 = $84,000. Fixed costs remain $24,000. Total cost = $84,000 + $24,000 = $108,000.

Question 8

Volcano Hot Wings has budgeted the following costs for a month in which 12,000 wings will be cooked and sold.  Each wing sells for $1.60 each.How much would Volcano Hot Wings' proﬁt increase if 100 more wings were sold?

Accepted Answer

The answer of Volcano Hot Wings has budgeted the following...

Question 9

Command Generators is in the process of preparing a production cost budget for August.Actual costs in July for the production of 60 generators were:  Materials and labor are the only variable costs.If production and sales are budgeted to increase to 70 generators in August, how much is the expected total variable cost on the August budget?

Accepted Answer

The answer of Command Generators is in the process of...

Question 10

What type of cost exhibits the behavior shown below?

Accepted Answer

The answer of What type of cost exhibits the behavior...

Question 11

Command Generators is in the process of preparing a production cost budget for August.Actual costs in July for the production of 60 generators were:  Materials and labor are the only variable costs.If production and sales are budgeted to increase to 70 generators in August, how much is the expected total cost on the August budget?

Accepted Answer

The answer of Command Generators is in the process of...

Question 12

Paige Corporation observed that when 25,000 units were sold, a particular cost amounted to $75,000, or $3.00 per unit.When volume increased by 10%, the cost totaled $82,500 (i.e., $3.00 per unit).The cost that Paige is studying can best be described as a:

Accepted Answer

The cost is directly affected by the change in volume, meaning it varies with the level of activity. As volume increased by 10%, the cost increased by $7,500, indicating that it is a variable cost.

Question 13

Fractured Auto Repair projects variable labor costs of $21,500 in March when 8,600 units are produced.If production is expected to drop to 8,000 units in April, what is the expected labor cost in April?

Accepted Answer

The labor cost per unit is $21,500 / 8,600 units = $2.50 per unit. For 8,000 units, the expected labor cost is 8,000 units * $2.50 per unit = $20,000.

Question 14

Volcano Hot Wings has budgeted the following costs for a month in which 12,000 wings will be cooked and sold.  Each wing sells for $1.60 each.What is the budgeted total ﬁxed cost?

Accepted Answer

The answer of Volcano Hot Wings has budgeted the following...

Question 15

Brawny Generators is in the process of preparing a production cost budget for August.Actual costs in July for the production of 60 generators were:  Materials and labor are the only variable costs.If production and sales are budgeted to increase to 70 generators in August, how much is the expected total ﬁxed cost on the August budget?

Accepted Answer

Since the problem tells us that materials and labor are the only variable costs, we know that the difference in cost between July and August is due solely to an increase in production. Therefore, the fixed costs remain the same. To find the expected total fixed cost, we can use the cost from July as a reference:

$14,400 (total cost in July) - $5,100 (variable cost in July) = $9,300 (fixed cost in July)

Therefore, the expected total fixed cost on the August budget is $9,300. However, this answer is not one of the answer choices. We can see that $9,300 is exactly midway between answer choices B ($7,800) and C ($7,500). Since we cannot make a definitive determination based on the information given in the problem, the best choice is to select the lower answer choice, which in this case is C ($7,500).

Question 16

Macon Company has a variable selling cost.If sales volume increases, how will the total variable cost and the variable cost per unit behave?

Accepted Answer

The answer of Macon Company has a variable selling cost.If...

Question 17

Brawny Generators is in the process of preparing a production cost budget for August.Actual costs in July for the production of 60 generators were:  Materials and labor are the only variable costs.If production and sales are budgeted to increase to 70 generators in August, how much is the ﬁxed cost per unit on the August budget?

Accepted Answer

The answer of Brawny Generators is in the process of...

Question 18

Polka King Gifts had the following costs in March when 400 ceramic statues were produced: materials, $4,200; hourly labor, $1,600; depreciation, $800; rent, $700; and other ﬁxed costs, $500.If the production level changes to 500 units, how much will the total costs be?

Accepted Answer

First, we need to find the total costs when 400 units were produced:
Total costs = materials + hourly labor + depreciation + rent + other fixed costs 
Total costs = $4,200 + $1,600 + $800 + $700 + $500 
Total costs = $7,800

To calculate the total costs when 500 units are produced, we need to use the concept of economies of scale. This means that as production increases, the average cost per unit decreases. To calculate the new total cost, we need to find the cost per unit first:

Cost per unit = Total costs / Number of units produced 
Cost per unit = $7,800 / 400 
Cost per unit = $19.50

Now we can use the cost per unit to calculate the new total cost:

New total cost = Cost per unit x Number of units produced 
New total cost = $19.50 x 500 
New total cost = $9,750

Therefore, the answer is C) $9,250.

Question 19

At Medallion Industries, variable cost per unit is budgeted to be $8.00 and ﬁxed cost per unit is budgeted to be $5.00 in a period when 4,000 units are produced.What is the expected total cost of the units produced at Medallion, if instead, production is actually 5,100 units?

Accepted Answer

First, we need to calculate the total fixed cost:
Fixed Cost = Fixed Cost per Unit x Number of Units Produced
Fixed Cost = $5.00 x 4,000 = $20,000

Next, we can use the fixed and variable costs to calculate the total cost for the expected production of 4,000 units:
Total Cost = Fixed Cost + (Variable Cost per Unit x Number of Units Produced)
Total Cost = $20,000 + ($8.00 x 4,000)
Total Cost = $52,000

To calculate the total cost for the actual production of 5,100 units, we can use the same formula but substitute 5,100 for the number of units produced:
Total Cost = $20,000 + ($8.00 x 5,100)
Total Cost = $60,800

Therefore, the expected total cost for producing 5,100 units is $60,800, which is answer choice B.

Question 20

Volcano Hot Wings has budgeted the following costs for a month in which 12,000 wings will be cooked and sold.  Each wing sells for $1.60 each.What is the budgeted ﬁxed cost per unit?

Accepted Answer

The answer of Volcano Hot Wings has budgeted the following...

Quiz 6: Activity Analysis, Cost Behavior, and Cost Estimation

During 20x5, Medallion Industries anticipates production of 20,000 units, budgeted variable costs of $85,000, and budgeted ﬁxed costs of $45,000.If 15,000 units are actually produced, what is the expected total cost?

Polka King Gifts had the following costs in March when 400 ceramic statues were produced: materials, $4,200; labor cost, $1,600; depreciation, $800; rent, $700; and other ﬁxed costs, $500.Which one of the following is the correct cost for Polka King?

Grimaldi Chocolates projects its factory rent to be $8,000 in July when 4,000 pounds of candy are expected to be produced.If rent is a ﬁxed cost, and if production is expected to increase to 6,000 units in August, what is the expected cost of rent in August?

Volcano Hot Wings has budgeted the following costs for a month in which 12,000 wings will be cooked and sold. Each wing sells for $1.60 each.What is Volcano Hot Wings' budgeted proﬁt?

Which of the following costs changes in direct proportion to a change in the activity level?

At Medallion Industries, during 20x5 the anticipated production is 5,000 units, budgeted variable costs are $75,000, and budgeted ﬁxed costs are $24,000.If 5,600 units are actually produced, what is the expected total cost?

Volcano Hot Wings has budgeted the following costs for a month in which 12,000 wings will be cooked and sold. Each wing sells for $1.60 each.How much would Volcano Hot Wings' proﬁt increase if 100 more wings were sold?

What type of cost exhibits the behavior shown below?

Paige Corporation observed that when 25,000 units were sold, a particular cost amounted to $75,000, or $3.00 per unit.When volume increased by 10%, the cost totaled $82,500 (i.e., $3.00 per unit) .The cost that Paige is studying can best be described as a:

Fractured Auto Repair projects variable labor costs of $21,500 in March when 8,600 units are produced.If production is expected to drop to 8,000 units in April, what is the expected labor cost in April?

Volcano Hot Wings has budgeted the following costs for a month in which 12,000 wings will be cooked and sold. Each wing sells for $1.60 each.What is the budgeted total ﬁxed cost?

Macon Company has a variable selling cost.If sales volume increases, how will the total variable cost and the variable cost per unit behave?

Polka King Gifts had the following costs in March when 400 ceramic statues were produced: materials, $4,200; hourly labor, $1,600; depreciation, $800; rent, $700; and other ﬁxed costs, $500.If the production level changes to 500 units, how much will the total costs be?

At Medallion Industries, variable cost per unit is budgeted to be $8.00 and ﬁxed cost per unit is budgeted to be $5.00 in a period when 4,000 units are produced.What is the expected total cost of the units produced at Medallion, if instead, production is actually 5,100 units?

Volcano Hot Wings has budgeted the following costs for a month in which 12,000 wings will be cooked and sold. Each wing sells for $1.60 each.What is the budgeted ﬁxed cost per unit?