Fixed Cost Questions and Answers

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Fixed Cost Questions and Answers

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A medical office does MRI (magnetic resonance imaging) scans on patients. It has two MRI machines. Each scan requires a technician to run the MRI machine. Below is the production function for the o...
Which statement is false? a) There are no fixed costs in the long run. b) Fixed costs are zero if the firm is producing nothing. c) Fixed costs do not depend on the firm's level of output. d) F...
Ken Washburn and Associates incurred a total cost of $10,000 to produce 500 custom mirrors. A total of 550 hours were required for the production of the mirrors. Direct labor is variable and costs...
If the variable cost amounts to $130,000 when sales are $250,000, what will the variable cost be when sales are $350,000?
Which of the following statement is not true? A) The cost of inputs that are impossible to adjust in the short run can be a source of fixed costs. B) Total fixed costs equal total costs minus the t...
A decreasing-cost industry is one in which: A) contraction of the industry will decrease unit costs. B) input prices fall or technology improves as the industry expands. C) the long-run supply c...
A constant-cost industry is one in which: A) resource prices fall as output is increased. B) resource prices rise as output is increased. C) resource prices remain unchanged as output is increas...
Expense A is a fixed cost, while expense B is a variable cost. During the current year, the activity level has increased, but is still within the relevant range. In terms of cost per unit of activi...
Determine the fixed- and variable-cost components using the high-low method. Month Total Maintenance Costs Total Machine Hours January $2,500 300 February 3,000 350 March 3,600 500 April 4,500 690...
Wall Company incurred $30,000 of fixed costs and $40,000 of variable costs when 2,000 units of product were made and sold. If the company's volume increases to 2,500 units, what would be the compan...
A strawberry farmer has 5,000 pounds of strawberries ready to harvest. The cost of picking and transporting the strawberries to the market is $3,500. If the market pays $0.60 per pound of strawberr...
Supply costs at Coulthard Corporation's chain of gyms are listed below: Client-Visits Supply Cost March 11,666 $28,349 April 11,462 $28,296 May 11,994 $28,434 June 13,900 $28,930 July 11,726 $28,36...
Supply costs at Coulthard Corporation's chain of gyms are listed below. Client-Visits Supply Cost March 11,657 $28,402 April 11,453 $28,324 May 11,985 $28,526 June 13,000 $28,912 July 11,717 $28,42...
Supply costs at Coulthard Corporation's chain of gyms are listed below. Client-Visits Supply Cost March 11,664 $28,356 April 11,460 $$28,299 May 11,992 $28,448 June 13,700 $28,926 July 11,724 $28,3...
Supply costs at Coulthard Corporation's chain of gyms are listed below. Client Visits Supply Cost March 11,656 $28,412 April 11,452 $28,331 May 11,984 $28,544 June 12,900 $28,910 July 11,716 $28,43...
Supply costs at Coulthard Corporation's chain of gyms are listed below: Client Visits Supply Cost March 11,663 $28,362 April 11,459 $28,303 May 11,991 $28,457 June 13,600 $28,924 July 11,723 $28,38...
The linear equation Y = a + bX is often used to express cost formulas. In this equation: a. the Y term represents a total fixed cost. b. the a term represents the variable cost in total. c. the X t...
Munoz Trophies makes and sells trophies it distributes to little league ballplayers. The company normally produces and sells between 3,000 and 9,000 trophies per year. The following cost data apply...
Variable Costs, Contribution Margin, Contribution Margin Ratio Super-Tees Company plans to sell 10,000 T-shirts at $18 each in the coming year. Product costs include: Direct materials per T-shirt $...
Determine whether the following is true or false: As activity decreases within the relevant range, fixed costs remain constant on a per unit basis.
A project currently generates sales of $10 million, variable costs equal to 40% of sales, and fixed costs of $2.3 million. The firm's tax rate is 20%. The project will last for 10 years. The discou...
Thornton Corporation incurs the following annual fixed costs: Item Cost Depreciation $65,000 Officers' salaries 170,000 Long-term lease 60,000 Property taxes 12,000 Required: Determine the total fi...
The short-run average VARIABLE cost can never exceed the long-run average total cost. Which of the following statements is/are correct? a. All costs are explicit. b. Long-run average total cost rem...
When distinguishing between fixed costs and variable costs, which of the following statements is true? 1) As production rises, variable costs per unit will fall. 2) As production rises, total fixed...
Handy's Hats makes the world's best hats. Information for the last eight months follows: Month Number of Hats Produced Total Cost January 6,750 $11,300 February 5,540 $10,200 March 6,250 $10,900 Ap...
Martinez Company's relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: Average Cost Per Unit Direct mate...
EcoBrite Labs performs tests on water samples supplied by outside companies to ensure that their wastewater meets environmental standards. Customers deliver water samples to the lab and receive lab...
(blank) is a cost that does not change, no matter how much of a good is produced.
Total fixed costs are $250,000 when 50,000 units are produced. Compute the fixed costs when 60,000 units are produced, assuming no other changes: a. $250,000 total b. $200,000 total c. $6 per unit...
Sherri's Tan-O-Rama is a local tanning salon. The following information reflects the number of appointments and total costs for the first half of the year: Month Number of Appointments Total Cost J...
For the following product cost related to the production of lawn furnitures, indicate whether it is a variable or a fixed cost, and a direct or an indirect cost: Annual flat fee for office security.
Suppose your cell phone company offers a plan under which you can buy time in blocks of 100 minutes. Every 100-minute block costs $15. If you use 101 minutes you will pay $30. This is an example of...
Which of the following is a characteristic of a fixed cost? a. The total cost remains constant, regardless of changes in the level of activity. b. The cost per unit varies proportionately with chan...
If the activity level increases, what happens to the unit fixed cost? a. It decreases. b. It increases. c. It remains the same. d. It depends on how much the activity level increases.
Intuit Inc. develops and sells software products for the personal finance market, including popular titles such as Quickbooks and TurboTax. Classify each of the following costs and expenses for thi...
Converse, an apparel company, has been fairly successful selling denim-colored college sportswear. Lydia sees an opportunity for profit and enters the market. In the short run, Lydia should: a. sh...
Is airline price discrimination just unfair or are there benefits to both business and leisure passengers?
Complete the following table. | Units (Q) | FC ($) | VC ($) | AFC ($) | 0 | 300.00 | 30.00 | - | 1 | 300.00 | 45.00 | | 2 | 300.00 | 52.50 | | 3 | 300.00 | 75.00 | | 4 | 300.00 | 120.00 |
Howard Industries Inc., operating at full capacity, sold 64,000 units at a price of $45 per unit during the current year. Its income statement is as follows: Sales $2,880,000 Cost of goods sold 1,4...
As the production rate is increased, average fixed costs: A. Are constant B. First fall, then rise (in a U-shaped curve) C. Decline D. Increase
10. Sally, Inc. has consistent fixed costs and contribution margin ratios from month to month. In January, Sally produced a $180,800 profit from $300,000 in revenue. In February, Sally produced a $...
In the case of a manufacturing organization, which of the following is a variable cost that varies directly with the sales volume? A) shipping cost B) interest cost C) dividend cost D) rental c...
Does litigation claim fall under non-current liabilities in the balance sheet? Explain.
As the volume of production increases, the fixed cost per unit of the product decreases. a. True b. False
Consider the following cost item: Hamburger buns in a Wendy's restaurant. Determine whether the cost is fixed or variable with respect to the number of units produced and sold. Also, determine whet...
A cell phone company offers two different plans. Plan A costs $88 per month for unlimited talk and text. Plan B costs $0.20 per minute plus $0.10 per text message sent. You need to purchase a plan...
Wall Company incurred $30,000 of fixed costs and $40,000 of variable costs when 1,000 units of product were made and sold. If the company's volume increases to 1,500 units, the company's total cost...
Hico Bottling Company pays its production manager a salary of $5,000 per month. Salespersons are paid strictly on commission, at $2 for each case of product sold. For Hico Bottling Company, the pr...
When a mixed cost is graphed, the Y-intercept corresponds to the: a. step cost. b. price of the units sold. c. fixed cost. d. variable rate.
Discretionary fixed cost does not include ____. a. assembly wages b. public relations costs c. advertising costs d. leasing costs
The contribution margin is equal to price per unit minus total costs per unit. True or false?
On a per-unit basis, this cost increases with each level of activity. A. Fixed B. Variable C. Mixed D. None of these
In total, this cost remains constant despite changes in activity or sales volumes. A. Fixed B. Variable C. Mixed D. None of these
When 24,000 units are produced, fixed costs are $15 per unit. Therefore, when 20,000 units are produced, fixed costs will _____. A. total $300,000 B. decrease to $12.50 per unit C. remain at $15...
A certain product may be manufactured using two different methods as shown below. First method, fixed costs per period are 600,000 pounds and variable costs are 295 pounds per unit of the product....
Lin Corporation has a single product whose selling price is $140 per unit and whose variable expense is $70 per unit. The company's monthly fixed expense is $31,800. Calculate the unit sales needed...
Pacific Parts produces a single part for sale. The part sells for $37 per unit. Fixed costs are $890,000 annually. Production and sales of 230,000 units annually result in profit before taxes of $2...
Windham Corporation has provided the following cost data for last year when 350,000 units were produced and sold: Raw materials $350,000 Direct labor $100,000 Manufacturing overhead $300,000 Sellin...
Darby Company, operating at full capacity, sold 125,550 units at a price of $69 per unit during the current year. Its income statement for the current year is as follows: Sales - $8,662,950 Cost...
Ben Palman owns an art gallery. He accepts paintings and sculpture on consignment and then receives 20% of the price of each piece as his fee. Space is limited, and there are costs involved, so Ben...
Risk is reduced when a high proportion of costs are fixed. True or false?
Indicate whether the cost is mainly fixed or variable with respect to the measure of activity listed below it. Cost Description: Shift manager's wages at a coffee shop Measure of Activity: Dollar...
Indicate whether the cost is mainly fixed or variable with respect to the measure of activity listed below it. Cost Description: Cook's wages at a coffee shop Measure of Activity: Dollar sales
Baird Entertainment sponsors rock concerts. The company is considering a contract to hire a band at a cost of $75,000 per concert. a. What are the total band cost and the cost per person if concer...
Saxbury Corporation's relevant range of activity is 3,000 units to 7,000 units. When it produces and sells 5,000 units, its average costs per unit are as follows: If 6,000 units are produced, wh...
The fixed costs per unit are $10 when a company makes 10,000 units. What are the per unit fixed costs when 12,500 units are produced? A) $6.00 B) $12.00 C) $10.00 D) $8.00
SIC stands for Special Item Code. True or false?
In March, Josephine used 2,500 units of electricity at 0.09 pounds per unit, plus a further 1,400 units at 0.05 pounds per unit. In addition, she paid a standing charge. The total of the electrici...
The cost for a long-distance telephone call is $0.36 for the first minute and $0.21 for each additional minute or portion thereof. Write an inequality representing the number of minutes a person co...
Identify whether the following is best described as a fixed, variable, or mixed cost with respect to product units: Rubber used to manufacture athletic shoes.
Sam's Sushi serves only a fixed-price lunch. The price of $8 and the variable cost of $4 per meal remain constant regardless of volume. Sam can increase lunch volume by opening and staffing additio...
The fixed cost per unit is considered constant despite the changes in volume of activity within the relevant range. a. True. b. False.
Dilly LLC, wants to make a profit of $30,000. It has variable costs of $67 per unit and fixed costs of $20,000. How much must it charge per unit if 5,000 units are sold? a. $37 b. $67 c. $52 d....
Distinguish between direct costs, indirect costs, and factory overhead. Explain each and how they differ.
Martinez Company's relevant range of production is 7,500 units to 12,500 units. If 11,000 units are produced, what is the total amounts of direct and indirect manufacturing costs incurred to suppor...
Martinez Company's relevant range of production is 7,500 units to 12,500 units. If 8,000 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of p...
Martinez Company's relevant range of production is 7,500 units to 12,500 units. If 12,500 units are produced, what is the average fixed manufacturing cost per unit produced? The average costs per u...
Martinez Company's relevant range of production is 7,500 units to 12,500 units. For financial accounting purposes, what is the total amount of period costs incurred to sell 10,000 units? The averag...
Dozier Company produced and sold 1,000 units during its first month of operations. It reported the following costs and expenses for the month: [TABLE] With respect to cost classifications for predi...
Martinez Company's relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: Average Cost Per Unit Direct mate...
Consider the information given in the table below. If 22,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production? | | Amount...
An economist estimated that the cost function of single-product firm is C(Q) = 100 + 20Q + 15Q^2 + 10Q^3, where Q is the quantity of output. Calculate the average fixed cost of producing 10 units o...
Suppose Reeder, Corp. has three divisions, all using the warehouse: Pipes, Seals, and Flanges. The total warehousing cost is $40,000. The total warehouse space is 100,000 square feet, of which Pipe...
Variable manufacturing costs are $126 per unit, and fixed manufacturing costs are $157,500. Sales are estimated to be 10,000 units. A. How much would absorption costing income from operations diffe...
An economist estimated that the cost function of a single-product firm is C(Q) = 100 + 20Q + 15Q^2 + 10Q^3, where Q is the quantity. Calculate the fixed cost of producing 10 units of output.
What is the cost that does not vary with the level of an activity?
Based on a predicted level of production and sales of 12,000 units, a company anticipates reporting an operating income of $26,000 after deducting variable costs of $72,000 and fixed costs of $10,0...
Which of the following is not an example of a cost that varies in total as the number of units produced changes? a. Electricity per KWH to operate factory equipment. b. Straight-line depreciation...
Given in the table below is the available information for Snap Company. Fixed overhead costs are $40,000 annually and fixed selling and administrative costs are $32,000 annually. Selling price is $...
A cost that is part selling cost and part manufacturing cost is referred to as a mixed cost. a. True b. False
In 2013, Fairview Corporation sold 100,000 units of its product for $20 each. The variable cost per unit was $14, and Fairview's margin of safety was 40,000 units. What was the amount of Fairview's...
Booble, Inc. has a contribution margin ratio of 47%. This month, sales revenue was $211,000, and profit was $46,300. How much are Booble's fixed costs? a) $21,761 b) $49,585 c) $52,870 d) $99,170
When a department or product line is dropped, the common fixed costs which had been allocated to that department: A. are eliminated. B. become variable costs. C. are allocated to the remaining d...
Given the following information, determine the variable cost per dollar of sales revenue and the total fixed costs, using both the high and low data to confirm your calculations. The high total sal...
X Company has the following data from 2014 and 2015: \\ \\ Expected production in 2016 is 43,500 units. Using the high-low method with the 2014 and 2015 data to determine the parameters of the cos...
What are costs that rise or fall depending on how much is produced?
What is a cost that does not change, no matter how much of a good is produced?
Lorge Corporation has collected the following information after its first year of sales. Sales were $2,020,800 on 126,300 units; selling expenses $303,120 (40% variable and 60% fixed); direct mater...
Deciding to invest in capital is a short-run decision. True or False?
Fixed costs should be ignored when evaluating how well a manager has controlled costs. True or False.
The fixed cost for this firm is $_____. A. 80 B. 90 C. 50 D. 100 ||Quantity (units)||Total revenue ($)||Total cost ($) |0|0|50 |1|90|80 |2|180|120 |3|270|170 |4|360|230 |5|450|300 |6|540|380 |7|630...
What are the fixed costs of production for this firm? A.$34 B. $4 C. $30 D. $50 ||Barrel of oil produced||Marginal revenue||Marginal cost||Average costs |1|$50|$4|$34 |2|50|6|40 |3|50|11|17 |4|50|1...
Austin Boston corporation's balance sheet for last year is present below: Cash $400,000 Accounts payable $1,500,000 Accounts receivable 2,000,000 Notes payable 1,000,000 Inventory 3,000,000 Mortgag...
Pipit Corporation has two divisions: the East Division and the West Division. The corporation's net operating income is $75,000. The East Division's divisional segment margin is $100,000 and the We...
Lorge Corporation has collected the following information after its first year of sales. Sales were $2,100,000 on 105,000 units; selling expenses $250,000 (40% variable and 60% fixed); direct mater...
On August 1, 2015, Tanner Corporation purchased a new machine on a deferred payment basis. A down payment of $2,000 was made and 4 annual installments of $6,000 each are to be made beginning on Sep...
Macaulay Roller Skates has three product lines - D, E, and F. The following information is available: D E F Sales revenue 90,000 50,000 30,000 Variable costs (40,000) (15,000) (12,000) Contribution...
Total costs are $210,000 when 15,000 units are produced; of this amount, variable costs are $68,000. What are the total costs when 21,000 units are produced? a. $237,200. b. $266,800. c. $294,00...
The fixed costs per unit are $20 when a company produces 20,000 units of product. What are the fixed costs per unit when 15,000 units are produced? a. $26.67. b. $20.00. c. $15.00. d. $14.17....
Vin Diesel owns the Fredonia Barber Shop. He employs 6.00 barbers and pays each a base rate of $1,350 per month. One of the barbers serves as the manager and receives an extra $530 per month. In ad...
When output is 100 units, the firm s total fixed cost is $500. What will this firm s total fixed cost be if output doubles to 200 units? a. $125 b. $1,000 c. $500 d. $750 e. $250
Let the TC curve be given by the equation TC(Q) = 8Q. The FC curve can be expressed as: A. 8 B. 0 C. 8Q D. It cannot be determined with the information given
Mendoza Company's highest point of total cost was $80,000 in June. Their point of lowest cast was $65,000 in January. The company makes a single product. Production volume in June and January were...
Which of the following are examples of a company's fixed costs: a) wages for hourly workers b) monthly rent for factory or retail space c) raw materials for production
Which of the following is an example of a fixed cost for a manufacturer? A. Income taxes B. Machine repair expense C. Fire insurance on buildings D. Delivery fuel expense
Why might it be misleading to show the fixed costs on a per unit basis?
Total warehouse rent is determined by an annual lease contract of $300,000. Currently, the company stores an average of 10,000 units of product in the warehouse. If the company's volume increases t...
What are the implications/consequences of fixed costs rising for a business?
State a cost of production that is independent of the level of production.
ABC sold a volume of 38,000 units in January (a volume within the relevant range). The cost of insurance on ABC's plant (a cost that is fixed with respect to sales volume) for January was $654,000....
Analysis of the operations of Padillo company shows the fixed costs to be $200,000 and the variable costs to be $8 per unit. The selling price is $16 per unit. a. Derive the break-even point expre...
Photo Station Company operates a printing service for customers with digital cameras. The current service, which requires employees to download photos from customer cameras, has monthly operating c...
GOT Manufacturing purchases a key component of one of its products from a local supplier. The current purchase price is $1,513 per unit. Annual component usage should increase from 150 to 750 units...
Suppose you and a friend start a babysitting service on campus. What are your fixed and variable costs?
Tex's Manufacturing Company can make 100 units of a necessary component part with the following costs: Direct Materials $120,000 Direct Labor 25,000 Variable Overhead 45,000 Fixed Overhead 30,000 I...
GOT Manufacturing purchases a key component of one of its products from a local supplier. The current purchase price is $1,546 per unit. Annual component usage should increase from 150 to 750 units...
AudioCables, Inc., is currently manufacturing an adapter that has a variable cost of $0.50 per unit and a selling price of $1.00 per unit. Fixed costs are $14,000. The current sales volume is 30,00...
The following information is available: | Total fixed cost | $400,000 | Total variable cost | $600,000 | Total number of units | 50,000 units | Selling price per unit | $20.00 per unit Calcula...
Classify each item as direct (D) or indirect (I) and as variable (V) or fixed (F). 1. Factory rent 2. Salary of a factory storeroom clerk 3. Cement for a road builder 4. Supervisor training program...
In a make-or-buy decision, relevant costs include: (a) Unavoidable fixed costs, (b) Fixed factory overhead costs applied to products, (c) Fixed selling and administrative expenses, (d) Avoidable fi...
Straight line depreciation, rent, and manager salaries are examples of variable costs. a. True b. False
Martinez Company's relevant range of production is 7900 units to 12900 units. When it produces and sells 10400 units, its unit costs are given in the table. (A) For financial accounting purposes, w...
Kate's Katering provides catered meals, and the catered meals industry is perfectly competitive. Kate's machinery costs $100 per day and is the only fixed input. Her variable cost is comprised of t...
Which of the following is considered a mixed cost for a bakery that makes banana nut bread? A) Bananas B) Building rent of $2,500 per month plus $8.00 per square foot used C) Flour D) Cleaning...
Use the high/low method to determine the fixed costs for a product, which has high and low mixed product costs as follows: 50,000 units produced at a cost of $36,000 and 80,000 units produced at a...
If fixed costs are $741,206 and variable costs are 70% of sales, what is the break-even point (dollars)? A. $518,844 B. $2,470,687 C. $3,211,893 D. $1,260,050
Is a fixed cost an incremental cost? Give an example in which a fixed cost is an incremental cost.
Bloom Company management predicts that it will incur fixed costs of $266,000 and earn a pretax income of $360,400 in the next period. Its expected contribution margin ratio is 54%. A. Compute the a...
Which of the following is not an example of a variable cost? A. Straight-line depreciation on a machine expected to last 8 years B. Piece-rate wages paid to manufacturing workers C. Buttons on wint...
Cost-Volume Profit Analysis Hailstorm Company sells a single product for $22 per unit. Variable costs are $14 per unit and fixed costs are $65,000 at an operating level of 7,000 to 12,000 units. a...
As more units of a product are sold, the total fixed cost typically ____. a) goes up b) goes down c) remains constant d) becomes a variable cost
Bay Corporation is manufacturing a part that is used in its finished product. The costs for each unit of the part follow: Direct materials $17 Direct labor $18 Manufacturing overhead: Variable cost...
The following data pertains to activity and costs for two months: June July Activity level 10,000 units 20,000 units Variable cost $20,000 Fixed cost $15,000 Mixed cost $10,000 Total cost $45,000 $...
Sorrento Company's plant is operating at less than full capacity. The company just received a one-time opportunity to accept an order at a special price below its usual price. The special price exc...
In your city, there are currently three firms providing oil changes. For each firm, there is a fixed cost of $100 per day and a marginal cost of $12 per oil change. Each firm currently maximizes it...
Yesterday, a perfectly competitive producer of construction bricks manufactured and sold 10,000 bricks per week at a market price that was just equal to the minimum average variable cost of produci...
What relationship, if any, can you detect between the fact that farmers' fixed costs of production are large and the supply of most agricultural products is generally inelastic?
For 2013, Winchester Company sold 80,000 units at a selling price of $20 per unit. Variable cost per unit was $15, and Winchester's net income for the year was $40,000. What was the amount of Winch...
Sasha Ltd. manufactures and sells cell phones. The following are some of the costs the company incurs during the production process. Classify the costs Sasha incurs in its production process based...
Assume a fixed cost of $150,000, a variable cost of $70, and a selling price of $90. What is the break-even point? a. 1,600 b. 2,100 c. 7,500 d. 15,000 e. 9,300
Which of the following statements best describes variable costs? a. costs that vary in total in direct proportion to activity b. costs that remain the same in total c. costs that vary on a per un...
X Company uses the high-low method to predict maintenance costs each month, with maintenance hours as the activity measure. The following past monthly cost and activity information is available: Mo...
The following information has been extracted from the books of the ABC Company in respect of its two operating divisions: Batteries Tyre Totals Sales Revenue 1,664,200 96,200 1,760,400 Cost of good...
Janice Huffman has decided to start Baird Cleaning, a residential housecleaning service co. She is able to rent cleaning equipment at a cost of $780 per month. Labor costs are expected to be $70 pe...
During the month of April, Vane Co-produced and sold 10,000 units of a product. Manufacturing and selling costs incurred during April were as follows: Direct materials and direct labor $400,000 Var...
Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes? a. Direct labor. b. Salary of a factory supervisor. c. Units-of-produc...
Why would a business be more inclined to accept new business at a lower price if it had excess capacity rather than if it was operating at full capacity?
Fanning Corp. incurs the following annual fixed costs: Depreciation $80,000 Officers' salaries $190,000 Long-term lease $42,000 Property taxes $48,000 Determine the total fixed cost per unit of pro...
The company has a capacity to produce 100,000 units in a year. Usually the company produces and sells 80,000 units in any year. The selling price is $20.00; variable production cost is $8.00 per un...
Carboxylic acids (RCO_2H) react with alcohols (R'OH) in the presence of an acid catalyst. The reaction product of propanoic acid with methanol has the following spectroscopic properties. Propose a...
Miller Company's most recent contribution format income statement is shown below: Total Per unit Sales (35,000 units) $210,000 $6.00 Variable expenses 105,000 3.00 Contribution margin 105,000 $3.00...
A manufacturer considers two methods for producing a circuit board. The board can be hand-wired at a $0.98 per unit and annual fixed cost of $1,000. A printed circuit board can be produced using an...
Last month Peggy Company had a $27,180 profit on sales of $344,800. Fixed costs are $76,260 a month. What sales revenue is needed for Peggy to break even?
When a department or product is dropped the common fixed costs which had been allocated to that department: a. are eliminated. b. become variable costs. c. are allocated to the remaining departme...
The following information relates to a product produced by Faulkland Company: Direct materials $15 Direct labor $12 Variable overhead $11 Fixed overhead $13 Unit cost $51 Fixed selling costs are $1...
Total fixed cost is frequently referred to as: a. overhead b. depreciation c. opportunity cost d. marginal cost
Process A has fixed costs of $1000 and variable costs of $5 per unit. Process B has fixed costs of $500 and variable costs of $15 per unit. What is the crossover point between process A and process...
Suppose that a firm's only variable input is labor. When 50 workers are used, the average product of labor is 50, and the marginal product of the 50th worker is 75. The average wage rate is $80, an...
Sunbelt Company produces 100,000 smoothie blenders per month, which is 80% of plant capacity. Variable manufacturing costs are $8 per unit. Fixed manufacturing costs are $400,000, or $4 per unit. T...
A fixed cost is a cost which: a. remains constant in total with changes in the level of activity. b. varies in total with changes in the level of activity. c. varies inversely in total with changes...
The increased use of automation and less use of the work force in companies has caused a trend towards an increase in: a. both variable and fixed costs. b. fixed costs and a decrease in variable co...
You run a school in Florida. The fixed monthly cost is $5,009.00 for rent and utilities, $5,573.00 is spent on salaries, and $1,294.00 on insurance. Also, every student adds up to $95.00 per month...
A property tax is an example of a ______. A. mixed cost B. committed fixed cost C. discretionary cost D. variable cost
Lebo Company produces telephones. The following information is available for this product: Fixed cost per unit $16.20 Variable cost per unit $14.50 Desired ROI per unit $4.50 What is the markup per...
A firm's _____ consist of expenditures that must be made before production starts that typically, over the short run, _____ regardless of the level of production. a) fixed costs; do not change. b)...
It would cost the town of Irondale $50 million to build a gas-powered generator that could produce a maximum of 5 megawatts of electricity at 15 cents per hour. Another alternative would be for Iro...
Given the following cost data, what type of cost is shown? Cost per Unit Number of Units $6,000 1 $3,000 2 $2,000 3 $1,500 4 a. Mixed cost b. Variable cost c. Fixed cost d. Period cost
Rental of equipment at $5,000 per month plus $6 for each machine hour used over 9,000 hours is a type of mixed cost. True or false?
A cost that can be separated into fixed and variable components is called a: a. Mixed cost. b. Step-variable cost. c. Copositive cost. d. Curvilinear cost. e. Differential cost.
The manufacturing costs of Kellam Industries for the first three months of the year follow: Months Total Costs Units Produced January $2,400,000 10,000 units February $2,950,000 42,000 units March...
Variable costs are relevant in deciding whether or not to drop a product. True or false?
For many corporations such as utility companies, a major portion of the cost of production is fixed in the short run. Should these very large fixed costs be ignored when the executives are making o...
Fran Company is currently operating profitably. The company has a fixed cost structure. Based on this information, which of the following statements is true? a. If volume increases by 20%, profitab...
Explain the concept of Average Fixed Cost curve (AFC).
Which of the following is a common fixed cost from the viewpoint of the Service Department in a Toyota dealership? a) The cost of parts used in repairing automobiles. b) Depreciation on tools and e...
Which of the following costs is a mixed cost? a. Electricity costs of $3 per kilowatt-hour b. Straight-line depreciation on factory equipment c. Rental costs of $10,000 per month plus $.30 per mach...
Rental charges of $40,000 per year plus $3 for each machine hour over 18,000 hours is an example of a fixed cost. a. True b. False
Traceable fixed costs that the manager of a department cannot change are called: a. Controllable. b. Committed. c. Conditional. d. Common.
Martinez Company's relevant range of production is 8,300 units to 13,300 units. When it produces and sells 10,800 units, its unit costs are as follows: Amount Per Unit Direct materials $5.80 Direct...
Assets acquired or self-constructed should initially be measured at: a) Assets acquired or self-constructed should initially be measured at Future Value b) Assets acquired or self-constructed shoul...
Butler Company developed a static budget at the beginning of the company's accounting period based on an expected volume of 4,000 units: Per unit Revenue $4 Variable costs $1.50 Contribution margin...
A fixed cost: A) Remains the same per unit as output increases and (or) decreases. B) Increases in total as output increases and (or) decreases. C) Remains constant in total no matter the level of...
A fixed cost: A. requires the future outlay of cash and is relevant for future decision-making. B. does not change with changes in the volume of activity within the relevant range. C. is directl...
Transportation modes with high variable costs include: A. Truck. B. Air. C. Water. D. Rail. E. B and D.
Identify and discuss the main variable costs in the airline industry (passenger, freight, etc.).
Cunningham, Inc. sells MP3 players for $60 each. Variable costs are $40 per unit, and fixed costs total $120,000. How many MP3 players must Cunningham sell to earn a net income of $280,000? a. 6,00...
Use the following information: Cost Volume $15,000 3,000 $18,000 4,000 $20,000 7,000 The fixed cost element for the firm is _____. a. $11,250 b. $10,250 c. $12,250 d. $11,350
The activity base selected determines whether a cost behaves as a variable cost or fixed cost. True or false?
A small producer of music boxes wants to move to a larger facility. Two alternative facilities have been found. Site 1 has a fixed cost of $500,000 per year, with a variable cost of $25 per unit. S...
The Donaldson Company reported income from operations of $89,000, a contribution margin of $159,987, and sales totaling $235,546. The company reported fixed costs of _____. A) $75,559 B) $395,53...
Explain the difference between fixed and variable costs and give two examples of each for a car manufacturer.
Erkkila Inc. reports that at an activity level of 6,600 machine hours in a month, its total variable inspection cost is $426,230 and its total fixed inspection cost is $188,301. What would be the...
Variable expenses tend to vary with production. a. True b. False
Fixed costs per unit decrease as production levels decrease. \\ A. True B. False
Costs that change abruptly at different levels of activity because the resources and their costs come in indivisible chunks are called \\ A) variable costs B) step costs C) mixed costs D) fixed...
Which of the following is true about the changes in fixed costs? a. An increase in production will result in a decrease in per unit fixed costs. b. A decrease in fixed costs will result in an incr...
Haskins Products sells 2,500 kayaks per year at a sales price of $450 per unit. Haskins sells in a highly competitive market and uses target pricing. The company has calculated its target full prod...
Nantua Corporation has two divisions, Southern and Northern. The following information was taken from last year's income statement segmented by division: Total Company Southern Northern Sales $4,70...
Based on a predicted level of production and sales of 15,000 units, a company anticipates reporting an operating income of $22,000 after deducting variable costs of $90,000 and fixed costs of $8,00...
Use the partial information regarding FSC Co. below, Units Sold Sales Variable Expense Contribution Margin p/unit Fixed Expense Net Income FSC Co. 10,000 $500,000 $20 $50,000 What are FSC Co.'s To...
A cost that remains constant per unit at various levels of activity is a: a. mixed cost. b. manufacturing cost. c. variable cost. d. fixed cost.
Fork Plastics has examined its utility expense for May and June. In May, the company used 2,200 machine hours and spent $18,600 on utilities. During June the company used 2,650 machine hours and sp...
Which of the following is not a fixed cost? (i) Property taxes. (ii) Straight-line depreciation. (iii) Salary of plant manager. (iv) Direct material cost.
Which one of the following is a name for the range over which a company expects to operate? a. Fixed range b. Variable range c. Mixed range d. Relevant range
Moctezuma Furniture Corporation incurred the following cost: Telephone bill. Identify the cost as variable, fixed or mixed.
Moctezuma Furniture Corporation incurred the following cost: Salaries of factory supervisors. Identify the cost as variable, fixed or mixed.
Moctezuma Furniture Corporation incurred the following cost: Insurance on buildings. Identify the cost as variable, fixed or mixed.
Moctezuma Furniture Corporation incurred the following cost: Property taxes. Identify the cost as variable, fixed or mixed.
Moctezuma Furniture Corporation incurred the following cost: Sales staff salaries. Identify the cost as variable, fixed or mixed.
Moctezuma Furniture Corporation incurred the following cost: Screws used in the production of furniture. Identify the cost as variable, fixed or mixed.
Define the following term: Fixed and variable costs.
Costs that remain constant in total dollar amount as the level of activity changes are called a. Mixed Cost b. Fixed Cost c. Variable Cost d. Opportunity Cost
Which of the following would be classified as a variable cost? a. Straight-line depreciation on production equipment. b. Copy lease payment of $500 per month plus $0.01 per copy. c. Fabric for u...
Jenny's Cutting Station is a new concept in haircuts; low cost and very quick. Set in a local mall, Jenny's offers 15-minute haircuts for harried shoppers who do not have time for lengthy appointme...
Which of the following costs would be incurred even if no units are produced? a. material costs b. direct labor costs c. transportation costs d. building rental costs e. purchasing costs
An example of a committed fixed cost is insurance. a. True b. False
Which of the following is a variable cost? a. Raw materials. b. Rent. c. Insurance expense. d. Salaries.
The recession that started in 2008 produced a surprise for some manufacturers. The number of jobs lost was actually lower than in previous recessions. Between 2000 and 2008 many factories adopted l...
State true or false and justify your answer: Fixed cost is constant at every level of output except zero. When a firm produces no output, fixed costs are zero in the short run.
A firm expects to sell 25,700 units of its product at $11 per unit. Pretax income is predicted to be $60,700. If the variable costs per unit are $5, total fixed costs must be _____. a. $128,500 b...
The management of a company manufacturing surfboards has fixed costs (zero output) of $200 per day and total costs of $3,800 per day at a daily output of 20 boards. a. Assuming the total costs per...
Production material costs are generally fixed costs. True False
Which of the following is the right formula for calculating total mixed cost? A. Total mixed cost = (variable cost per unit x number of units) + total fixed cost B. Total mixed cost = (variable c...
Which of the following statements is true of the behavior of total fixed costs within the relevant range? A. They will decrease as production decreases. B. They will increase as production decrea...
Brummitt Corporation has two divisions: the BAJ Division and the CBB Division. The corporation's net operating income is $10,900. The BAJ Division's divisional segment margin is $77,100 and the CBB...
Answer true or false: Fixed costs that are allocated among all departments are known as common fixed costs.
Answer true or false: Written down depreciation of manufacturing equipment is an example of fixed cost.
At a break-even point of 600 units sold, the variable costs were $600 and the fixed costs were $300. What will the sale of each additional unit contribute to profit before income taxes? A. $1.00 B....
Stites Corporation will make $100,000 if it sells 8,000 bathtubs for $200 per unit. If the contribution margin is 30%, what will the fixed costs be? A. $1,020,000 B. $580,000 C. $380,000 D. $480,000
Erkila Inc. reports that at an activity level of 6,700 machine-hours in a month, its total variable inspection cost is $426,380 and its total fixed inspection cost is $192,780. What would be the av...
The cost of direct material is an example of a fixed cost. True or False?
Answer true or false: Mixed costs are costs that have characteristics of both variable and fixed costs.
Answer true or false: Fixed costs are costs that remain the same in total dollar amount as the activity base changes.
The total cost (TC) of producing computer software diskettes (Q) is given as: TC = 500 + 2Q. What is the fixed cost? A. 500 B. 2Q C. 2 D. 2 + (500/Q) E. None of the above
How do fixed costs in a business create a problem for job costing?
Which of the following statements best gives the reason why a data usage bill for a smartphone is an essential (variable) expense? a. It is an obligation to pay, but the spender has some control ov...
Which of the following would you list as an "Essential (Fixed)" expense? a. electricity bill b. telephone usage bill c. rent d. none of the above
Eastern Polymers, Inc., processes a base chemical into plastic. Standard costs and actual costs incurred for the manufacture of 5,200 units of product are given below. Determine the fixed factory o...
When using a flexible budget, what will occur to fixed costs as the activity level increases within the relevant range? A. Fixed costs per unit will decrease. B. Fixed costs per unit will remain un...
State true or false and justify your answer: In a flexible budget, when the activity declines, the total variable cost also declines.
True or false? The primary difference between wages and salaries is the kinds of benefits associated with them.
What are the implications for a business of high operating gearing?
The fixed costs of a business: a. are different each month b. include interest on business loans c. include the cost of production materials d. are based on the quantity of goods produced
Explain the difference between fixed costs (FC) and variable costs (VC) as it relates to production.
Which of the phrases below most closely describes the following term: Fixed costs? a. Costs that increase or decrease in total in response to increases or decreases in the level of business activi...
Last month, a florist sold 910 bunches of flowers, making a profit of $2,005. Fixed costs are $3,000 per month, and the selling price of a bunch of flowers is $7.50. Calculate the variable cost of...
Jackson Company is trying to determine the optimal price to charge for its PUNCH model. Jackson has fixed costs of $50,000 and the PUNCH has variable costs of $12.00 per unit. Jackson has determine...
Core Manufacturing makes a single product. Budget information regarding the current period is given below: Revenue (100,000 units at $8.00) $800,000 Direct materials $170,000 Direct labor 125,000 V...
Quinnett Corporation has two divisions: the Export Products Division and the Business Products Division. The Export Products Division's divisional segment margin is $44,300 and the Business Product...
Fixed costs are constant on both the total cost and per-unit cost basis. (a) True (b) False.
Gwinnett Barbecue Sauce Corporation manufactures a specialty barbecue sauce. Gwinnett has the capacity to manufacture and sell 18,000 cases of sauce each year but is currently only manufacturing an...
Committed fixed costs are those that relate to the investment in facilities, equipment, and the basic organizational structure of a company. (a) True (b) False.
Fantabulous Products sells 2,000 kayaks per year at a price of $450 per unit. Fantabulous sells in a highly competitive market and uses target pricing. The company has $1,000,000 of assets and the...
The Wall-shire Company has three divisions-Northern, Western, and Southern. The divisions have the following revenues and expenses: Northern Western Southern Sales $450,000 $410,000 680,000 Variabl...
Fixed costs A. are costs that vary with output B. are costs that do not vary with output C. are the costs associated with the fixed inputs D. Both B and C above
True or false? Fixed costs can be changed, but it is extremely costly to do so in a short period of time.
The total fixed costs for a manufacturer of road maps are $25,000, and its unit variable cost is $3. The company sells 20,000 maps and just breaks even. What is the map's selling price? a. $3.75 b....
Which of the following correctly describes fixed and variable cost behavior as total volume increases? a. Unit fixed costs stay the same and unit variable costs increase. b. Total fixed costs sta...
Which of the following would be the least controllable fixed costs? (a) Property taxes (b) Rent (c) Research and development (d) Management training programs.
Why do fixed costs remain constant regardless of the level of output?
Mixed costs: a) Vary with production in direct proportion to volume b) Vary with production but not in direct proportion to volume c) Do not vary with production d) Include only different types of...
Cranberry Wood Products spends an average of $9.50 in labor and $12.40 in materials on every unit it sells. Sales commissions and shipping amount to another $3.10. All other costs are fixed and add...
Paul's Pizza produced and sold 2,000 pizzas last month and had fixed costs of $6,000. If production and sales are expected to increase by 10% next month, which of the following statements is true?...
Which of the following situations will most likely violate cost-volume-profit assumptions about fixed costs? A) When production volume increases beyond the capacity of the plant, a second shift wi...
Higher-level performance reports should allocate both traceable and common fixed costs to lower departments. (a) True (b) False.
________ does not change as output is increased or decreased. (a) Marginal cost (b) Dependent cost (c) Fixed cost (d) Opportunity cost.
Why aren't fixed costs relevant for most short-term decisions?
Antioch Extraction, which mines ore in Montana, uses a calendar year for both financial reporting and tax purposes. The following selected costs were incurred in December, the low point of activity...
Fixed operating expenses include all of the following except _______. (a) rent (b) utilities (c) raw materials (d) depreciation.
Suppose that you have two processes A and B for producing a widget. Process A has a fixed cost of $10,000 and per unit variable cost of $80.00. Process B has a fixed cost of $30,000 and the per uni...
Assume a fixed cost of $950, a variable cost of $4.75 per unit, and a selling price of $6.25 per unit. How many units must be sold to make a profit of $500?
True or false? As activity increases, total variable costs increase but fixed costs remain the same.
How do fixed costs react in total and on a per unit basis? a. Fixed costs increase in total as production increases and remain constant on a per unit basis. b. Fixed costs remain constant in tota...
What is the difference between discretionary versus non-discretionary fixed costs, and can they be changed? Explain.
The following production and total cost data for two levels of monthly production volume have been supplied by a company that produces a single product: The best estimate of the total cost to manuf...
The Can-Do Company operates throughout the year. The total cash outflows required are $91,250 per year. The fixed cost of replenishing the cash account is $12 a transaction. The annual interest rul...
Copper Queen Hotel is interested in estimating its fixed and variable costs so that it can make more accurate projections of its costs and profits. Is the cost of ground maintenance classified as a...
Copper Queen Hotel is interested in estimating its fixed and variable costs so that it can make more accurate projections of its costs and profits. Are the salaries of its restaurant staff classifi...
Copper Queen Hotel is interested in estimating its fixed and variable costs so that it can make more accurate projections of its costs and profits. Is depreciation of the building classified as a f...
As production levels decrease, the fixed cost per unit: A. decreases. B. increases. C. stays the same. D. none of the above.
Changes in activity have a neutral effect on fixed costs per unit. (a) True (b) False.
Is the cost of fringe benefits for assembly-line workers classified as a variable or fixed cost with respect to the number of units produced and sold? Is this a selling cost, an administrative cost...
For Big Rig Trucks, a manufacturer of large diesel vehicles, is depreciation on a salesperson's car classified as a fixed or variable cost? Is it a product or period cost? Explain.
For Big Rig Trucks, a manufacturer of large diesel vehicles, are accounting fees classified as a fixed or variable cost? Is it a product or period cost? Explain.
For Big Rig Trucks, a manufacturer of large diesel vehicles, are the wages of workers who build the engines classified as a fixed or variable cost? Is it a product or period cost? Explain.
For Big Rig Trucks, a manufacturer of large diesel vehicles, is the cost of cleaning supplies used for daily clean-up classified as a fixed or variable cost? Is it a product or period cost? Explain.
For Big Rig Trucks, a manufacturer of large diesel vehicles, is the company president's salary classified as a fixed or variable cost? Is it a product or period cost? Explain.
For Big Rig Trucks, a manufacturer of large diesel vehicles, is aluminum used in manufacturing each truck's body classified as a fixed or variable cost? Is it a product or period cost? Explain.
Is the cost of wax to make candles classified as a variable cost, a fixed cost, or a mixed cost? Explain.
Is the computer paper used in an accounting firm classified as a variable cost, a fixed cost, or a mixed cost? Explain.
Are the paper towels used in factory restrooms classified as a variable cost, a fixed cost, or a mixed cost? Explain.
Are the property taxes on a manufacturing plant classified as a variable cost, a fixed cost, or a mixed cost? Explain.
Is the cost of labels attached to shirts made by a company classified as a variable cost, a fixed cost, or a mixed cost? Explain.
Are insurance premiums paid on the headquarters of a manufacturing company classified as a variable cost, a fixed cost, or a mixed cost? Explain.
Are wages of forklift operators who move finished goods from a central warehouse to the loading dock classified as a variable cost, a fixed cost, or a mixed cost? Explain.
Are wages of factory maintenance workers classified as a variable cost, a fixed cost, or a mixed cost? Explain.
Consider the data in the table which applies to the provision of psychological testing services. Calculate the total cost per unit (one unit = one test) if the number of tests is 500 per month.
Consider the data in the table which applies to the provision of psychological testing services. Calculate the variable production cost per unit (one unit = one test) if the number of tests is 500...
Classify the following cost related to producing sweatshirts as either variable, fixed or mixed cost for units produced and sold: Property taxes on factory, building and equipment.
Classify the following cost related to producing sweatshirts as either variable, fixed or mixed cost for units produced and sold: Hourly wages of sewing machine operators.
Classify the following cost related to producing sweatshirts as either variable, fixed or mixed cost for units produced and sold: Patterns for different designs (patterns typically last many years...
Classify the following cost related to producing sweatshirts as either variable, fixed or mixed cost for units produced and sold: Salary of the production supervisor.
Classify the following cost related to producing sweatshirts as either variable, fixed or mixed cost for units produced and sold: Sales salaries.
Classify the following cost related to producing sweatshirts as either variable, fixed or mixed cost for units produced and sold: Advertising costs of $10,000 per month.
Classify the following cost related to producing sweatshirts as either variable, fixed or mixed cost for units produced and sold: Janitorial costs of $2,000 per month.
Classify the following cost related to producing sweatshirts as either variable, fixed or mixed cost for units produced and sold: Electricity costs of $0.25 per kilowatt-hour.
Classify the following cost related to producing sweatshirts as either variable, fixed or mixed cost for units produced and sold: Warehouse rent of $6,000 per month plus $0.50 per square foot of st...
Martinez Company's relevant range of production is 7,500 units to 12,500 units. The unit costs when it produces and sells 10,000 units are provided in the table. If 8,000 units are produced, what i...
Martinez Company's relevant range of production is 7,500 units to 12,500 units. The unit costs when it produces and sells 10,000 units are provided in the table. If 8,000 units are produced, what i...
Martinez Company's relevant range of production is 7,500 units to 12,500 units. The unit costs when it produces and sells 10,000 units are provided in the table. If 12,500 units are produced, what...
Martinez Company's relevant range of production is 7,500 units to 12,500 units. The unit costs when it produces and sells 10,000 units are provided in the table. If 12,500 units are produced, what...
Martinez Company's relevant range of production is 7,500 units to 12,500 units. The unit costs when it produces and sells 10,000 units are provided in the table. If 8,000 units are produced, what i...
The following data have been extracted from the records of Puzzle, Inc.: February August Production level, in units 11,800 25,960 Variable costs $33,040 $? Fixed costs ? 32,500 Mixed costs 29,120 ?...
For a construction company, would the salary paid to the company's bookkeeper be considered a fixed or variable cost? Explain.
Assume that in the short run a firm is producing 100 units of output, has average total costs of $200, and has a variable cost of $150. The firm's total fixed costs are: _____.
Describe the general nature of the variable cost.
Which curve is the average fixed cost curve? a) A b) B c) C d) D
Suppose you decided to open a copy store. You rent store space (signing a one-year lease), and you take out a loan at the local bank and use the money to purchase 10 copiers. Six months later, a la...
Assume that ten units of labor are necessary to produce four units of output. The price of labor is six dollars per unit and the fixed cost is 60 dollars. What is the firm's cost to produce four un...
The monthly salary of a factory's custodian and the costs of raw materials are: a. variable and fixed costs, respectively (with respect to the production of units) b. fixed and variable costs, resp...
Distinguish between discretionary fixed costs and committed fixed costs.
For a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft, would heat, water, and power consumed in the factory be classified as a product cos...
For Issac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft, would salaries of personnel who work in the finished goods warehouse...
For Issac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft, would lubricants used for machine maintenance be classified as a pro...
Does the concept of the relevant range apply to fixed costs?
Cypress Books expects to earn $55,000 next year after taxes. Sales will be $400,000. The store is located near the shopping district surrounding Eastville University. Its average product sells for...
For a supermarket, would the rent from the six-year lease on the building where the store is located be classified as a fixed cost? Explain.
Would the cost of the boxes of cereal sold in a supermarket be classified as a fixed cost for the supermarket? Explain.
Why do average fixed costs fall continuously?
Which of the following would be classified as a fixed cost for the local supermarket? a. The cost of the boxes of cereal sold in the supermarket. b. The salary paid to the store's manager. c. The r...
If Gatsby has total fixed and variable production costs of $750,000 when producing 30,000 child chairs and the company's fixed costs traceable to that product line are $570,000, what is the variabl...
True or false? Fixed costs are forever lost after they have been paid.
In the short run, as output increases, _______. (a) the difference between average total cost and average variable cost decreases (b) the difference between total cost and average variable cost dec...
A mixed cost: a) is fixed over a wider range of activity than a step cost. b) is a fixed cost over the relevant range and a variable cost everywhere else. c) contains both fixed and variable com...
Which of the following is an example of a fixed cost in a manufacturing company: a) The cost of raw materials. b) The cost of electricity for running machines. c) Wages of assembly line workers....
Consider the following costs for a certain company. Compute the total amount of Fixed Costs.
Two firms have the following Total Costs at the following output quantities. |Quantity|1|2|3|4|5|6|7 |Firm A's TC, $|15|40|75|120|175|240|315 |Firm B's TC, $|50|98|144|188|230|270|308 a) Which of t...
A purely competitive firm finds that the market price for its product is $25. It has a fixed cost of $100 and a variable cost of $17.50 per unit for the first 50 units and then $30 per unit for all...
Average fixed cost (AFC): A. is always fixed across all output ranges for the given production function B. falls as output falls C. rises as output rises D. rises as output falls
On March 1, 2014, Gupta Company acquired real estate, on which it planned to construct a small office building, by paying $110,000 in cash. An old warehouse on the property was demolished at a cost...
You can rent time on computers at the local copy center for an $8.00 setup charge and an additional $5.50 for every minute. How much time can be rented for $23.00?
True or false? Total fixed costs equal total costs minus total variable costs.
True or false? The costs of inputs that are impossible to adjust in the short run can be a source of fixed costs.
True or false? Fixed costs are best defined as costs that decline as output increases.
Cost structure in the pharmaceutical industry is largely characterized by fixed expenses which are proportional to output levels. A. True B. False
Fixed costs are the costs: a. that are subject to diminishing marginal productivity. b. that are embodied in the calculation of marginal cost. c. that are independent of the rate or output. d. that...
If a company has to pay $10,000 each month to cover the cost of the lease for its factory but does not manufacture anything during the month, the lease payment is still due in full. This is an exam...
In the short run, what happens to fixed cost as output increases? A) It increases. B) It falls and then rises due to diminishing returns to labor. C) It rises and intersects average total cost at i...
Fixed costs are ______. a. the amount by which a firm's cost changes if the firm produces one more unit of output b. a production expense that changes with the quantity of output produced c. equal...
It is possible for a firm to have positive fixed cost and zero total cost. a. True b. False
The licorice industry is competitive. The current market price of a string of licorice is $.50. At this price the firm decides to produce 2 million strings of licorice this month. The total fixed c...
The average total cost (ATC) of producing a bell is $5 when Jenny's Jingles produces 100 bells. Total cost when zero bells are produced is $250. \\ 1. The total variable cost (TVC) of producing 10...
A firm producing 30 units of output has average total cost equal to $12 and an average variable cost equal to $8. This firm's total fixed costs are therefore equal to: a. $4 b. $120 c. $240 d. $360
Determine if the following statement is true or false: Fixed costs are constant.
Determine if the following statement is true or false: Average fixed costs are constant.
When production levels are expected to increase within a relevant range, and a flexible budget is used, what effect would be anticipated with respect to each of the following costs? Fixed costs pe...
Product Cott has sales of $200,000, a contribution margin of 20%, and a margin of safety of $80,000. What is Cott's fixed cost? a. $16,000 b. $24,000 c. $80,000 d. $96,000
Calculate average total cost, what is the most efficient (minimum ATC) output quantity given the costs below? What should be the cost to produce 900 units? Output Avg. Variable Cost Step Cost Tota...
Haskins Products sells 2,500 kayaks per year at a sales price of $450 per unit. Haskins sells in a highly competitive market and uses target pricing. The company has calculated its target full prod...
Which of the following is not involved in the sell or process further decision? a) Revenues b) Variable costs c) Fixed costs d) Opportunity costs
Why is it important to distinguish between fixed and variable costs? Explain how they can be used to make and support business decisions. Also, what are mixed costs?
Battonkill Company, operating at full capacity, sold 124,200 units at $63/unit in 2014. Its income statement and division of costs for 2014 are given in the following table. The company is consider...
Battonkill Company, operating at full capacity, sold 124,200 units at $63/unit in 2014. Determine the unit variable cost for 2014. Its income statement and division of costs for 2014 are given in t...
Battonkill Company, operating at full capacity, sold 124,200 units at $63/unit in 2014. Determine the total fixed costs in 2014. Its income statement and division of costs for 2014 are given in the...
Is the cost of factory utilities classified as an inventoriable cost or a period cost? Is it a fixed cost or a variable cost?
Doggie Pals produces 100,000 dog collars each month that give off a fresh scent to keep your dog smelling clean between baths. Total manufacturing costs are $200,000. Of this amount, $175,000 are v...
Janitorial services for a factory are $300 per month. Is this cost classified as a fixed cost, a mixed cost, or a variable cost? Explain.
Warehouse rent for a factory is $4,500 per month plus $2 per square foot of storage used. Is this cost classified as a fixed cost, a mixed cost, or a variable cost? Explain.
Are the hourly wages of temporary factory workers classified as a fixed cost, a mixed cost, or a variable cost? Explain.
Acme had total costs of $250,000 when 5,000 units were sold. When sales equaled 12,000 units, total costs were $390,000. Fixed costs were: a. $140,000 b. $150,000 c. $320,000 d. $600,000 e. none of...
The servers like Gary Frazier's busy ice cream shop decided that putting more ice cream in the Sundaes and cones would bring back more customers. After three months, Gary was surprised to discover...
A basic car rental charges a daily rate of $29 a day plus $.20 a mile. Suppose that you rent a car for a day and your bill (before taxes) is $79. How many miles did you drive?
Raymond decides to set up a lemonade stand every weekend for the next four weeks to save up for the latest X-Men comic. He has to pay his brother Robert $10 as a one-time payment for him to not bul...
Sales mix decisions should be made using variable costing because? A) Sales mix decisions usually focus on fixed costs. B) Fixed costs will not affect operating income in the long term. C) Compani...
At an activity level of 5,300 machine-hours in a month, Clyburn Corporation's total variable maintenance cost is $114,268, and its total fixed maintenance cost is $154,336. What would be the avera...
What happens to total fixed costs as output rises?
If ABC Airlines cuts its domestic fares by 30%: a. its fixed costs will decrease. b. profit will increase by 30%. c. a profit can only be earned by decreasing the number of flights and reducing the...
From a total cost perspective, as unit sales decrease within a normal operating range: a) fixed costs per unit will increase. b) fixed costs per unit will decrease. c) fixed costs per unit will sta...
Are rental payments on leased office machinery classified as a fixed or variable cost? Explain.
Are insurance premiums classified as a fixed or variable cost? Explain.
Are executive salaries classified as a fixed or variable cost? Explain.
Are real estate taxes classified as a fixed or variable cost? Explain.
A company is analyzing its mixed costs. During July, its busiest month, a company had total labor hours of 14,000 and total costs of $40,000. During February, its slowest month, the company had lab...
Barker Company has a single product called a Zet. The company normally produces and sells 82,000 Zets each year at a selling price of $44 per unit. The company's unit costs at this level of activit...
Last year, Wesson Company sold 10,000 units of its only product. If sales increase by 12% in the current year, how will unit variable cost and unit fixed cost by affected? Unit Variable Cost Unit...
Erkkila Inc. reports that at an activity level of 6,800 machine-hours in a month, its total variable inspection cost is $426, 530 and its total fixed inspection cost is $197,309. What would be the...
Which of the following would be an example of a fixed cost to a firm? a. Rent for the building that it occupies b. Wages for the laborers c. Cost of raw materials d. Electricity and other fuel...
Mr. James' company produces candy bars. Which is not a variable input for this firm? a. Sugar b. Assembly-line workers c. The large chocolate-stirring machines d. Packaging materials
Fixed costs are: a. costs that never change. b. costs that a firm incurs, even when output is zero. c. not actually costs since they do not affect the decisions of a firm. d. costs that increase...
In economics, a fixed cost is a cost that: a. is present only in the short run. b. goes up as the level of output goes up. c. goes down as the level of output goes up. d. does not vary with the...
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