Test bank for fundamental managerial
accounting concepts 10th edition by
thomas edmonds, christopher
1) Java Joe operates a chain of coffee shops. The company pays rent of $20,000 per year for
each shop. Supplies (napkins, bags, and condiments) are purchased as needed. The manager
of each shop is paid a salary of $3,000 per month, and all other employees are paid on an
hourly basis. Relative to the number of customers for a shop, the cost of supplies is which
kind of cost?
A) Fixed cost
B) Variable cost
C) Mixed cost
D) Relevant cost
2) Select the correct statement regarding fixed costs.
A) Because they do not change, fixed costs should be ignored in decision making.
B) The fixed cost per unit decreases when volume increases.
C) The fixed cost per unit increases when volume increases.
D) The fixed cost per unit does not change when volume decreases.
3) Larry's Lawn Care incurs significant gasoline costs. This cost would be classified as a
variable cost if the total gasoline cost:
A) varies inversely with the number of hours the lawn equipment is operated.
B) is not affected by the number of hours the lawn equipment is operated.
C) increases in direct proportion to the number of hours the lawn equipment is operated.
D) None of these are correct.
4) Select the correct statement regarding fixed costs.
A) There is a contradiction between the term "fixed cost per unit" and the behavior
pattern implied by the term.
B) Fixed cost per unit is not fixed.
C) Total fixed cost remains constant when volume changes.
D) All of these are correct statements.
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,Test bank for fundamental managerial
accounting concepts 10th edition by
thomas edmonds, christopher
5) Rock Creek Bottling Company pays its production manager a salary of $6,000 per month.
Salespersons are paid strictly on commission, at $1.50 for each case of product sold.
For Rock Creek Bottling Company, the production manager's salary is an example of:
A) a variable cost.
B) a mixed cost.
C) a fixed cost.
D) None of these
6) Rock Creek Bottling Company pays its production manager a salary of $6,000 per month.
Salespersons are paid strictly on commission, at $1.50 for each case of product sold.
For Rock Creek Bottling Company, the cost of the salespersons' commissions is an example
of:
A) a fixed cost.
B) a variable cost.
C) a mixed cost.
D) none of these
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,Test bank for fundamental managerial
accounting concepts 10th edition by
thomas edmonds, christopher
7) Based on the following cost data, what conclusions can you make about the costs of Product
A and Product B?
Production: Total Cost
Product A Product B
10 units $ 100 ?
100 units $ 1,000 ?
1,000 units $ 10,000 ?
Production: Unit Cost
Product A Product B
10 units ? $ 10,000
100 units ? $ 1,000
1,000 units ? $ 100
A) The cost of Product A is a fixed cost and the cost of Product B is a variable cost.
B) The cost of Product A is a variable cost and the cost of Product B is a fixed cost.
C) The costs of Product A and Product B are both variable costs.
D) The costs of Product A and Product B are both mixed costs.
8) Based on the behavior shown in the following table, which of the following is a variable
cost?
Units Produced 2 3 4 5
Cost Per Unit of Materials 500 500 500 500
Cost Per Unit of Labor 500 333 250 200
Total Utilities Cost 4,500 4,500 4,500 4,500
A) Materials Cost
B) Labor Cost
C) Utilities Cost
D) All of the costs are variable
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, Test bank for fundamental managerial
accounting concepts 10th edition by
thomas edmonds, christopher
9) At a production and sales level of 2,500 units, Bastion Company incurred $72,000 of fixed
cost and $60,000 of variable cost. When 6,400 units of product are produced and sold the
company's cost per unit is:
Note: Round your final answer to whole dollars.
A) $35.
B) $49.
C) $48.
D) $40.
10) At a production and sales level of 2,545 units, Bastion Company incurred $70,000 of fixed
cost and $56,000 of variable cost. When 6,000 units of product are produced and sold the
company's cost per unit is:
A) $46.
B) $39.
C) $34.
D) $44.
11) The following variable manufacturing costs apply to goods produced by Bitty Corporation.
Item Cost per unit
Materials $ 3.10
Labor 2.60
Overhead 1.60
Total $ 7.30
Determine the total variable manufacturing cost if Bitty produces 4,100 units.
A) $6,560
B) $29,930
C) $12,710
D) $10,660
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accounting concepts 10th edition by
thomas edmonds, christopher
1) Java Joe operates a chain of coffee shops. The company pays rent of $20,000 per year for
each shop. Supplies (napkins, bags, and condiments) are purchased as needed. The manager
of each shop is paid a salary of $3,000 per month, and all other employees are paid on an
hourly basis. Relative to the number of customers for a shop, the cost of supplies is which
kind of cost?
A) Fixed cost
B) Variable cost
C) Mixed cost
D) Relevant cost
2) Select the correct statement regarding fixed costs.
A) Because they do not change, fixed costs should be ignored in decision making.
B) The fixed cost per unit decreases when volume increases.
C) The fixed cost per unit increases when volume increases.
D) The fixed cost per unit does not change when volume decreases.
3) Larry's Lawn Care incurs significant gasoline costs. This cost would be classified as a
variable cost if the total gasoline cost:
A) varies inversely with the number of hours the lawn equipment is operated.
B) is not affected by the number of hours the lawn equipment is operated.
C) increases in direct proportion to the number of hours the lawn equipment is operated.
D) None of these are correct.
4) Select the correct statement regarding fixed costs.
A) There is a contradiction between the term "fixed cost per unit" and the behavior
pattern implied by the term.
B) Fixed cost per unit is not fixed.
C) Total fixed cost remains constant when volume changes.
D) All of these are correct statements.
Version 1 1
,Test bank for fundamental managerial
accounting concepts 10th edition by
thomas edmonds, christopher
5) Rock Creek Bottling Company pays its production manager a salary of $6,000 per month.
Salespersons are paid strictly on commission, at $1.50 for each case of product sold.
For Rock Creek Bottling Company, the production manager's salary is an example of:
A) a variable cost.
B) a mixed cost.
C) a fixed cost.
D) None of these
6) Rock Creek Bottling Company pays its production manager a salary of $6,000 per month.
Salespersons are paid strictly on commission, at $1.50 for each case of product sold.
For Rock Creek Bottling Company, the cost of the salespersons' commissions is an example
of:
A) a fixed cost.
B) a variable cost.
C) a mixed cost.
D) none of these
Version 1 2
,Test bank for fundamental managerial
accounting concepts 10th edition by
thomas edmonds, christopher
7) Based on the following cost data, what conclusions can you make about the costs of Product
A and Product B?
Production: Total Cost
Product A Product B
10 units $ 100 ?
100 units $ 1,000 ?
1,000 units $ 10,000 ?
Production: Unit Cost
Product A Product B
10 units ? $ 10,000
100 units ? $ 1,000
1,000 units ? $ 100
A) The cost of Product A is a fixed cost and the cost of Product B is a variable cost.
B) The cost of Product A is a variable cost and the cost of Product B is a fixed cost.
C) The costs of Product A and Product B are both variable costs.
D) The costs of Product A and Product B are both mixed costs.
8) Based on the behavior shown in the following table, which of the following is a variable
cost?
Units Produced 2 3 4 5
Cost Per Unit of Materials 500 500 500 500
Cost Per Unit of Labor 500 333 250 200
Total Utilities Cost 4,500 4,500 4,500 4,500
A) Materials Cost
B) Labor Cost
C) Utilities Cost
D) All of the costs are variable
Version 1 3
, Test bank for fundamental managerial
accounting concepts 10th edition by
thomas edmonds, christopher
9) At a production and sales level of 2,500 units, Bastion Company incurred $72,000 of fixed
cost and $60,000 of variable cost. When 6,400 units of product are produced and sold the
company's cost per unit is:
Note: Round your final answer to whole dollars.
A) $35.
B) $49.
C) $48.
D) $40.
10) At a production and sales level of 2,545 units, Bastion Company incurred $70,000 of fixed
cost and $56,000 of variable cost. When 6,000 units of product are produced and sold the
company's cost per unit is:
A) $46.
B) $39.
C) $34.
D) $44.
11) The following variable manufacturing costs apply to goods produced by Bitty Corporation.
Item Cost per unit
Materials $ 3.10
Labor 2.60
Overhead 1.60
Total $ 7.30
Determine the total variable manufacturing cost if Bitty produces 4,100 units.
A) $6,560
B) $29,930
C) $12,710
D) $10,660
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