LSUS MBA 714 EXAM 1 QUESTIONS AND ACCURATE
ANSWERS RATED A+
When Zee Corporation produces 25,000 units, its fixed cost is $21.00 per unit. Zee's fixed cost
will _____________ if it produces 20,000 units.
a. remain at $21.00 per unit
b. increase by $5.25 per unit
c. increase by $26.25 per unit
d. decrease to $16.80 per unit - ANSWER b. increase by $5.25 per unit
Total Fixed Cost = FC/u x units = $21 x 25,000 = $525,000
FC/u at 20,000 = TFC / units = $525,,000 = $26.25
Difference = New - Old = $26.25 - $21 = $5.25 (Increase)
Increases and decreases in the volume of units produced (within a relevant range)
a. Will impact total variable costs but not total fixed costs
b. Will impact unit variable costs but not unit fixed costs
c. Will impact total variable costs but not unit fixed costs
d. Will impact total fixed costs but not unit variable costs - ANSWER a. Will impact total
variable costs but not total fixed costs
,Zee, Inc. estimated the regression, which resulted in the following output:
Coefficients Standard Error t-Stat P-Value Lower 95% Upper 95% Intercept 500 1411.05 4.28
0.003 2782.09 9289.89 DLH 10 1.61 2.83 0.022 0.85 8.27
Regression Statistics
Multiple R 0.66
R-Square 0.68
Adjusted R-Square 0.69
If Zee processes 100 units, the estimated fixed cost would be:
a. $10
b. $500
c. $510
d. $1,500 - ANSWER b. $500
Fixed cost is the intercept
Wages paid to the factory warehouse supervisor are considered an example of:
Direct Labor / Period Cost
A) Yes Yes
,B) Yes No
C) No Yes
D) No No - ANSWER D) No No
Mullennex Corporation's relevant range of activity is 2,000 units to 6,000 units. When it
produces and sells 4,000 units, its average costs per unit are as follows:
Average Cost per Unit
Direct materials $ 6.55
Direct labor $ 3.5
Variable manufacturing overhead $ 1.25
Fixed manufacturing overhead $ 3
Fixed selling expense $ 0.5
Fixed administrative expense $ 0.4
Sales commissions $ 1.5
Variable administrative expense $ 0.4
If 6,000 units are produced, the average fixed manufacturing cost per unit produced is closest
to:
A) $2.40
B) $2.70
, C) $2.00
D) $3.75 - ANSWER C) $2.00
Total fixed manufacturing overhead cost ($3.00 per unit × 4,000 units*) (a) $12,000
Number of units produced (b) 6,000
Average fixed manufacturing cost per unit produced (a) ÷ (b) $2.00
*The average fixed manufacturing overhead cost per unit was determined by dividing the
total fixed manufacturing overhead cost by 4,000 units.
Schonhardt Corporation's relevant range of activity is 2,000 units to 6,000 units. When it
produces and sells 4,000 units, its average costs per unit are as follows:
Average Cost per Unit
Direct materials $ 7.15
Direct labor $ 3.4
Variable manufacturing overhead $ 1.35
Fixed manufacturing overhead $ 2.8
Fixed selling expense $ 0.7
Fixed administrative expense $ 0.4
Sales commissions $ 0.5
ANSWERS RATED A+
When Zee Corporation produces 25,000 units, its fixed cost is $21.00 per unit. Zee's fixed cost
will _____________ if it produces 20,000 units.
a. remain at $21.00 per unit
b. increase by $5.25 per unit
c. increase by $26.25 per unit
d. decrease to $16.80 per unit - ANSWER b. increase by $5.25 per unit
Total Fixed Cost = FC/u x units = $21 x 25,000 = $525,000
FC/u at 20,000 = TFC / units = $525,,000 = $26.25
Difference = New - Old = $26.25 - $21 = $5.25 (Increase)
Increases and decreases in the volume of units produced (within a relevant range)
a. Will impact total variable costs but not total fixed costs
b. Will impact unit variable costs but not unit fixed costs
c. Will impact total variable costs but not unit fixed costs
d. Will impact total fixed costs but not unit variable costs - ANSWER a. Will impact total
variable costs but not total fixed costs
,Zee, Inc. estimated the regression, which resulted in the following output:
Coefficients Standard Error t-Stat P-Value Lower 95% Upper 95% Intercept 500 1411.05 4.28
0.003 2782.09 9289.89 DLH 10 1.61 2.83 0.022 0.85 8.27
Regression Statistics
Multiple R 0.66
R-Square 0.68
Adjusted R-Square 0.69
If Zee processes 100 units, the estimated fixed cost would be:
a. $10
b. $500
c. $510
d. $1,500 - ANSWER b. $500
Fixed cost is the intercept
Wages paid to the factory warehouse supervisor are considered an example of:
Direct Labor / Period Cost
A) Yes Yes
,B) Yes No
C) No Yes
D) No No - ANSWER D) No No
Mullennex Corporation's relevant range of activity is 2,000 units to 6,000 units. When it
produces and sells 4,000 units, its average costs per unit are as follows:
Average Cost per Unit
Direct materials $ 6.55
Direct labor $ 3.5
Variable manufacturing overhead $ 1.25
Fixed manufacturing overhead $ 3
Fixed selling expense $ 0.5
Fixed administrative expense $ 0.4
Sales commissions $ 1.5
Variable administrative expense $ 0.4
If 6,000 units are produced, the average fixed manufacturing cost per unit produced is closest
to:
A) $2.40
B) $2.70
, C) $2.00
D) $3.75 - ANSWER C) $2.00
Total fixed manufacturing overhead cost ($3.00 per unit × 4,000 units*) (a) $12,000
Number of units produced (b) 6,000
Average fixed manufacturing cost per unit produced (a) ÷ (b) $2.00
*The average fixed manufacturing overhead cost per unit was determined by dividing the
total fixed manufacturing overhead cost by 4,000 units.
Schonhardt Corporation's relevant range of activity is 2,000 units to 6,000 units. When it
produces and sells 4,000 units, its average costs per unit are as follows:
Average Cost per Unit
Direct materials $ 7.15
Direct labor $ 3.4
Variable manufacturing overhead $ 1.35
Fixed manufacturing overhead $ 2.8
Fixed selling expense $ 0.7
Fixed administrative expense $ 0.4
Sales commissions $ 0.5
