Mccaskell Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows: Average Cost per UnitDirect materials$6.30Direct labor$3.65Variable manufacturing overhead$1.75Fixed manufacturing overhead$9.90Fixed selling expense$2.25Fixed administrative expense$1.80Sales commissions$1.00Variable administrative expense$0.50 If 8,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:
A. $79,600
B. $172,800
C. $93,600
D. $87,600
Answer: A
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Which of the following statements by a sales manager best reflects an understanding of the iceberg principle?
A. "Let's not dwell on sales data summaries-let's get below the surface and study the details." B. "Cost problems always show up first-but controlling expenses doesn't mean that you won't run into revenue problems." C. "Detailed cost analysis gets you focused on small parts of the problem, whereas general summaries make it easier to see the really big problems." D. "Don't tell me that you're certain we're going to increase sales. They were certain that an iceberg couldn't sink the Titanic!" E. "Most costs that look like they're fixed are actually changing all the time."
In a perpetual inventory system, the sale of items for cash consists of two entries. One entry is a debit to Cash and a credit to Sales. The other entry is a debit to
a. Work in Process Inventory and a credit to Finished Goods Inventory. b. Finished Goods Inventory and a credit to Cost of Goods Sold. c. Cost of Goods Sold and a credit to Finished Goods Inventory. d. Finished Goods Inventory and a credit to Work in Process Inventory.
Cameron Manufacturing Co's static budget at 5,000 units of production includes $40,000 for direct labor and $5,000 for variable electric power. Total fixed costs are $25,000. At 8,000 units of production, a flexible budget would show:
A) variable costs of $64,000 and $25,875 of fixed costs B) variable costs of $64,000 and $25,000 of fixed costs C) variable costs of $72,000 and $25,000 of fixed costs D) variable and fixed costs totaling $112,000