Quiz 6

1.   Manufacturing costs include all of the following categories except ________.

administrative costs
direct labor
direct materials
manufacturing overhead

2.  Items such as indirect materials, indirect labor, maintenance and repairs on production equipment, depreciation, and insurance on manufacturing facilities are included in ________.

nonmanufacturing costs
manufacturing overhead costs
direct costs

3.  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 materials    $ 5.00
Direct labor    $ 2.50
Variable manufacturing overhead    $ 1.40
Fixed manufacturing overhead    $ 4.00
Fixed selling expense    $ 2.00
Fixed administrative expense    $ 2.20
Sales commissions    $ 1.20
Variable administrative expense    $ 0.45
Required:

1. For financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units? (Do not round intermediate calculations.)

4.  3. If 8,000 units are produced and sold, what is the variable cost per unit produced and sold? (Round your answer to 2 decimal places.)

5.  If 8,000 units are produced, what is the total amount of fixed manufacturing cost incurred to support this level of production?

6. What incremental manufacturing cost will Martinez incur if it increases production from 10,000 to 10,001 units? (Round your answer to 2 decimal places.)

7.  If a firm increases its activity level, ________.

costs will remain the same
all costs will rise
some costs will change, other costs will remain the same

8   A fixed cost is a cost which ________.

varies in total with changes in the level of activity
remains constant per unit with changes in the level of activity
varies inversely in total with changes in the level of activity
remains constant in total with changes in the level of activity

9.  In the equation, Y = a + bX, X represents ________.

the total mixed cost
the level of activity
the total fixed cost
the variable cost per unit of activity

10.   Tirri Corporation has provided the following information:

     Cost per Unit    Cost per Period
Direct materials    $ 7.10     
Direct labor    $ 4.30     
Variable manufacturing overhead    $ 1.60     
Fixed manufacturing overhead         $ 23,600
Sales commissions    $ 1.20     
Variable administrative expense    $ 0.45     
Fixed selling and administrative expense         $ 8,000
 

If the selling price is $27.30 per unit, the contribution margin per unit sold is closest to:

$12.65
$7.40
$15.90
$10.50