Multiple Choice Questions

1. B.W. Shoes manufactures athletic shoes and documented its production levels and manufacturing overhead costs for the past 5 months as follows:

Using the high/low method, what is the overhead cost equation?

a. Y = $7,080 + $3.83X

b. Y = $14,000 + $2.50X

c. Y = $29,750 + $3.62X

d. Y = $8,500 + $2.35X

2. Refer to question 16. If B.W.€™s production is expected to be 10,850 pairs, how much estimated overhead cost will be incurred?

a. $48,635.50

b. $41,125.00

c. $69,027.00

d. $33,997.50

3. Rale€™s Jewelers manufactures gold earrings and documented its production levels and overhead costs for the past 5 months as follows:

Using the high/low method, what is the overhead cost equation?

a. Y = $36,300 + $2.20X

b. Y = $5,200 + $3.56X

c. Y = $25,000 + $2.89X

d. Y = $12,500 + $3.40X

4. When using the high/low method, the change in cost divided by the change in volume is:

a. The variable cost per unit

b. The fixed cost per unit

c. The mixed cost per unit

d. The total cost per unit

5. Generally speaking, variable costs are relevant to production decisions, except when:

a. The variable costs are part of a mixed cost

b. The variable costs are unavoidable

c. The variable costs do not differ between alternatives

d. None of the above; variable costs are always relevant to production decisions

6. Generally speaking, fixed costs are not relevant to production decisions, except when:

a. The fixed costs are part of a mixed cost

b. The fixed costs are unavoidable

c. The fixed costs differ between alternatives

d. None of the above; fixed costs are always relevant to production decisions

7. The after-tax cost of a tax-deductible cash expenditure can be calculated as follows:

a. After-tax cost = Before-tax cost + (1 €“ tax rate)

b. After-tax cost = (Before-tax cost + tax rate) €“ 1

c. After-tax cost = Before-tax cost + tax rate

d. After-tax cost = Before-tax cost + (tax rate €“ 1)

8. A manager is considering a project that will increase sales revenue by $120,000 without affecting expenses. What is the after-tax revenue given a 30 percent tax rate?

a. $36,000

b. $84,000

c. $120,000

d.$150,000

Transcribed Image Text:

Production (pairs) Overhead Cost January 10,500 $40,250 February 10,675 41,000 March 11,500 44,250 April 12,500 45,250 May 11,000 43,750