ACCOUNTING Chapter 5 Practice Test 1. Shipping costs at Fisheries Inc. are a mixed cost with variable and fixed cost components. Records indicate the company shipped 6,000 tons of halibut for $5,000 in March and 9,000 tons for $7,400 in April. Assuming that this activity is within the relevant range, the expected shipping cost for shipping 7,800 tons would be: A) $6,240. B) $9,750. C) $6,440. D) $6,200. 2. At an activity level of 20,000 units produced, fixed costs total $30,000 and variable costs total $67,000. Assuming that this activity is within the relevant range if 25,000 units are produced, then: A) total fixed costs are expected to be $37,500. B) variable cost per unit is expected to equal $2.68. C) fixed cost per unit is expected to equal $1.20. D) total cost per unit is expected to equal $3.88. Use the following to answer questions 3-6 Buffo Company fabricates metal folding chairs. Data concerning the company’s revenue and cost structure follow: Selling price per unit……………………….. Manufacturing cost………………………… Administrative expense…………………… Sales commission…………………………. Advertising expense………………………. $35 $4,000 per month plus $17 per unit $2,500 per month plus $2.5 per unit 15% of sales $2,000 per month 3. If Buffo plans to produce and sell 3,000 units next month, the expected contribution margin would be: A) $30,750. B) $74,250. C) $26,750. D) $96,500. 4. If Buffo plans to produce and sell 4,000 units next month, the expected gross margin would be: A) $41,000. B) $37,000. C) $68,000. D) $57,500. 5. If Buffo expects to produce and sell 2,000 units next month, the total expected manufacturing cost would be: A) $34,000. B) $39,000. C) $45,500. D) $38,000. 6. If Buffo expects to produce and sell 5,000 units next month, the expected net operating income would be: A) $51,250. B) $42,750. C) $71,000. D) $62,500. Use the following to answer questions 7-8 Farmer Inc, would like to estimate the variable and fixed components of its electrical costs and has compiled the following data for the last four months of operations. Machine Hours January…………………………… 30 February…………………………. 42 March……………………………. 35 April…………………………….. 20 Electrical Cost $75 $90 $81 $68 7. Using the high-low method of analysis, the variable cost per machine hour for electricity would be estimated to be: A) $3.40. B) $2.14. C) $1.00. D) $0.87. 8. Using the high-low method of analysis, the fixed cost per month for electricity would be estimated to be: A) $53.46. B) $0.00. C) $3.40. D) $48.00. ANSWERS 1.C 2. C 3. A 4. C 5. D 6. B 7. C 8. D

Accounting, Chapter 5 Practice Test with Solutions

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