Multiple Choice Answers

1. Nikkel Corporation, a merchandising company, reported the following results for July:

Sales         $410,000
Cost of goods sold (all variable)       $173,900
Total variable selling expense $  21,200
Total fixed selling expense     $  20,500
Total variable administrative expense        $  8,900
Total fixed administrative expense   $  31,000

The gross margin for July is:
$206,000
$236,100
$154,500
$358,500

2.
Nikkel Corporation, a merchandising company, reported the following results for July:

Sales         $433,000
Cost of goods sold (all variable)       $174,800
Total variable selling expense $  25,600
Total fixed selling expense     $  15,100
Total variable administrative expense        $  14,800
Total fixed administrative expense   $  31,400

The contribution margin for July is:
$217,800
$258,200
$171,300
$386,500

At an activity level of 8,400 machine-hours in a month, Nooner Corporation’s total variable production engineering cost is $732,480 and its total fixed production engineering cost is $180,400. What would be the total production engineering cost per unit, both fixed and variable, at an activity level of 8,800 machine-hours in a month? Assume that this level of activity is within the relevant range.
$107.35
$107.70
$107.88
$106.81

At a sales volume of 38,000 units, Thoma Corporation’s sales commissions
(a cost that is variable with respect to sales volume) total $752,400.

To the nearest whole dollar, what should be the total sales commissions at a sales volume of 34,300 units? (Assume that this sales volume is within the relevant range.)
$690,660
$833,563
$679,140
$752,400

5.
A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $5,280 and is paid at the beginning of the first year. Eighty percent of the premium applies to manufacturing operations and 20% applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage?
Product                  Period
$1408                    $352
$5280                    $0
$2816                    $704
$4224                    $1056

6.
Haar Inc. is a merchandising company. Last month the company’s cost of goods  sold was $61,700. The company’s beginning merchandise inventory was $17,700 and its ending merchandise inventory was $23,100. What was the total amount of the company’s merchandise purchases for the month?
$61,700
$102,500
$67,100
$56,300

7. The following costs were incurred in September:

  Direct materials $39,200
  Direct labor $33,400
  Manufacturing overhead $25,100
  Selling expenses $23,600
  Administrative expenses $40,600

Conversion costs during the month totaled:
$58,500
$72,600
$64,300
$161,900

8. Supply costs at Lattea Corporation’s chain of gyms are listed below:

  Client-Visits Supply Cost
  March 11,662 $28,576
  April 11,458 $28,410
  May 11,990 $28,834
  June 13,500 $28,922
  July 11,722 $28,637
  August 11,208  $28,236
  September 12,002 $28,835
  October 11,693 $28,593
  November 11,841 $28,718

Management believes that supply cost is a mixed cost that depends on client-visits. Using the high-low method to estimate the variable and fixed components of this cost, those estimates would be closest to:
$0.34 per client-visit; $24,367 per month
$.88 per client-visit; $17,814 per month
$1.99 per client-visit; $28,638 per month
$0.30 per client-visit; $24,872 per month

9. Faast Company’s Quality cost report is to be based on the following data:

Quality engineering…………………………………………..$86000
Quality circles………………………………………………….$53000
Supervision of testing and inspection activities……………$92000
Net Cost of scrap………………………………………………$96000
Text and inspection of in-process goods……………………$16000
Liability arising from defective products………………………$13000
Warranty repairs and replacements……………………………………$62000
Debugging software errors………………………………………………….$86000
Rework labor and overhead………………………………………………….$29000

a. What would be the total prevention cost appearing on the quality cost report?
$69,000
$148,000
$139,000
$178,000

b. What would be the total appraisal cost appearing on the quality cost report?
$108,000
$121,000
$247,000
$102,000

c. What would be the total internal failure cost appearing on the quality cost report?
$102,000
$158,000
$211,000
$99,000

d. What would be the total external failure cost appearing on the quality cost report?
$75,000
$533,000
$286,000
$109,000