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L15.2030 - Cost Accounting (2025/2026)
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Which of the following is a manufacturing overhead cost?
Company X has the following estimated costs for the next year:
- Direct materials: $16109
- Direct labor: $40000
- Salary of production supervisor: $38000
- Rent on factory equipment: $18893
- Sales commission: $86000
- Advertising expenses: $18000
It is estimated that 53000 machine hours and 8000 direct labor hours will be worked during the next year. What will be the predetermined overhead rate if the company applies manufacturing overhead cost to jobs on the basis of direct labor hours?
Company X produces and sells two products: product P and product S. The selling prices are $60 for Product P and $100 for Product S sells for. The variable cost are as follows:
| Product P | Product S |
Variable manufacturing cost cost as percentage of selling price | 34% | 35% |
Variable selling and administrative cost as percentage of selling price | 6% | 5% |
Expected sales in units next year are: 4000 for Product P and 1000 for Product S. Fixed costs are budgeted at $188240 per year.
The yearly break even point in sales is:
Company X sells a single product for $40 per unit. Fixed costs are $120830 and variable costs equal 75% of sales. If fixed costs increase by $12713, Company X will have to increase sales by how much just to earn profits equal to those earned before costs increased?
Company X is analyzing its fixed and variable costs within its current relevant range. As its cost driver activity changes within the relevant range, which of the following statements is/are correct?
A) As the cost driver level increases, total fixed cost remains unchanged.
B) As the cost driver level increases, unit fixed cost increases.
C) As the cost driver level decreases, unit variable cost decreases.
Company X reports the following data for the current year:
- Net profit (variable costing basis) = $52123
- Net profit (absorption costing) = $53323
- Fixed manufacturing overhead costs per unit were the same in both the prior and current year ($1.20 per unit)
In comparing the absorption and variable cost methods, which of the following statements is FALSE (use the option "None of the others" if all other options are true):
The best way of allocating overhead costs to products is:
Company X shows a large Margin of Safety. That indicates:
Company X produces and sells a single product with a positive contribution margin. If the selling price and the variable cost per unit both increase 5% and fixed costs do not change, what is the effect on the contribution margin per unit ($) and the contribution margin as % of sales?