Accounting Managerial Chapter 2

Which of the following is the primary source of revenue for a service business?

Providing intangible goods and services

Which of the following is the primary source of revenue for a merchandising business?

The purchase and resale of finished products

Which of the following is the. primary source of revenue for a manufacturing business?

The production of products from raw materials

Fixed costs are expenses that _____.

remain constant as activity changes

Variable costs are expenses that ______.

remain constant on a per-unit basis but change in total based on activity level

(not confidence in the answer)

Total costs for ABC Distributing are $250,000 when the activity level is 10,000 units. If variable costs are $5 per unit, what are their fixed costs?

$200,000

Which of the following methods of cost estimation relies on only 2 data points?

The high-low method

In the cost equation Y = a + bx, Y represents which of the following?

total costs

A scatter graph is used to test the assumption that the relationship between cost and activity level is ______.

linear

Fixed or Variable

Lumber used to construct decks ($12 per square foot)

variable

Fixed or Variable

Carpenter labor used to construct decks ($10 per hr)

variable

Fixed or Variable

Construction supervisor salary ($45,000 per year)

fixed

Fixed or Variable

Depreciation on tools and equipment ($6,000 per year)

fixed

Fixed or Variable

Selling and administrative expenses ($35,000 per year)

fixed

Fixed or Variable

Rent on corporate office space ($34,000 per year)

fixed

Fixed or Variable

Nails, glue, and other materials required to construct deck (varies per job)

variable