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……………………….. $35
Manufacturing cost………………………… $4,000 per month plus $17 per unit
Administrative expense…………………… $2,500 per month plus $2.5 per unit
Sales commission…………………………. 15% of sales
Advertising expense………………………. $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.
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