Extra credit assignment
(total possible points can be earned: 30)
MULTIPLE CHOICE 1)
Bressette Corporation has provided the following information:
Cost per Unit Cost per Period
Direct materials $ 6.20
Direct labor $ 3.70
Variable manufacturing overhead $ 1.25
Fixed manufacturing overhead $ 10,000
Sales commissions $ 1.50
Variable administrative expense $ 0.50
Fixed selling and administrative expense $ 5,000
For financial reporting purposes, the total amount of product costs incurred to make
5,000 units is closest to: 1) A) $65,750 B) $10,000 C) $70,750 D) $55,750 Learning Objective:
01-03 Understand cost classifications used to prepare financial statements: product costs and
period costs.; 01-04 Understand cost classifications used to predict cost behavior: variable costs,
fixed costs, and mixed costs. 2) Property taxes on a company’s factory building would be classified as a(n): variable cost. Learning Objective:
01-03 Understand cost classifications used to prepare financial statements: product costs and
period costs.; 01-05 Understand cost classifications used in making decisions: differential costs,
sunk costs, and opportunity costs.; 01-04 Understand cost classifications used to predict cost
behavior: variable costs, fixed costs, and mixed costs. 3) Which costs will change with a decrease in activity within the relevant range? 3) A) Total fixed costs and total variable cost. B) Unit fixed costs and total variable cost. C) Unit variable cost and unit fixed cost. D) Unit fixed cost and total fixed cost. Learning Objective:
01-04 Understand cost classifications used to predict cost behavior: variable costs, fixed costs, and
mixed costs. 4)
Gilchrist Corporation bases its predetermined overhead rate on the estimated
machine-hours for the upcoming year. At the beginning of the most recently completed
year, the Corporation estimated the machine-hours for the upcoming year at 79,000
machine-hours. The estimated variable manufacturing overhead was $7.38 per
machine-hour and the estimated total fixed manufacturing overhead was $2,347,090.
The predetermined overhead rate for the recently completed year was closest to: 4) A) $37.09 per machine-hour B) $36.07 per machine-hour C) $7.38 per machine-hour D) $29.71 per machine-hour