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Exam 5: Cost Behavior Analysis and Use

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Question 41

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The management of Harlow Corporation, a manufacturing company, would like your help in contrasting the traditional and contribution approaches to the income statement. The company has provided the following financial data for January: The company had no beginning or ending inventories. -The gross margin for January was:

A) $166,000
B) $110,000
C) $42,000
D) $172,000

E) A) and B)
F) A) and C)

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Question 42

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The following data pertains to activity and the cost of electricity for two recent months: The best estimate of the total monthly fixed electrical cost is:

A) $300
B) $1,200
C) $1,500
D) $1,050

E) A) and B)
F) B) and C)

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Question 43

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_________________ is a method of separating a mixed cost into its fixed and variable elements by fitting a regression line that minimizes the sum of the squared errors.

Gargymal Company would like to estimate the variable and fixed components of its electrical costs and has compiled the following data for the last five months of operations. -Using the high-low method of analysis, the estimated variable cost per machine hour for electricity is closest to:

The following data pertain to activity and costs for two recent months: Assuming that these activity levels are within the relevant range, the mixed costs for November were:

Krouse Corporation reports that at an activity level of 8,100 units, its total variable cost is $509,652 and its total fixed cost is $197,316. What would be the total cost, both fixed and variable, at an activity level of 8,400 units? Assume that this level of activity is within the relevant range.

Hiss Company's activity for the last six months is as follows: -Using the high-low method, the estimated monthly fixed component of the electrical cost is:

Rymore Company would like to classify the following costs according to their cost behavior: -Which of the following classifications best describes the behavior of Cost A?

Bacho Corporation reports that at an activity level of 5,400 units, its total variable cost is $416,934 and its total fixed cost is $142,560. -What would be the total variable cost at an activity level of 5,500 units? Assume that this level of activity is within the relevant range.

Maintenance costs at a Neller Corporation factory are listed below: Management believes that maintenance cost is a mixed cost that depends on machine-hours. Using the high-low method to estimate the variable and fixed components of this cost, these estimates would be closest to:

An increase in the activity level within the relevant range results in:

Faram Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. The best estimate of the total cost to manufacture 2,300 units is closest to:

You are applying the scattergraph method and find that the regression line you have drawn passes through a data point with the following coordinates: 1,000 units and $9,600. The regression line passes through the Y axis at the $600 point. Which of the following is the cost formula that represents the slope of this line?

Given the cost formula Y = $17,500 + $4X, at what level of activity will total cost be $42,500?

Gargymal Company would like to estimate the variable and fixed components of its electrical costs and has compiled the following data for the last five months of operations. -Using the high-low method of analysis, the estimated fixed cost per month for electricity is closest to:

An analysis of past maintenance costs indicates that maintenance cost is an average of $0.20 per machine-hour at an activity level of 10,000 machine-hours and $0.25 per machine-hour at an activity level of 8,000 machine-hours. Assuming that this activity is within the relevant range, what is the total expected maintenance cost if the activity level is 8,700 machine-hours?

Rymore Company would like to classify the following costs according to their cost behavior: -Which of the following classifications best describes the behavior of Cost C?

Eddins Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. The best estimate of the total variable manufacturing cost per unit is:

The following production and average cost data for two levels of monthly production volume have been supplied by a company that produces a single product: -The best estimate of the total cost to manufacture 3,200 units is closest to:

Dabbs Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. The best estimate of the total monthly fixed manufacturing cost is: