Exam 5: Cost Behavior

Carson,which uses the high-low method of estimating costs,reported total costs of $24 per unit when production was at its lowest level,at 10,000 units.When production doubled to its highest level,the total cost per unit dropped to $15.Carson would estimate its total fixed cost as

The contribution margin ratio is calculated as total contribution margin divided by total sales revenue.This is the formula for contribution margin ratio.

Contribution margin is defined as sales revenue less variable costs.This is the definition of contribution margin.

Which of the following is a fixed cost?

A step cost

A variable cost increases in total as the volume increases.Variable costs are those that change,in total,in direct proportion to changes in activity levels.

Flint Enterprises had the following cost and production information for April: Inventory increased by 3,000 units during April.How much greater will Flint Enterprises' income be under absorption costing than under variable costing?

If sales revenue doubles,fixed costs will

A cost that remains the same,in total,regardless of changes in activity level is a

Stella,Inc.must perform maintenance on its production machinery after every 10,000 units produced.Production varies between 12,000 and 30,000 units a year.The cost of this maintenance would be classified as a

Lark,which uses the high-low method,had total costs of $25,000 at its lowest level of activity when 5,000 units were sold.When,at its highest level of activity,sales equaled 12,000 units,total costs were $39,000.Lark would estimate fixed costs as

Fremont,which uses the high-low method,reported total costs of $10 per unit at its lowest production level,5,000 units.When production tripled to its highest level,the total cost per unit dropped to $5.Fremont would estimate its variable cost per unit as

If a firm uses absorption costing,which of the following actions taken by management would increase gross profit even if sales do not increase?

The intercept of the cost line on a scattergraph represents

The contribution margin ratio is

Cost behavior is

Cypress,which uses the high-low method,had an average cost per unit of $5 at its lowest level of activity when sales equaled 10,000 units and an average cost per unit of $3.25 at its highest level of activity when sales equaled 24,000 units.Cypress would estimate fixed costs as

Jasmine Corp.has a selling price of $15,variable costs of $10 per unit,and fixed costs of $25,000.Contribution margin is $65,000.How many units did Jasmine sell?

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: What is Star's variable cost per unit?

The difference between variable costing and full absorption costing is due to differences in the treatment of