Exam 6: Cost Behaviour: Analysis and Use

Reference: 06-05 Maxwell Company has a total expense per unit of $2.00 at the 16,000 unit level of activity and total expense per unit of $1.95 at the 21,000 unit level of activity. -The best estimate of the total fixed cost per period for Maxwell Company is

Reference: 06-11 Porter Company has provided the following data for the second quarter of the most recent year: Sales \ 300,000 Fixed manufacturing overhead 55,000 Direct labour 72,500 Fixed selling expense 46,250 Variable manufacturing overhead 41,000 Variable administrative expense 48,000 Direct materials 51,500 Fixed administrative expense 44,500 Variable selling expense 49,750 Assume that direct labour is a variable cost and that there were no beginning or ending inventories. -The gross margin (loss)for Porter Company for the second quarter was

Which of the following is a fixed cost of producing sweatshirts

Which of the following statements is true

The term "relevant range" means the range within which:

Reference: 06-05 Maxwell Company has a total expense per unit of $2.00 at the 16,000 unit level of activity and total expense per unit of $1.95 at the 21,000 unit level of activity. -The best estimate of the variable cost per unit for Maxwell Company is

Reference: 06-10 The following data have been provided by a retail company that sells a single product. This Year Last Year Units sold 200,000 150,000 Sales revenue \ 1,000,000 \ 750,000 Less cost of goods sold 700,000 525,000 Gross margin 300,000 225,000 Less operating expenses 222,000 210,000 Net income \ 78,000 \ 15,000 -If total variable costs are $748,000, what is the company's contribution margin for this year?

Reference: 06-13 A comparative income statement for Jimbob Co., a merchandising company, for the three months ended June is presented below. Jimbob Co. Comparative Income Statement For the Second Quarter April May June Sales in units 4,500 5,250 6,000 Sales revenue \ 630,000 \ 735,000 \ 840,000 Less cost of goods sold 252,000 294,000 336,000 Gross Margin 378,000 441,000 504,000 Less operating expenses: Shipping expense 56,000 63,500 71,000 Advertising expense 70,000 70,000 70,000 Salaries and commissions 143,000 161,750 180,500 Insurance expense 9,000 9,000 9,000 Depreciation expense 42,000 42,000 42,000 Total operating expenses 346,250 372,500 Net income \ 131,500 -What is the company's contribution margin for the quarter?

A mixed cost contains both variable and fixed cost elements.

Reference: 06-01 Rymore Company would like to classify the following costs according to their cost behaviour: July August Sales in units 1,500 1,600 Cost A \ 35,000 \ 36,000 Cost B 16,000 16,000 Cost C 67,500 72,000 -Which of the following classifications best describes the behaviour of Cost A

Reference: 06-06 Johnson Company has provided the following data for the first five months of the year: Machine Hours Lubrication Cost January 120 \ 750 February 160 \ 810 March 200 \ 870 April 150 \ 795 May 170 \ 825 -Using the high-low method of analysis, the estimated monthly fixed component of lubrication cost is closest to?

A cost that has both the characteristics of fixed cost and variable cost is known as a

Reference: 06-13 A comparative income statement for Jimbob Co., a merchandising company, for the three months ended June is presented below. Jimbob Co. Comparative Income Statement For the Second Quarter April May June Sales in units 4,500 5,250 6,000 Sales revenue \ 630,000 \ 735,000 \ 840,000 Less cost of goods sold 252,000 294,000 336,000 Gross Margin 378,000 441,000 504,000 Less operating expenses: Shipping expense 56,000 63,500 71,000 Advertising expense 70,000 70,000 70,000 Salaries and commissions 143,000 161,750 180,500 Insurance expense 9,000 9,000 9,000 Depreciation expense 42,000 42,000 42,000 Total operating expenses 320,000 346,250 372,500 Net income \ 58,000 \ 94,750 \ 131,500 -What is the best estimate of the company's total fixed operating expenses per month

At an activity level of 6,000 units the cost for maintenance is $7,200 and at 10,000 units the cost for maintenance is $11,600. Using the high-low method, the cost formula for maintenance is?

Significant reductions in committed fixed costs can usually be made on a temporary basis without seriously impairing the long-term goals of a firm.

Reference: 06-04 In the O'Donnell Manufacturing Company, at an activity level of 80,000 machine hours, total overhead costs were $223,000. Of this amount, utilities were $48,000 (all variable) and depreciation was $60,000 (all fixed). The balance of the overhead cost consisted of maintenance cost (mixed). At 100,000 machine hours, maintenance costs were $130,000. Assume that all of the activity levels mentioned in this problem are within the relevant range. -The total fixed overhead cost for O'Donnell is?

Which of the following is an advantage of the high-low method

In a scattergraph, the line fitted to the plotted points is known as a regression line.

Which of the following classifications best describes the behaviour of Cost C

Of the costs listed below, which would most likely be considered as a discretionary fixed cost?