Exam 6: Activity Analysis, Cost Behavior, and Cost Estimation

Command Generators is in the process of preparing a production cost budget for August.Actual costs in July for the production of 60 generators were: Materials and labor are the only variable costs.If production and sales are budgeted to increase to 70 generators in August, how much is the expected total variable cost on the August budget?

Fulton and Sons, Inc.presently leases a copy machine under an agreement that calls for a fixed fee each month and a charge for each copy made.Fulton made 7,000 copies and paid a total of $360 in March; in May, the firm paid $280 for 5,000 copies.The company uses the high-low method to analyze costs. Fulton's monthly fixed fee is:

Cost that are nearly variable, but increase in small steps instead of continuously are called step-variable costs.

A mixed cost is also known as a:

Costs that remain the same over a wide range of activity, but jump to a different amount outside that range, are known as:

Within the relevant range, a curvilinear cost function can sometimes be graphed as a:

Brawny Generators is in the process of preparing a production cost budget for August.Actual costs in July for the production of 60 generators were: Materials and labor are the only variable costs.If production and sales are budgeted to increase to 70 generators in August, how much is the fixed cost per unit on the August budget?

Ralston has the following budgeted costs at its anticipated production level (expressed in hours): variable overhead, $165,000; fixed overhead, $250,000.If Ralston now revises its anticipated production slightly upward, it would expect:

Which of the following tools is not associated with cost estimation?

Which of the following statements about the visual-fit method is (are) true? I.The method results in the creation of a scatter diagram. II.The method is not totally objective because of the manner in which the cost line is determined. III.The method is especially helpful in the determination of outliers.

Volcano Hot Wings has budgeted the following costs for a month in which 12,000 wings will be cooked and sold. Each wing sells for $1.60 each.What is the budgeted fixed cost per unit?

Shum Manufacturing, which uses the high-low method, makes a product called Kwan.The company incurs three different cost types (A, B, and C) and has a relevant range of operation between 2,500 units and 10,000 units per month.Per-unit costs at two different activity levels for each cost type are presented below. If Shum produces 10,000 units, the total cost would be:

Volcano Hot Wings has budgeted the following costs for a month in which 12,000 wings will be cooked and sold. Each wing sells for $1.60 each.What is the budgeted total fixed cost?

A staff assistant at Warrington Corporation recently determined that the first five units completed in a new manufacturing process took 500 hours to complete, or an average of 100 hours per unit.The assistant also found that when the cumulative output produced doubles, the average labor time declines by 20%.On the basis of this information, how many total hours would Warrington use if it produces a cumulative amount of 40 units?

Barkoff Enterprises, which uses the high-low method to analyze cost behavior, has determined that machine hours best explain the company's utilities cost.The company's relevant range of activity varies from a low of 600 machine hours to a high of 1,100 machine hours, with the following data being available for the first six months of the year: The fixed utilities cost per month for Barkoff is:

Barkoff Enterprises, which uses the high-low method to analyze cost behavior, has determined that machine hours best explain the company's utilities cost.The company's relevant range of activity varies from a low of 600 machine hours to a high of 1,100 machine hours, with the following data being available for the first six months of the year: The variable utilities cost per machine hour for Barkoff is:

Macon Company has a variable selling cost.If sales volume increases, how will the total variable cost and the variable cost per unit behave?

A variable cost that has a definitive physical relationship to the activity measure is called a (n):

If the organization operates at an activity level outside the relevant range, any cost predictions based on data from the relevant range may not be very accurate.

Which of the following costs exhibits both decreasing and increasing marginal costs over a specific range of activity?