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

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. The cost formula that expresses the behavior of Shum's total cost is:

Committed fixed costs would include:

Blaster, Inc.recently conducted a least-squares regression analysis to predict selling expenses.The company has constructed the following regression equation: Y = 329,000 + 7.80X.Which of the following statements is false if the primary cost driver is number of units sold?

The following data relate to the Torrence Company for May and August: May and August were the lowest and highest activity levels, and Torrence uses the high-low method to analyze cost behavior.If maintenance hours are estimated to be 26,000 hours in October, which of the following statements is true?

Which of the following is not an issue in the collection of data for cost estimation?

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 expected total fixed cost on the August budget?

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 variable cost?

Berringer Designs hired a graphic artist.It is estimated that the artist's learning rate is at 70% and her first quarter's output amounted to 300 relatively equal job outputs, which took her a total of 50 hours to complete.Output is expected to double in every succeeding quarter. By the 5th quarter, based on learning curve estimates, what should the artist's average time (in hours) be for the units of output?

The following data relate to the Torrence Company for May and August of the current year: May and August were the lowest and highest activity levels, and Torrence uses the high-low method to analyze cost behavior.Which of the following statements is true?

Organize, Inc.has only variable costs and fixed costs.A review of the company's records disclosed that when 200,000 units were produced, fixed manufacturing costs amounted to $800,000 and the cost per unit manufactured totaled $11.On the basis of this information, how much cost would the firm anticipate at an activity level of 205,000 units?

A cost that has both a fixed and variable component is known as a:

Polka King Gifts had the following costs in March when 400 ceramic statues were produced: materials, $4,200; labor cost, $1,600; depreciation, $800; rent, $700; and other fixed costs, $500.Which one of the following is the correct cost for Polka King?

What type of cost exhibits the behavior shown below?

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.

The nonstatistical method of cost estimation that calls for the creation of a scatter diagram is the:

Which of the following is (are) example(s) of a mixed cost? I.A building that is used for both manufacturing and sales activities. II.An employee's compensation, which consists of a flat salary plus a commission. III.Depreciation that relates to five different machines. IV.Maintenance cost that must be split between sales and administrative offices.

Swan, Inc.uses the high-low method to analyze cost behavior.The company observed that at 22,000 machine hours of activity, total maintenance costs averaged $33.40 per hour.When activity jumped to 25,000 machine hours, which was still within the relevant range, the average total cost per machine hour was $30.40. On the basis of this information, what were total maintenance costs when Swan experienced 23,000 machine hours?

Cost estimation typically focuses on the future.

At Medallion Industries, variable cost per unit is budgeted to be $8.00 and fixed cost per unit is budgeted to be $5.00 in a period when 4,000 units are produced.What is the expected total cost of the units produced at Medallion, if instead, production is actually 5,100 units?

The slope of a regression line measures how steeply the cost line rises as activity increases.