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

Each of Boggart's production managers (annual salary cost, $45,000) can oversee 60,000 machine hours of manufacturing activity. Thus, if the company has 50,000 hours of manufacturing activity, one manager is needed; for 75,000 hours, two managers are needed; for 125,000 hours, three managers are needed; and so forth.Boggart's salary cost can best be described as a:

When the engineering method is applied to costs other than labor, it is referred to as the experience method.

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?

Gentry Industries has the following information about maintenance costs in the past six months. Gentry's monthly fixed maintenance fee is:

Fractured Auto Repair projects variable labor costs of $21,500 in March when 8,600 units are produced.If production is expected to drop to 8,000 units in April, what is the expected labor cost in April?

At Medallion Industries, during 20x5 the anticipated production is 5,000 units, budgeted variable costs are $75,000, and budgeted fixed costs are $24,000.If 5,600 units are actually produced, what is the expected total cost?

Polka King Gifts had the following costs in March when 400 ceramic statues were produced: materials, $4,200; hourly labor, $1,600; depreciation, $800; rent, $700; and other fixed costs, $500.If the production level changes to 500 units, how much will the total costs be?

Amounts spent for charitable contributions are an example of a(n):

When graphed, a typical variable cost appears as:

Define the term "relevant range" and explain its importance in understanding cost behavior.

Within the relevant range of activity, costs:

In regression analysis, the variable that is being predicted is known as the:

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 variable cost per copy is:

In regression analysis, the variable that is being predicted is known as the independent variable.

The relevant range is that range of activity where a company achieves its maximum efficiency.

What type of cost exhibits the behavior shown below?

Gentry Industries has the following information about maintenance costs in the past six months. If the company uses the high-low method to analyze costs, Gentry's variable cost is:

When graphed, a typical fixed cost appears as:

Sophie Corporation recently produced and sold 100,000 units.Fixed costs at this level of activity amounted to $50,000; variable costs were $100,000.How much cost would the company anticipate if during the next period it produced and sold 102,000 units?

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. What is the total output as of the 5th quarter?