Exam 3: Cost Behavior

The following six months of data were collected on electricity cost and the number of machine hours in a factory. Required:

Which of the following would probably be a committed fixed cost for an accounting firm?

Select the appropriate cost behavior for each of the costs listed below. a. variable b. fixed -salary of chief executive officer

Select the appropriate cost behavior for each of the costs listed below. a. variable b. fixed -rental cost of warehouse

Select the appropriate type of fixed cost for each cost listed below. a. discretionary b. committed -cost of executive training seminars

Figure 3-12. The method of least squares was used to develop a cost equation to predict the cost of monthly equipment maintenance. The following computer output was received: The driver used was the number of machine hours. -Refer to Figure 3-12. What is the independent variable of the cost formula for equipment maintenance?

If production volume increases from 8,000 to 10,000 units,

Which of the following would probably be a mixed cost?

Per-unit variable costs

Arcadia Company incurred the following costs and machine hours during the first three months of the current year. Assume that the driver for all costs is machine hours. Required:

Calculation of the cost line using the high-low method tests the lowest cost period to see if it is an outlier.

Figure 3-9. The following cost formula was developed using monthly data for a retail clothing store. Total cost = $75,620 + ($242 * number of customers) -Refer to Figure 3-9. The term "total cost"

Andover Company makes weather balloons. The company controller wanted to calculate the fixed and variable costs associated with the maintenance costs incurred by the factory. Data for the past six months were collected. Required:

Consider each of the following independent situations. Required: For each situation, describe the cost as one of the following: fixed cost, variable cost, mixed cost, or step cost.

Figure 3-11. The following four months of data were collected on utility cost and the number of labor hours in a factory. -Refer to Figure 3-11. Select the correct set of high and low months. High Low

Figure 3-9. The following cost formula was developed using monthly data for a retail clothing store. Total cost = $75,620 + ($242 * number of customers) -Refer to Figure 3-9. The term $242

The relevant range is the range of output which the assumed cost relationship is valid for the normal operations of the firm.

Select the appropriate type of cost for each of the definitions below. a. variable b. fixed c. mixed d. step -has both a variable and a fixed component

Figure 3-13. The following 6 months of data were collected on electricity cost and the number of machine hours in a factory. -Refer to Figure 3-13. Select the correct set of high and low months. High Low

Ruskin Company had utilities cost of $95,000 at an output level of 30,000 units. The utilities cost was a mixed cost and the fixed portion was $50,000. What would the estimate of total utilities cost be at an output level of 40,000 units?