Exam 3: Cost Behavior

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. A dependent variable value used in calculating the cost line using the high-low method is:

Select the appropriate cost behavior for each of the costs listed below. a. variable b. fixed -real estate taxes

Figure 3-6. Taran Company incurred the following costs for the months of January and February. -Refer to Figure 3-6. If output was 5,000 units in January and 10,000 units in February we can assume that

When the volume of activity increases within the relevant range, the fixed cost per unit

Figure 3-14. Blacken Company manufactures motorcycles. The company's management accountant wants to calculate the fixed and variable costs associated with utility cost incurred by the factory. Data for the past five months were collected. -Refer to Figure 3-14. Using a regression program, the yearly utility cost equation (with all variables to the nearest penny) is

Select the appropriate cost behavior for the following costs incurred by an automobile manufacturer. a. variable b. fixed -cost of inspections

Total variable costs = Variable rate * amount of output.

The spreadsheet regression program supplies more than the estimates of the coefficients; it also provides information that can be used to see how ________ the cost equation is which is a feature not available for the high-low method.

Depreciation on factory equipment would be an example of a _________.

Select the appropriate item for each of the definitions listed below. a. dependant variable b. independent variable c. intercept d. slope -it corresponds to the variable rate

Which of the following would be a variable cost for a dentist's office?

Ross Company has the following information available regarding costs at various levels of monthly production: Required:

Figure 3-5. Maxwell Company makes treadmills. The company controller wants to calculate the fixed and variable costs associated with the janitorial costs incurred in the factory. Data for the past four months were collected. -Refer to Figure 3-5. What would Maxwell Company's estimate of total janitorial cost be at a level of 600 machine hours?

If an automobile manufacturer changes from skilled labor to computer-controlled assembly procedures, the past data

Figure 3-4. Botana Company constructed the following formula for monthly utility cost. Total utility cost = $1,200 + ($8.10* labor hours) Assume that 775 labor hours are budgeted for the month of April. -Refer to Figure 3-4. Calculate the total variable utility cost for the month of April.

Discretionary fixed costs often involve a long-term contract.

Figure 3-10. The following cost formula was developed using the monthly data for an accounting firm. Total cost = $87,100 + ($210 *number of tax returns) -Refer to Figure 3-10. The term "number of tax returns"

When a mixed cost is graphed the slope of the line equals

Why is it necessary to separate a mixed cost into its variable and fixed components?

The controller of Lamps Limited is concerned about the how much the company's costs have risen over the past few months. Since the majority of the company's costs are mixed, it is hard to tell if the increasing costs are due to variable costs or fixed costs. The controller asks that you research the different ways to separate mixed costs and then to present a report showing the advantages and disadvantages of each method. He would also like you to make a recommendation as to which method should be used.