Exam 2: Cost Behavior, Activity Analysis, and Cost Estimation

A cost that is constant within a relevant range but differs outside the relevant range of activity is best classified as what type of cost?

At a sales volume of 25 units the average cost is $205 per unit and the variable cost is $5 per unit. Assuming a linear cost behavior pattern, if sales double to 50 units the average cost will be:

Which of the following methods of cost estimation utilizes judgment to determine the cost estimation model?

Which of the following costs is best classified as fixed costs with respect to volume?

The following information pertains to Joe Coffee Company's monthly activity and total costs: What would be the best equation for predicting total costs using the high-low method?

The following data was input into a spreadsheet program to determine the Intercept, Slope and R² (RSQ) for Patient Days and Maintenance Costs for a local hospital: -The estimated variable maintenance cost per patient day for the hospital is:

George Rentals offers machine rental services for concrete cutting. Consider the following costs of the company over the relevant range of 4,000 to 10,000 hours of operating time for its concrete cutting equipment. -What are the estimated total costs at a volume of 5,000 hours?

Howell sells specialized products produced by electronics companies to engineering firms. Howell sells these products at a price based on Howell's purchase price. Howell's customer cost hierarchy is as follows: Next year Howell plans to sell $4,000,000 of product to the 100 engineering firms they serve. They anticipate that each firm will place an average of 4 orders. Howell's predicted customer costs for next year are:

Classify the total costs of each of the following as variable, fixed, mixed, or step. Sales volume is the cost driver. ---------a.Wages of machine operator who is paid based on number of units produced on the machine ---------b.Keyboards purchased from a subcontract supplier in a computer assembly plant ---------c.Property taxes ---------d.Salaries of quality inspectors when each inspector can evaluate a maximum of 500 units per day ---------e.Annual salary for the vice president of manufacturing ---------f.Electric power in a factory ---------g.Raw materials used in production ---------h.Water consumed by the plant, which is based on a flat fee plus actual consumption ---------i.Overhead costs in the factory for incidental components such as small screws and rivets. ---------j.Fire insurance on factory building

George Rentals offers machine rental services for concrete cutting. Consider the following costs of the company over the relevant range of 4,000 to 10,000 hours of operating time for its concrete cutting equipment. -What is the estimated total fixed cost per hour at a volume 8,000 hours?

Mixed cost behavior pattern is unrelated to unit activity level.

Indicate whether each of the following fixed costs are committed or discretionary. a. Depreciation on the factory b. Cancellable lease on the corporate jet c. Super Bowl TV advertisement d. Annual scheduled maintenance on the air conditioning system e. Annual donation to the local Boys and Girls Clubs f. Salary of the director of training who is on a three-year contract g. Travel for employees to attend professional development seminars

Electricity used to heat, light, and cool a manufacturing facility would best be classified as what type of cost?

Identify each of the following costs as fixed-committed or fixed-discretionary by writing an "X" under one of the following headings:

Depreciation of a copy machine in the Human Resource Department would best be classified as what type of cost?

Over the past decade, the composition of total manufacturing costs has resulted in which of the following?

John Anderson uses gas to heat his home. He has accumulated the following information regarding his monthly gas bill and monthly heating degree-days. The heating degree-days value for a month is found by first subtracting the average temperature for each day from 65 degrees and then summing these daily amounts together for the month. What will be the increase in John's monthly gas bill per heating degree-day using the high-low method?

The Timber Products manufactures small tables. The overhead incurred in manufacturing the tables has both a fixed component and a variable component. The company's management wishes to explain variable overhead as a percentage of direct labor costs. Management has obtained the following cost data pertaining to the production of the small tables: Compute the fixed and variable components of the overhead costs using the high-low method.

Kratz Manufacturing Company uses an activity-based costing system. It has the following manufacturing activity areas, related cost drivers and cost allocation rates: During the month, 100 units were produced, with no defects, requiring three setups. Each unit consisted of 17 parts, 3 direct labor hours and 2.5 machine hours. Direct materials cost $50 per finished unit. -What is the total manufacturing cost for inspections?

Axe Manufacturers produces a product with the following manufacturing cost hierarchy for its only current product. Next year Axe plans to manufacture 25,000 units of product, in batches of 250 units. Axe's predicted manufacturing cost for next year is: