Exam 3: Cost Behaviour

Denver Manufacturing Denver Manufacturing would like to do a better job budgeting for maintenance costs and, consequently, they have prepared a schedule showing maintenance costs and units produced for the past five months as follows: Number of units produced Total maintenance costs January 5400 \ 4800 February 6600 5180 March 4900 4500 April 5600 4900 May 6000 5490 -Using the high/low method,if Denver expects to produce 5000 units in June,what will be budgeted total maintenance costs?

The cost equation,y = $500 + $0x,represents:

You are given the following cost and volume information: Volume ( in units ) Cost per unit ( in\ ) 200 \ 10 400 10 600 10 Which type of cost is given?

Bob’s Burgers currently produces and sells 4000 burgers per month with the following costs: Variable costs \ .50 per unit Fixed costs \ 2000 Bob has recently switched food suppliers and anticipates that variable costs will decrease by $.05 per unit. In addition, Bob has renegotiated his store lease and fixed costs will be dropping by $40 per month. -Bob anticipates selling 4200 burgers during the month of July.What will be estimated total costs during July?

Howard Inc.provides temporary clerical services to local businesses.The company has determined that total costs for a given month can be predicted by using the following formula: Total Costs = $2500 + $20x Where 'x' equals total direct labour hours for the month.If total direct labour hours for June are expected to be 600,what are total costs expected to be?

The cost equation,y = $400 + $5x,represents:

Which of the following statements is false regarding variable costing?

Denver Manufacturing Denver Manufacturing would like to do a better job budgeting for maintenance costs and, consequently, they have prepared a schedule showing maintenance costs and units produced for the past five months as follows: Number of units produced Total maintenance costs January 5400 \ 4800 February 6600 5180 March 4900 4500 April 5600 4900 May 6000 5490 -Using the high/low method,what is the cost equation to predict total maintenance costs?

You are the manager of a small biscuit stand.The variable cost of producing one chocolate chip biscuit is $.75.Your fixed costs per week are $1000.What is the total cost per unit if 1000 biscuits are produced and sold per week? Two thousand biscuits? Do your answers for the two quantities differ? Why or why not?

Label whether each of the following costs is most likely fixed (F)or variable (V). Factory msurance Direct materials Secretary salary Shipping supplies Gasoline costs

Why should income taxes be considered by corporate decision makers?

Noble Inc.documented the number of units produced as well as maintenance costs for the past five months as follows: Number af units Total overhead costs October 120 a00 \ 6200 Navember 180000 10000 December 100000 6000 January 110000 8000 February 135000 9000 Noble uses the high/low method of estimating mixed costs. Required: A. What is the equation to predict estimated total overhead costs? B. If the company expects to produce 150000 units in March, what will be the estimated total overhead costs?

Regression analysis is a technique used to:

You are given the following cost and volume information: Volume ( in units ) Total Cost ( in ) 200 \ 1000 400 2000 600 3000 Which type of cost is given?

When using the high/low method,the change in cost divided by the change in volume is:

Cornell Products Cornell Products has the following cost information available for 2009: Direct materials \ 1.00 per unit Direct labour \ 2.00 per unit Variable manufacturing overhead \ 1.50 per unit Variable selling and administrative costs \ 50 per unit Fixed manufacturing overhead \ 30000 Fixed selling and administrative costs \ 25000 During 2009, Cornell produced 6000 units out of which 5400 units were sold for $20 each. -What is net income under variable costing?

Blue Ridge Resorts has the following pretax information available for the current year: Pretax receipts \8 00000 Pretax costs 300000 Assuming all receipts are taxable and all costs are tax-deductible,what will be Blue Ridge's after-tax net income for the year if their tax rate is 30 per cent?

Which of the following types of costs is the most likely to be classified as variable?

How do variable costing and absorption costing differ? When is net income different under the two methods?

You run a regression analysis and receive the following results: Multiple R .39429 R Square .15547 Adjusted R Square .14964 Standard Error .44416 $\text { Analysis of Variance }$ DF Sum of Squares Mean Square Regression 1 5.26588 5.26588 Residual 145 28.60536 .19728 $F=26.69262 \quad \text { Signif } F=.0000$ Variable Coefficients Standarderror t Stat P -value Variable 1 11.0300 .021000 5.166 .0000 Intercept 8833.0700 .090000 9.751 .0000 Required: A. What is the fixed cost in this regression analysis? B. What is the variable cost per unit? C. Prepare the cost equation based upon these results. D. Does this regression equation 'fit' the data well? What information did you examine to answer this question?