Exam 3: Cost Behaviour

When comparing a 'pretax cost' and an 'after-tax cost',which of the following is true?

Richardson Corporation plans to increase its advertising budget by 20 per cent next year.The company currently spends $15 000 on advertising costs.In addition to advertising,Richardson spends $50 000 per year for other fixed costs and $10 per unit for variable costs.If Richardson anticipates producing 30 000 units next year,what will be next year's total costs? Required: Calculate total estimated costs for next year.

Pearson Products believes one of its costs is a mixed cost and has run a regression analysis which shows the following: SUNLMARY OUTPUT Regression Statistics Multiple R 0.963711945 R Square 0.928740713 Adjusted R Square 0.916864165 Standard Error 946.0983069 Observations 8 ANOVA df S S M S F Significance F Regression 1 69996575.46 69996575.46 78.19955153 0.000116235 Residual 6 5370612.038 895102.0063 Total 7 75367187.5 Coefficients Standard Eiror t Stat P -vahue Intercept 11568.56000 1352.390000 8.554149469 0.000140059 X Variable 1 1.9800000 0.223900000 8.843051031 0.000116235 Required: A. Write the equation to predict estimated total mixed costs. B. If 1000 units are produced, what will be total mixed costs? C. What does the 'R Square' number tell Pearson? Interpret the 'R Square' data for Pearson.

Your company leases a copier.The contract states that you must pay the leasing company $3000 per year and $.005 per copy. Required: A. Write the equation to predict estumated total lease cost. B. Compute the estinated total costs if: i. 10000 copies are made. ii. 50 000 copies are made. C. Compute the estinated cost per unit if: i. 10 000 copies are made. ii. 50 000 capies are made.

Assuming the number of units sold and produced are the same,which of the following statements is true when comparing net income using absorption and variable costing?

George's Ice Cream Shop believes most of its utilities costs are mixed.George has collected the following data on gallons of ice cream used and related utilities' costs for the past six months: Number of gallons used Utilities cost May 20 \ 700 June 30 850 July 40 1100 August 30 975 September 25 900 October 22 720 George has run a regression analysis on the above information and has come up with the following data: Coefficients Intercept 374.4318 X Variable 1 18.29545 Comparing the high/low method to regression analysis,to the nearest dollar,which of the following formulas would be the best predictor of total estimated mixed costs?

Triangle Associates is contemplating making a large charitable contribution.If their tax rate is 35 per cent,what is the after-tax cost of making a $20 000 contribution?

Compare and contrast the two methods that are used to predict mixed costs.

The cost equation,y = $0 + $5.40x,represents:

A manager is considering a special project that will increase cash sales by $80 000 and increase costs by $30 000.All cash receipts are taxable and all costs are tax deductible.If the tax rate is 30 per cent,what will be the after-tax profit from the special project?

Hill Top Products has run a regression analysis comparing total production and utilities' costs for the past six months.The regression analysis shows an R square (R²)of .86.Which of the following statements best describes the meaning of R²?

Mr. Quik Printers Mr. Quik Printers documented the number of copies it made for customers as well as total overhead costs for the past five months as follows: Number of copies Total overhead costs October 230000 \ 7400 November 240000 7500 December 280000 8000 January 265000 7700 February 248000 7550 -Using the high/low method,what is the overhead cost equation?

The manager of a company is considering a special project that will increase sales revenue by $90 000 without affecting costs.If the company has a tax rate of 30 per cent,what will be the after-tax profit?

In regression analysis,an R square (R²)of 1.0 would indicate:

Logan Inc.plans to double its rental space next year which will increase its fixed costs by 40 per cent while variable costs remain the same.Current year costs are as follows: Variable costs \ 10 per unit Fixed costs \ 30000 If next year production is expected to be 20 000 units,estimated total costs will be:

Which of the following descriptions would not be found on an income statement prepared using variable costing?

The high/low method:

You are given the following cost and volume information: Volume ( in units ) Total Cost ( in \ ) 200 \ 1000 400 1000 600 1000 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. -Quality Products Inc.incurred total costs of $50 000 to produce 1400 units.Variable costs are $15 per unit.What are estimated fixed costs?

Speedy Couriers documented the miles driven and total vehicle costs for the past five months as follows: Number of miles Total vehicle costs January 800 \ 1095 February 1000 1440 March 750 1200 April 900 1380 May 1100 1410 -Using the high/low method,if Speedy expects to drive 1200 miles in June,what will be expected total vehicle costs?