Exam 3: Cost Behavior

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 forecasted utility cost at 2,600 machine hours (rounded to the nearest dollar) is

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

Select the appropriate cost behavior for each of the costs listed below. -license fees on automobiles

Select the appropriate item for each of the definitions listed below. -may be discretionary or committed

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

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

If a cost's step-cost behavior follows very narrow steps, the costs may be approximated using:

Select the appropriate cost behavior for each of the costs listed below. -factory supervisor's salary

Select the appropriate type of cost for each of the definitions listed below. -remains constant on a per-unit basis within the relevant range

Laconic Company manufactures ultra sound equipment. Based on past experience, Laconic has found that total annual repair and maintenance cost can be represented by the following formula: total annual repair and maintenance cost = $205,000 + $7.50x, where x = machine hours. Last year, Laconic incurred 145,000 machine hours. Required:

Figure 3-3.Okafor Company manufactures skis. The management accountant wants to calculate the fixed and variable costs associated with the leasing of machinery. Data for the past four months were collected. -Refer to Figure 3-3. Using the high-low method calculate the variable rate for the lease cost

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

Olson Company makes hearing aids. Olson has found that total electricity cost for the factory can be represented by the following formula: total annual electricity cost = $149,000 + $2.75x, where x = labor hours. Last year, Olson incurred 212,000 labor hours. Required:

A cost __________ is a casual factor that measures the output of the activity that leads costs to change.

Select the appropriate type of cost for each of the definitions listed below. -will decrease on a per-unit basis as output increases

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

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. What would be the estimate of electricity cost if the factory incurred 4,700 labor hours next month?

Select the appropriate type of cost for each of the definitions below. -has both a variable and a fixed component

If output increases by 50% and is still within the relevant range

Explain the differences between a variable, fixed, and a mixed cost.