Exam 6: Cost Behavior

The managerial accountant at Organic Beverage Factory used spreadsheet software to run a regression analysis scenario and compile the following monthly cost data: Which of the following is the correct cost equation showing the correlation of monthly costs,based on the results of the regression analysis compiled by the managerial accountant?

When a company produces more units than it sells,absorption costing operating income will be higher than variable costing operating income.

Which of the following cost behaviors cannot be accurately represented by a single straight line?

Frost Company has a contribution margin per unit of $49.If 7,000 more items are sold,and fixed expenses remain the same,the net change in operating income will be

Great Calls has a special plan offer this month.There is a $3.00 per month charge each month and calls anywhere in the United States are $0.04 per minute.What would the monthly cost be if you typically talk for 450 minutes per month?

Schrute Farm Sales buys portable generators for $450 and sells them for $720.He pays a sales commission of 5% of sales revenue to his sales staff.Mr.Schrute pays $2,000 a month rent for his store,and also pays $1,700 a month to his staff in addition to the commissions.Mr.Schrute sold 200 generators in June.If Mr.Schrute prepares a traditional income statement for the month of June,what would be his operating income?

Stanley's Bicycles store buys bicycles on average for $600 and sells them on average for $750.He pays a sales commission of 15% of sales revenue to his sales staff.Stanley pays $1,400 a month rent for his store,and also pays $3,000 a month to his staff in addition to the commissions.Stanley sold 120 bicycles in June.If Stanley prepares a traditional income statement for the month of June,what would be his operating income?

If there is little or no relationship between the cost and the volume,the data points on a scatter plot will appear almost as a straight line.

Jean's Fitness Club provides monthly memberships as well as personal training sessions.The personal trainers earn 50% of the revenue for all personal training sessions.The Fitness Club also sells nutrition products.Jean's general ledger accounts indicate the following for the year.The front desk staff wages expense remains the same throughout the year. If a contribution margin income statement is prepared for the year,what is operating income?

Under absorption costing,fixed manufacturing costs are not expensed until the units are sold.

Regression analysis uses only two of the historical data points to estimate a cost equation.

The managerial accountant at the Bookcase Factory prefers regression analysis to the high-low method because it is a more accurate method.The managerial accountant uses regression output and analyzes the following data to predict future costs: Y =$250x + $625 Where, Y = total monthly utility cost X = number of guests What is the intercept coefficient,or the vertical intercept of the fixed cost line,in the equation listed above?

Sugartown Corporation has total sales revenues of $930,000.If its total fixed costs are $182,000 and its total variable costs are $267,000,then the total contribution margin is

Maintenance costs at Wilmington Manufacturing over the past six months are listed in the following table. Using the high-low method,what would the variable maintenance cost per machine hour be?

The fixed cost per unit of activity varies with changes in volume.

Unit variable costs do not change as total production increases.

The Maple Company has total fixed costs of $400,000.It also has $200,000 in total variable costs.These costs exist at a production level of 100,000 units.The fixed cost per unit is

The equation for a straight line is y = fx + v,where y is the total cost,f is the fixed cost per unit,x is the volume of activity,and v is the variable cost per unit.

Doggie Pals produces 100,000 dog collars each month that give off a fresh scent to keep your dog smelling clean between baths.Total manufacturing costs are $200,000.Of this amount,$150,000 are variable costs.What are the total production costs when 125,000 collars are produced? (Assume both production levels are in the same relevant range. )

Maintenance costs at Wilmington Manufacturing over the past six months are listed in the following table. Using the high-low method,what would the total maintenance costs be if 17,500 machine hours were used?