Exam 6: Cost Behavior

The Akron Slugger Company produces various types of wooden baseball bats.It has calculated the average cost per unit of a production level of 7,500 bats to be $10.00.If $22,500 of the total costs are fixed,what is the variable cost of producing each bat?

Outliers are abnormal data points.

When graphing total fixed costs,the cost line always begins at the origin.

Regression analysis can be used in ABC implementations to help managers select the primary cost driver for an activity cost pool.

Using account analysis,what type of cost is a community activity pass that costs $80 plus $15.00 per event?

McCartney Services has a customer Web site to take orders,answer customer questions,and address customer complaints.The costs associated with this customer Web site over the past six months are listed below: Management at McCartney Services believes that the customer Web site costs are a mixed cost and would like to use the high-low method to estimate their future costs using the number of Web site hits in any given month as the cost driver. Required: 1.Using the high-low method,estimate the variable cost per Web site hit and the monthly fixed costs associated with the customer Web site. 2.Use the results you computed in Requirement 1 to write the cost equation to estimate the customer Web site expenses for McCartney Services. 3.If McCartney Services expects 9,500 Web site hits for July,what are their anticipated customer Web site costs for July?

At Dwight Incorporated,total fixed and variable costs are $400,000 at a production level of 100,000 units.The company has total fixed costs of $225,000.The variable cost per unit at 150,000 units is

Under absorption costing,variable manufacturing costs are treated as period costs.

In the equation y = $11.75x + $550,"y" represents

An equation of a line for total mixed costs is

Neon Company manufactures widgets.The following data is related to sales and production of the widgets for last year. Using variable costing,what is the operating income for last year?

Under variable costing,fixed manufacturing overhead is expensed immediately as a period cost.

All variable costs are listed ________ on a contribution margin income statement.

An R-square value over .80 generally indicates that the cost equation is not very reliable for predicting costs at other volumes within the relevant range.

Sea Side Enterprises is trying to predict the cost associated with producing its anchors.At a production level of 5,000 anchors,Sea Side Enterprises average cost per anchor is $52.00.If $15,000 of the costs are fixed,and the plant manager uses the cost equation to predict total costs,her forecast for 6,000 anchors will be

Sally's Gift Baskets sells gift baskets,on average,for $125;each gift basket costs,on average,$60.Debby pays salaries each month of $1,300 and her store rent is $1,000 per month.She also pays sales commissions of 5% of the sales price.In May,140 gift baskets were sold. Required: a.Prepare a traditional income statement for the month of May. b.Prepare a contribution margin income statement for the month of May.

Lily's Pastries produces cupcakes,which sell for $5 each.During the current month,Lily produced 2,800 cupcakes,but only sold 2,700 cupcakes.The variable cost per cupcake was $3 and the sales commission per cupcake was $0.50.Total fixed manufacturing costs were $1,400 and total fixed marketing and administrative costs were $1,200.What is the product cost per cupcake under absorption costing?

Total mixed costs can be expressed as a combination of the fixed and sunk cost equations.

The cost equation determined using the high-low method should be the same as the cost equation determined using regression analysis.

When using the high-low method,the "high" point should be chosen as the data point with the highest cost (not the highest volume).