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 costs are fixed,and the plant manager uses the average cost per unit to predict total costs,her forecast for 8,500 bats will be

Mixed costs per unit decrease as volume increases because of the variable cost component.

If the data points were randomly scattered,the R-square value would be closer to 0 than 1.

The manager at Wheeling Mulch has been trying to calculate the portion of the company's overhead expenses that is fixed and the portion that is variable.Over the past twelve months,the number of yards of mulch processed was highest in July,when the total monthly overhead costs totaled $28,000 for 32,000 yards of mulch processed.The lowest number of yards of mulch processed in the last twelve months occurred in October,when total overhead costs were $26,000 for 28,000 yards of mulch processed.What is the fixed portion of the monthly overhead expenses?

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 gross profit?

The HF Corporation manufactures and sells toy gyroscopes.The following data is related to sales and production of the toy gyroscopes for last year. Using variable costing,what is the contribution margin for last year?

Fixed costs that are the result of previous management decisions that current managers have no control over in the short run are called ________ fixed costs.

A "perfect" straight line would render an R-square value of 1.00.

The intercept-coefficient in regression analysis yields the fixed cost portion of the total costs.

Your client's company wants to determine the relationship between its monthly operating costs and a potential cost driver.The output of regression analysis showed the following information: Intercept Coefficient = 75,828 X Variable 1 Coefficient = 52.61 R-square = 0.9756 Should your client use this information to predict monthly operating costs?

Which method are managers using when they use their judgment to classify costs as variable,fixed,or mixed?

Neon Company manufactures widgets.The following data is related to sales and production of the widgets for last year. Using absorption costing,what is gross profit for last month?

On a regression analysis output generated with Excel,a regression equation's "goodness of fit" is represented by the

Wallace Industries wanted to determine the relationship between its monthly operating costs and a potential cost driver,machine hours.The output of a regression analysis showed the following information (note: only a portion of the regression analysis results is presented here): What is closest to the total cost if the firm uses 4,200 machine hours?

Mixed costs are purely fixed.

Total mixed costs increase as volume increases because of the variable cost component.

The fixed cost per unit does not always remain the same.

Which of the following costs is an example of a fixed cost?

Jones Ice Cream Stand is operated by Mr.Jones and experiences different sales patterns throughout the year.To plan for the future,Mr.Jones wants to determine its cost behavior patterns.He has the following information available about the ice cream stand's operating costs and the number of soft serve cones served. Using the high-low method,the fixed costs for a month are

Wallace Industries wanted to determine the relationship between its monthly operating costs and a potential cost driver,machine hours.The output of a regression analysis showed the following information (note: only a portion of the regression analysis results is presented here): What is the cost equation based upon the results of the regression analysis?