Exam 6: Cost Behavior

Runaround Corporation sells running shoes and during January they ran production machines for 20,000 hours total and incurred $9,000 in maintenance costs. During July they ran production machines for 14,000 hours total and incurred $7,200 in maintenance costs. Based on this data, what is the cost formula for maintenance costs?

Stanley's Bicycles store buys bicycles on average for $610 and sells them on average for $780. He pays a sales commission of 15% of sales revenue to his sales staff. Stanley pays $1500 a month rent for his store, and also pays $3000 a month to his staff in addition to the commissions. Stanley sold 140 bicycles in June. If Stanley prepares a traditional income statement for the month of June, what would be his operating income?

Runaround Corporation sells running shoes and during January they ran production machines for 20,000 hours total and incurred $9,000 in maintenance costs. During July they ran production machines for 14,000 hours total and incurred $7,200 in maintenance costs. Based on this data, what will total maintenance costs be if the machines are run for 16,500 hours?

Under absorption costing, all nonmanufacturing costs are treated as period costs.

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

Which of the following would NOT be considered a committed fixed cost?

Total fixed costs for Purple Figs Company are $92,000. Total costs, both fixed and variable are $210,000 if 90,000 units are produced. The fixed cost per unit at 90,000 units would be

Which of the following does not appear on an income statement prepared using variable costing?

Manufacturing overhead (consisting of costs like factory rent, factory utilities, factory maintenance, and other similar costs)is usually what type of cost?

When the number of units produced is less than the number of units sold, how does operating income under variable costing differ from operating income under absorption costing?

The output from regression analysis generated in Excel gives us all of the following information except

If inventory has declined, operating income will be higher under absorption costing than it is under variable costing.

Total costs for Locke & Company at 140,000 units are $339,000, while total fixed costs are $165,000. The total variable costs at a level of 300,000 units would be

On a regression analysis output generated with Excel, a regression equation's fixed cost component is represented by the

During the current period, 14,000 units were produced and 12,000 units were sold. Fixed manufacturing costs incurred amounted to $126,000. An absorption costing income statement would report fixed manufacturing costs as which of the following?

Total variable costs can be expressed as y = vx, where y = total mixed cost, v = mixed cost per unit of activity, and x = volume of activity.

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

Total fixed costs do not change in response to changes in the volume of production.

The high-low method uses only two of the historical data points to estimate a cost equation.

Outliers are data points that fall in the same general pattern as the other data points.