Exam 6: Cost Behavior

Valle Crucis Corporation 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?

Total mixed cost graphs intersect the y-axis at the level of fixed costs.

For retailers and service companies without inventory, operating income is different if a traditional income statement or a contribution margin income statement is prepared.

Which is true about a scatterplot?

Which of the following would be considered a discretionary fixed cost?

Net income reported under absorption costing will exceed net income reported under variable costing for a given period if

The cost equation determined by regression analysis is usually more accurate than the line determined by the high-low method.

It costs Homer's Manufacturing $0.85 to produce baseballs and Homer sells them for $4.00 a piece. Homer pays a sales commission of 5% of sales revenue to his sales staff. Homer also pays $13,000 a month rent for his factory and store, and also pays $81,000 a month to his staff in addition to the commissions. Homer sold 68,500 baseballs in June. If Homer prepares a contribution margin income statement for the month of June, what would be his contribution margin?

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

Unit variable costs do not change as total production increases.

Lindsey Inc. has total sales revenues of $440,000. If its total fixed costs are $70,000 and its total variable costs are $152,000, the contribution margin is

Which method are managers using when they plot all the data points to see if there is a linear relationship among the data?

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 are the fixed costs?

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

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.

Fixed costs per unit decrease as production levels increase.

To follow is information about the units produced and total manufacturing costs for Pine Enterprises for the past six months. Using the high-low method, what is the variable cost per unit?

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

The contribution margin income statement presents ________ below the contribution margin line.

If a regression analysis shows an R factor of .89 exists, it is safe to assume