Exam 6: Cost Behavior

Sea Side Enterprises is trying to predict the cost associated with producing its anchors. At a production level of 5300 anchors, Sea Side Enterprises average cost per anchor is $54. If $18,000 of the costs are fixed, and the plant manager uses the cost equation to predict total costs, her forecast for 9000 anchors will be (Round any intermediary calculations to the nearest cent.)

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?

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

The manager at Screaming Trees 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 processed was highest in July, when the total monthly overhead costs totaled $28,000 for 33,000 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 $21,000 for 24,000 yards of mulch processed. What was the variable cost per yard?

If inventory has not increased or decreased, but has stayed the same, operating income will be the same under variable costing and absorption costing.

The use of either absorption or variable costing will make little difference in companies

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 traditional income statement is prepared for the year, what is operating income?

When a merchandiser prepares a contribution margin income statement, Cost of Goods Sold is always a variable cost.

In a manufacturing company, fixed costs remain the same at many different production levels within the relevant range.

Using account analysis, what type of cost are utilities if you are charged $45 for the first 400 kilowatt hours, $100 for 401-600 kilowatt hours, and $165 + or - for 601-900 kilowatt hours?

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

U.S. GAAP requires companies to use absorption costing for external reporting purposes.

Betsy's Gift Baskets sells gift baskets, on average, for $125; each gift basket costs, on average, $60. Betsy 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.

The controller for Andy's Bicycles has gathered the following cost and activity level information: a. What is the total cost of producing 1,000 racing bicycles? b. What is the variable cost of producing each racing bicycle? c. Suppose the controller uses the average cost to predict total costs. What total cost would the controller calculate for 2,500 racing bicycles? d. If the controller uses the cost equation to predict total costs, what total cost would the controller calculate for 2,500 racing bicycles? e. Is there a difference between the forecasted total cost using average cost versus the cost equation? If there is a difference, what creates the difference? If there is no difference, when would there be a difference?

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

Schrute Farm Sales buys portable generators for $470 and sells them for $750 He pays a sales commission of 5% of sales revenue to his sales staff. Mr. Schrute pays $6000 a month rent for his store, and also pays $1800 a month to his staff in addition to the commissions. Mr. Schrute sold 600 generators in June. If Mr. Schrute prepares a contribution margin income statement for the month of June, what would be his operating income?

In a regression output, the "intercept coefficient" represents the fixed cost component of a mixed cost equation.

An R-square value of 0.00 indicates a perfect relationship between the volume of activity and the cost being analyzed.

In the equation y = $7.20x + $790, "y" represents

Johnson Trucking Company wants to determine a fuel surcharge to add to its customers' bills based on the number of miles driven to each area. It wants to separate the fixed and variable portion of the truck's operating costs so it has a better idea of how distance affects these costs. Johnson Trucking Company has the following data available. Using the high-low method, the monthly operating costs if Johnson Trucking Company drives 21,000 miles in a month will be (Round any intermediary calculations to the nearest cent.)