Exam 6: Cost Behavior

The Maple Company has total fixed costs of $420,000. It also has $220,000 in total variable costs. These costs exist at a production level of 110,000 units. The variable cost per unit is

What term represents the variable cost per unit of activity in the equation: y = vx + f? (Assume x represents the volume of activity.)

A scatterplot helps managers visualize the relationship between historical costs and volume.

The managerial accountant at Flat Screen Manufacturing reported that the organization contains an automated production line to manufacture and produce its products for consumers to enjoy in the marketplace. The managerial accountant reported that the company uses the high-low method to estimate the costs in the new budget. The managerial accountant reported the following information: a. Compute the slope of the mixed cost, or the variable cost per unit of activity. b. Compute the vertical intercept, or the fixed cost component of the mixed cost. c. What is the mixed cost equation?

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 Gross Profit?

Schrute Farm Sales buys portable generators for $450 and sells them for $740. 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 700 generators in June. If Mr. Schrute prepares a traditional income statement for the month of June, what would be his operating income?

Total variable costs change in direct proportion to changes in volume.

Cost behavior can be mathematically expressed using equations.

On a regression analysis output generated with Excel, the slope of a mixed cost line is represented by the

Regis Corporation wants to know how closely its current cost driver is correlated with its monthly operating costs. The managerial accountant runs a regression analysis using a statistical software program and produces the following data: Intercept Coefficient = 12,200,567 X Variable 1 Coefficient = 95.65 R-square = 0.8574 What is the Regis Corporation's monthly cost equation?

Absorption costing is required to be used for

The Heartlake Corporation manufactures and sells toy gyroscopes. The following data is related to sales and production of the toy gyroscopes for last year. Using absorption costing, what is operating income for last year? (Round any intermediary calculations to the nearest cent.)

Traditional income statements do not distinguish fixed operating costs from variable operating costs.

If 130,000 units are produced, total costs are $333,000. Total fixed costs for Blue Peace Inc. are $145,000. The variable cost per unit is

Total fixed costs for Diamond Enterprises are $700,000. Total costs, including both fixed and variable, are $920,000 if 140,000 units are produced. The fixed cost per unit at 200,000 units would be

Discuss and compare absorption costing income statements with variable costing income statements. In your discussion, address the following questions: a. What is the main difference between the two methods? b. Under what circumstances will the operating income under each method be the same? c. What situation will cause the absorption costing income to be higher than the variable costing income? d. What situation will cause the absorption costing income to be lower than the variable costing income? e. Why would a company use absorption costing to prepare its income statements? f. Why would a company use variable costing to prepare its income statements?

Contribution margin income statements organize costs by behavior.

If a company's overhead cost equation is y = $8.80x + $120,020. The "x" is

The cost of goods sold is a variable cost for merchandise company, but contains a mixture of variable and fixed production costs for manufacturers.

Cost C is a _______________ cost.