Exam 6: Cost Behavior

Jeppson Company manufactures computer hard drives.The following data is related to sales and production of the computer hard drives for last year. Selling price per unit \ 100.00 Variable manufacturing costs per unit \ 45.00 \ Variable selling and administrative expenses per unit 6.00 Fixed manufacturing overhead (in total) \ 30,000 Fixed selling and administrative expenses (in total) \ 8,000 Units produced during year 1,500 Units sold during year 1,200 Units in beginning inventory 0 - Using variable costing,what is variable cost of goods sold for last month?

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 = 89,620 X Variable 1 Coefficient = 62.53 R-square = 0.9852 - Should your client use this information to predict monthly operating costs?

An R-square value of 1.0 indicates a perfect relationship between the volume of activity and the cost being analyzed.

Under absorption costing,fixed manufacturing costs are treated as inventoriable product costs.

What factor related to manufacturing costs causes the difference in operating income computed using absorption costing and operating income computed using variable costing?

If production exceeds units sold,which of the following is TRUE concerning income?

Renting a car and paying $15 per day plus $.03 per mile driven is an example of what type of cost?

Traditional income statements distinguish fixed operating costs from variable operating costs.

Traditional income statements organize costs by:

If fixed costs related to a product increase,while variable costs and sales price remain constant,what will happen to the contribution margin?

Crystal Clear Water Hauling 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.Crystal Clear Water Hauling has the following data available. Month Miles driven Total operating costs January 15,900 \ 27,500 February 17,300 \ 29,910 March 18,500 \ 29,830 April 16,100 \ 28,600 May 17,100 \ 28,800 June 15,500 \ 26,830 - The variable cost per mile using the high-low method is:

Jeppson Company manufactures computer hard drives.The following data is related to sales and production of the computer hard drives for last year. Selling price per unit \ 100.00 Variable manufacturing costs per unit \ 45.00 Variable selling and administrative expenses per unit \ 6.00 Fixed manufacturing overhead (in total) \ 30,000 Fixed selling and administrative expenses (in total) \ 8,000 Units produced during year 1,500 Units sold during year 1,200 Units in beginning inventory 0 - Using variable costing,what is the contribution margin for last month?

Plymouth Manufacturing produces cup holders.Total manufacturing costs are $400,000 when 40,000 holders are produced.Of this amount,total variable costs are $120,000.What are the total production costs when 60,000 holders are produced? (Assume the same relevant range for both production levels.)

If the number of units sold exceeds the number of units produced,how is operating income affected?

Vanco 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 4,000 machine hours? A.$ 2,413.21 B.$ 6,002.36 C.$ 3,589.15 D.$9,652,855.04

Regression analysis can be used in ABC implementations to help managers select the primary cost driver for an activity cost pool.

Preston Racquets manufactures tennis racquets.The following data are available for last month. Units in bepinging inventory 0 Units produced during year 1,200 racquets Units in ending inventory 200 racquets Sales comrissions per racquet \ 10.00 Fixed manufacturing coverhead \ 48,000 Fixed marketing expenses \ 12,000 Selling price per racquet \ 200 Variable manufacturing cost per racquet \ 110 -Using variable costing,what is variable cost of goods sold for last month?

If the number of units produced equals the number of units sold for a manufacturer,both variable costing and absorption costing income statements will yield the same gross margin.

When predicting costs at different volumes,managers should consider which of the following?

The controller for Truman Canoes has gathered the following cost and activity level information: Average total cost per unit \ 300.00 Production level used to calculate average cost 2,000 Total fixed costs \ 100,000 a.What is the total cost of producing 2,000 fiberglass canoes? b.What is the variable cost of producing each fiberglass canoe? c.Suppose the controller uses the average cost to predict total costs.What total cost would the controller calculate for 3,000 fiberglass canoes? d.If the controller uses the cost equation to predict total costs,what total cost would the controller calculate for 3,000 fiberglass canoes? 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?