Exam 6: Cost Behavior

Cotown Corporation has total sales revenues of $300,000.If their total fixed costs are $50,000 and their total variable costs are $175,000,the contribution margin is:

In the equation: y = vx + f,what term represents the total cost?

Regression analysis uses only two of the historical data points for estimating a cost equation.

The manager at Copley Mulch 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 of mulch processed was highest in July,when the total monthly overhead costs totaled $6,000 for 25,000 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 $4,000 for 15,000 yards of mulch processed. -What was the variable cost per yard?

The traditional income statement is considered by most companies to be a better management tool than the contribution margin income statement.

For retailers and service companies,operating income is the same whether a traditional income statement or a contribution margin income statement is prepared.

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 absorption costing,what is gross profit for last month?

Using account analysis,what type of cost is Satellite TV when the charge is $30.00 per month plus $3.99 for pay-per-view movies?

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

In the equation: y = vx + f,what term represents the total variable cost component?

Total fixed costs for Herman Enterprises are $200,000.Total costs,both fixed and variable,are $550,000 if 100,000 units are produced.The variable cost per unit is:

Harbor Manufacturing is trying to predict the cost associated with producing its anchors.At a production level of 4,000 anchors,Harbor Manufacturing's average cost per anchor is $50.00.If $20,000 of the total costs are fixed,what is the variable cost of producing each anchor?

If a scatter plot reveals a fairly weak relationship between cost and volume,the manager should select a different activity for modeling cost behavior.

If the data points were randomly scattered,the R-square value would be closer to 1 than 0.

Atwood Dairy Bar sells its famous soft-serve ice cream cones near a marina and resort area.The owner,Theresa,wants to determine the cost behavior patterns to help planning for the next summer season.She has the following information available about the operating costs and the number of soft-serve cones served. Month Number of soft-serve cones Total aperatine costs April 8,200 \ 5,200 May 8,600 \ 5,500 June 7,500 \ 4,500 July 9,700 \ 6,000 August 8,900 \ 5,900 September 5,700 \ 5,000 Theresa uses the high-low method to determine the operating cost equation and sells 8,000 cones in a month for $2.00 each. -What would the operating income be if she prepared a traditional income statement for the month?

GAAP allows companies to use the contribution margin format for external reporting purposes if they so choose.

If a regression analysis shows an R factor of .85 exists,it is safe to assume:

Feathered Nests produces decorative birdhouses.The company's average cost per unit is $20.00 when it produces 2,000 birdhouses.If $4,800 of the total costs are fixed,what is the variable cost of producing each birdhouse?

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

At any given volume,average fixed costs must equal average variable costs.