Exam 5: How Do Organizations Identify Cost Behavior Patterns

Exhibit 5-4 Wayside Company has machine hours of 5,000 and machine costs of $170,000 at the high data point.Machine hours are 2,000 and machine costs are $110,000 at the low data point.Wayside uses the high-low method to estimate costs. -Refer to Exhibit 5-4.What is the estimated total fixed cost?

Exhibit 5-7 Last month,Ellison Industries sold its product for $100 per unit.Fixed production costs were $50,000,and variable production costs amounted to $21 per unit.Fixed selling and administrative costs totaled $20,000,and variable selling and administrative costs amount to $3.00 per unit.Dawson produced and sold 6,000 units last month. -Refer to Exhibit 5-7.Which of the following amounts represents total selling and administrative costs?

Which of the following is the total mixed cost equation for a factory where machine operating costs include $300,000 of machine depreciation per year,plus $70 of utility costs for each day the machinery is in operation?

When identifying cost behavior patterns,short-term time periods are always measures in one year increments.

Factory maintenance costs are estimated for Bing Company based on the level of machine hours used.If total monthly fixed costs are $150,000,variable costs per machine hour are $8,and 15,000 machine hours are expected to be used in June,which of the following would be the best estimate of total maintenance costs?

Exhibit 5-1 Presented below are the production data for the mixed costs incurred by Clarion Company. Clarion Company uses the high-low method to estimate mixed costs. -Refer to Exhibit 5-1.What is the estimated total mixed cost at an operating level of 7,000 units?

Exhibit 5-7 Last month,Ellison Industries sold its product for $100 per unit.Fixed production costs were $50,000,and variable production costs amounted to $21 per unit.Fixed selling and administrative costs totaled $20,000,and variable selling and administrative costs amount to $3.00 per unit.Dawson produced and sold 6,000 units last month. -Refer to Exhibit 5-7.Which of the following amounts represents total fixed costs?

Exhibit 5-6 Regression analysis for Barton Industries results in the following output. -Total costs at the low point were $340,000 when 30,000 units were produced and total costs at the high point were $400,000 when 40,000 units were produced.Using the high-low method,what are the estimated total costs for a production level of 36,000 units?

Exhibit 5-3 Hayley Inc.is using the account analysis approach to identify the cost behavior of production costs for one month.The production manager was asked to review these costs and provide her best guess as to how they should be categorized.Hayley produced 200 units for the month.She responded with the following information. -When using a graph of total mixed costs,the y-intercept represents:

You are using the following information to estimate costs: What type of costs are these?

The equation that best describes a mixed cost is:

Which of the following approaches for estimating fixed and variable costs using historical information fits a straight line to a set of data points?

Exhibit 5-6 Regression analysis for Barton Industries results in the following output. -Refer to Exhibit 5-6.Using the information above,what is the cost equation in the form Y = f + vX?

Why do companies use the contribution margin income statement format?

When 85,000 units are produced,the fixed cost is $10 per unit.Assuming our company is within the relevant range and we produce 120,000 units,our fixed costs will not remain at $10 per unit.

Which of the following costs does not change in total when the activity level increases or decreases within the relevant range?

Total mixed costs do not change in proportion to changes in activity.

The contribution margin income statement is used for internal reporting purposes and presents the fixed and variable components of cost information.

Per unit fixed costs change with changes in activity.

All costs behave in a linear manner.