Exam 5: How Do Organizations Identify Cost Behavior Patterns

Presented below are the production data for the first six months of the year for the mixed costs incurred by Crew Industries. Crew Industries uses the high-low method to analyze mixed costs. (1)How would the cost function be stated? (Round results to the nearest cent. ) (2)What is the estimated total cost at an operating level of 5,000 units?

Exhibit 5-5 Tyler Incorporated sells 5,000 units per month with the following costs: Variable costs: $1.25 per unit Fixed costs: $3,000 per month -Refer to Exhibit 5-5.Tyler recently switched vendors and expects variable costs to rise by $1.00 per unit.However,with a new lease on the factory,Tyler expects fixed costs to drop by $300 per month. After making the changes,what is Tyler's cost equation used to estimate total monthly costs?

Which of the following costs is typically not a fixed overhead cost for a factory?

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 variable costs?

You are trying to decide whether to use machine hours or direct labor hours as the best predictor for overhead costs.Below are the results from the two regression analyses that you run. Which of the following statements is the most correct regarding which activity would be the best cost driver and why?

To accurately predict costs,managers must understand how costs behave with changes in activity.

If a firm's activity expands beyond its relevant range,only fixed costs must be reevaluated.

The traditional income statement and the contribution margin income statement follow the identical format in presenting operating results.

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