Exam 3: Cost Behaviour

Sudbury Company operates a chain of trendy nail salons.The company's chief executive officer is interested in accumulating some information on the overhead costs incurred by the company.You have been asked to analyze the following six months' worth of data. A regression analysis produced the following coefficients. Overhead No. of Month cost Appointments July \ 60,160 867 August 56,500 624 September 58,900 689 October 63,500 974 November 59,325 730 December 62,400 901 Required: Intercept 42,900 Variable 1 20.46 A. Using the results of regression, construct a cost formula for the total overhead cost. B. The CEO would like to limit total overhead cost in future months to $20 \%$ of total revenues. Will that be possible if total revenues are expected to average $\$ 300,000$ per month and total appointments per month are expected to average 1,000? Show all of your calculations.

Banff Company manufactures snowboards. The management accountant wants to calculate the fixed and variable costs associated with the leasing of machinery. Data for the past four months were collected. Machine Month Lease cost hours April \ 21,000 550 May 16,500 420 June 19,000 510 July 22,230 570 -Refer to the Figure.Which of the following is the fixed cost of leasing when using the high-low method?

"Outliers" are points that do NOT seem to fit the general pattern of behaviour.

Select the appropriate type of fixed cost for each cost listed below. -Cost of executive training seminars

The following four months of data were collected on utility cost and the number of labour hours in Edmonton Company's factory. Utility Labour Month cost hours May \ 22,100 3,975 June 24,600 5,430 July 23,500 4,400 August 20,140 3,200 -Refer to the Figure.What is the fixed cost of electricity when using the high-low method?

Select the best description for the following: -$6.53 × independent variable

If output increases by 60% and is still within the relevant range,what will be the most likely result?

Select the appropriate item for each of the definitions listed below. -Total cost depends on the level of output

Explain the difference between a committed fixed cost and a discretionary fixed cost.

When a mixed cost is graphed,what does the slope of the line represent?

Select the appropriate cost behaviour for each of the costs listed below. -Controller's salary

What will be the result if production volume increases from 4,000 to 5,000 units?

The Saskatoon Company manufactures motorcycles. The company's management accountant wants to calculate the fixed and variable costs associated with utility cost incurred by the factory. Data for the past five months were collected. Utility Machine Month cost hours March \ 30,255 2,200 April 32,750 2,525 May 34,712 2,710 June 31,850 2,410 July 30,720 2,290 -Refer to the Figure.When using a linear regression program,what is the forecasted utility cost at 2,000 machine hours (rounded to the nearest dollar)?

Which of the following is likely a fixed cost in a fast-food restaurant?

What is an attribute of the scattergraph method?

What is a characteristic of a mixed cost?

St. John's Company incurred the following costs for the months of March and April. Type of Cost March April Insurance \ 5,000 \ 5,000 Utilities 4,000 5,000 Depreciation 3,500 3,500 Materials 10,000 20,000 -Refer to the Figure.Assume that output was 5,000 units in March and 10,000 units in April,utility cost is a mixed cost,and the fixed cost of utilities was $3,000.What was the variable rate per unit of output for utilities cost?

Whitehorse Company manufactures ultrasound equipment.Based on past experience,Whitehorse has found that total annual repair and maintenance cost can be represented by the following formula: total annual repair and maintenance cost = $300,000 + $10.00x,where x = machine hours.Last year,Whitehorse incurred 150,000 machine hours. Required: A. What was the total repair and maintenance cost incurred by Whitehorse last year? B. What was the total fixed repair and maintenance cost incurred by Whitehorse last year? C. What was the total variable rep air and maintenance cost incurred by Whitehorse last year? D. What was the repair and maintenance cost per machine hour last year? E. What was the fixed repair and maintenance cost per machine hour last year? F. What was the variable repair and maintenance cost per machine hour last year?

Whistler Company makes downhill skis.The company controller wants to calculate the fixed and variable costs associated with janitorial services incurred by the factory.Data for the past six months were collected. Which of the following is the set of high and low months? High Low Janitorial Labour Month cost hours July \ 9,200 10,120 August 8,800 9,500 September 9,350 10,500 October 9,620 11,100 November 8,400 8,660 December 9,400 10,650

A cost that does change in total as output changes is a variable cost.