Exam 3: Cost Behavior

Which of the following is an advantage of using the scatterplot method over the high-low method to estimate costs?

Figure 3-9 Abboud Company is planning to introduce a new product with an 80 percent learning rate for production for batches of 1,000 units.The variable labor costs are $30 per unit for the first 1,000-unit batch.Each batch requires 100 hours.There are $10,000 in fixed costs not subject to learning. - Refer to Figure 3-9.What is the cumulative total time (labor hours) to produce 2,000 units based on the cumulative average-time learning curve?

Figure 3-2 A company usually processes 20,000 orders at a total cost of $300,000.During the year, only 16,000 orders were processed. - Refer to Figure 3-2.What is the cost of unused activity?

A hospital requires one nurse for each eight patients.This is an example of a

Which of the following is NOT a method of determining cost behavior?

Figure 3-5 Lee Corporation manufactures and sells party items.The following representative direct labor hours and production costs are provided for a four-month period: - Refer to Figure 3-5.Predict a cost for 5,000 labor hours.

The linearity assumption is most likely to be a close approximation for an underlying nonlinear cost function

Mixed costs, by definition, contain both

The Smith Company has the following cost data pertaining to the production of small desks: Required:

If all the activity capacity acquired is not used, this is an example of

__________ explain changes in costs as factors other than changes in units produced.

If production volume increases from 8,000 to 10,000 units,

Hook Company wants to develop a cost estimating equation for its monthly cost of electricity.It has the following data: Using the high-low method, which of the following is the best equation?

Figure 3-1 ALF Systems undertakes its own machine maintenance.The depreciation on the equipment is $20,000 per year and operating cost is $2 per machine hour.Last year 275,000 machine hours were used to produce 100,000 units. - See Figure 3-1.Develop a cost equation for the total machine maintenance cost.

Figure 3-5 Lee Corporation manufactures and sells party items.The following representative direct labor hours and production costs are provided for a four-month period: -Refer to Figure 3-5.The monthly production cost can be expressed as

The plant manager requested information to assist in estimating maintenance costs.The following computer printout was generated using the least-squares method: Required:

In the formula Y = F + VX, X refers to the

A managerial accountant has determined the following relationships between overhead and several possible bases: The best basis for overhead application is

Which of the following statements is TRUE about the learning curve?

Greene Enterprises has the following information about its truck fleet miles and operating costs: What is the best estimate of total costs using the high-low method if the expected fleet mileage for 2008 is 500,000 miles?