Exam 3: Cost Behavior

Which of the following is an example of a committed fixed expense?

Fixed cost per unit is $9 when 20,000 units are produced and $6 when 30,000 units are produced.What is the total fixed cost when nothing is produced?

The average unit cost at a monthly volume of 9,000 units is $3, and the average unit cost at a monthly volume of 22,500 units is $2.10. Required: Develop an equation for total monthly costs.

_______________ are costs incurred for the acquisition of short-run activity capacity, usually as the result of yearly planning.

Ross Company has the following information available regarding costs at various levels of monthly production: Required:

A manufacturing company pays an assembly line worker $10 per hour.What is the proper classification of this labor cost?

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.Compute the total machine maintenance cost for last year.

The hypothesis test of cost parameters

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.Using the high-low method, what is the cost formula for estimating costs?

The efficient level of activity performance is called

Weaknesses of the high-low method include all of the following EXCEPT

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. - Refer to Figure 3-1.Compute the total variable machine maintenance cost last year.

As the volume of activity increases within the relevant range, the variable cost per unit

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 average time per batch using the incremental unit-time learning curve for 2,000 units?

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 using the incremental unit-time learning curve to produce 2,000 units?

Abboud Company is planning to introduce a new product with an 80 percent incremental unit-time learning curve 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.What is the cumulative total time (labor hours) to produce 2,000 units?

Advantages of the method of least squares over the high-low method include all of the following EXCEPT

Innova, Inc., is beginning the production of a new product.Management believes that 500 labor hours will be required to complete the new unit.An 80 percent incremental unit-time learning curve model for direct labor hours is assumed to be valid.Assume the q = -0.3219.Data on costs are as follows: Required:

Assume the following information: What is the variable cost per unit?

What is the difference between a correlation equal to -1 and a correlation equal to 0?