Exam 5: Cost Drivers and Cost Behavior

J-Mobile provides cellular phone and Internet services with a plan that provides up to 1,000 minutes of airtime usage for a flat rate of $99.99 per month plus a charge for any minutes used over this amount at the rate of $0.10 per minute in excess of the minimum 1,000 airtime minutes.Which of the following describes the cost of the J-Mobile service?

Describe the nature of the various cost behavior patterns.

Learning curve.Falcon Co.makes technical products for magicians.To make Product J24,the company recently recorded the following costs,which decline subject to an 85 percent cumulative learning curve. Required: Complete the chart by filling in the cost amounts for volumes of 4,8,and 16 units and show your calculations. (Falcon Co. ;learning curve. )

Why do managers use cost behavior patterns?

Which statement is true concerning committed costs?

PB Investigators LLC hires one private investigator for every 5 clients.The annual salary for each private investigator is $60,000 per year.The cost to PB Investigators LLC for investigators is known as which of the following?

Briefly explain how to use historical data to estimate costs.

Narrative 5-1 The following question(s)refer to the this equation analyzing the relationship of total cost to changes in machine hours.The following relationship was determined: TC = $2,200 + $3X Refer to Narrative 5-1.The $3 in the above equation is an estimate of which of the following?

Certain fixed costs that provide a firm with the capability to produce or sell or both are known as:

Analysts should take which step(s)in analyzing cost data?

Describe how analysts estimate cost behavior using regression,account analysis,and engineering methods.

Which of the following is a strength of the regression method of cost estimation?

Which of the following cost functions describes costs vary with the volume of activity,but not in constant proportion?

Which of the following statements is correct?

Valley Company incurred a total cost of $5,000 to produce 300 units of output.A total of 450 hours was incurred for this effort.If the variable cost was $10 per direct labor hour,then the fixed cost was

Leman Suitcase Company The Leman Suitcase Company is trying to decide which independent variable would be a better predictor of advertising expense.The following regressions were run using sales dollars and units sold as the independent variables. Regression Analysis #1 Dependent variable - Advertising Expense Independent variable - Sales Dollars Regression Analysis #2 Dependent variable - Advertising Expense Independent variable - Units Sold Refer to the Leman Suitcase Company.Using units sold as the independent variable,what would be the prediction of advertising expense if 4,000 units are expected to be sold?

What is the term used to describe costs that increase in steps?

Which of the following can complicate the collection of data to estimate costs?

Wilkens Company Wilkens Company wants to determine the cost behavior pattern of maintenance costs.Wilkens has decided to use linear regression by employing the equation y = a + bx for maintenance costs.The prior year's data regarding maintenance hours and costs,and the results of the regression analysis are given in the data below. Average cost per hour $9.00

If revenues are $25 per unit,variable costs are $15 per unit,and fixed costs are $400,what is the operating profit when 100 units are sold?