Exam 5: Cost Behavior Analysis and Use

Baaca Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. -The best estimate of the total monthly fixed manufacturing cost is:

Rymore Company would like to classify the following costs according to their cost behavior: -Which of the following classifications best describes the behavior of Cost B?

In October, Haldeman Corporation, a manufacturing company, reported the following financial data: The company had no beginning or ending inventories. -The gross margin for October was:

The following information was collected for one of the costs at Demetra Manufacturing Corporation over the past two years: Assuming that there has been no change in the cost structure over the last two years and this activity is within the relevant range, this cost at Demetra would best be described as a:

The 4 x 4 Shop is a large retailer of equipment for pickup trucks. An income statement for the company's bed liner department for the most recent quarter is presented below: The liners sell, on average, for $350 each. The department's variable selling expenses are $35 per liner sold. The remaining selling expenses are fixed. The administrative expenses are 25% variable and 75% fixed. The company purchases its liners from a supplier at a cost of $125 per liner. Required: Prepare an income statement for the quarter, using the contribution approach.

At an activity level of 9,600 machine-hours in a month, Montgomery Corporation's total variable production engineering cost is $402,336 and its total fixed production engineering cost is $570,240. What would be the total production engineering cost, both fixed and variable, at an activity level of 9,900 machine-hours in a month? Assume that this level of activity is within the relevant range.

Giaquinto Corporation reports that at an activity level of 7,600 units, its total variable cost is $182,856 and its total fixed cost is $444,296. Required: For the activity level of 7,900 units, compute: (a) the total variable cost; (b) the total fixed cost; (c) the total cost; (d) the average variable cost per unit; (e) the average fixed cost per unit; and (f) the average total cost per unit. Assume that this activity level is within the relevant range.

Given the cost formula Y = $12,000 + $6X, total cost at an activity level of 8,000 units would be:

The high-low method is generally less accurate than the least-squares regression method for analyzing the behavior of mixed costs.

Discretionary fixed costs:

Utility costs at one of Hambley Corporation's factories are listed below: Management believes that utility cost is a mixed cost that depends on machine-hours. Required: Estimate the variable cost per machine-hour and the fixed cost per month using the high-low method. Show your work!

With automation, fixed costs increase relative to variable costs.

The _______________ approach to the income statement organizes costs by function.

On an income statement prepared by the traditional approach, costs are organized and presented according to function.

Electrical costs at one of Noyd Corporation's factories are listed below: Management believes that electrical cost is a mixed cost that depends on machine-hours. -Using the high-low method, the estimate of the fixed component of electrical cost per month is closest to:

At a sales level of $300,000, James Company's gross margin is $15,000 less than its contribution margin, its net operating income is $50,000, and its selling and administrative expenses total $120,000. At this sales level, its contribution margin would be:

Prater Company has provided the following data: -The best estimate of the company's total fixed selling and administrative expense per year is:

The cost of goods sold in a merchandising company typically would be classified as a:

The following data pertains to activity and utility costs for two recent years: Using the high-low method, the cost formula for utilities is:

Maxwell Company has a total expense per unit of $2.00 per unit at the 16,000 level of activity and total expense per unit of $1.95 at the 21,000 unit level of activity. -The best estimate of the total expected costs at the 19,000 level of activity for Maxwell Company is: