Question 1

A disadvantage of the high-low method of cost analysis is that:

Accepted Answer

A) it cannot be used when there are a very large number of observations. 
B) it is too time consuming to apply. 
C) it uses two extreme data points,which may not be representative of normal conditions. 
D) it relies totally on the judgment of the person performing the cost analysis. 
A) it cannot be used when there are a very large number of observations. 
B) it is too time consuming to apply. 
C) it uses two extreme data points,which may not be representative of normal conditions. 
D) it relies totally on the judgment of the person performing the cost analysis.

Question 2

Discretionary fixed costs:

Accepted Answer

A) vary directly and proportionately with the level of activity. 
B) have a long-term planning horizon,generally encompassing many years. 
C) are made up of plant,equipment,and basic organizational costs. 
D) none of the above. 
A) vary directly and proportionately with the level of activity. 
B) have a long-term planning horizon,generally encompassing many years. 
C) are made up of plant,equipment,and basic organizational costs. 
D) none of the above.

Question 3

At an activity level of 10,000 units,variable costs totaled $35,000 and fixed costs totaled $20,800.If 16,000 units are produced and this activity is within the relevant range,then:

Accepted Answer

A) total cost would equal $89,280. 
B) total unit cost would equal $4.80. 
C) fixed cost per unit would equal $5.58. 
D) total costs would equal $55,800. 
A) total cost would equal $89,280. 
B) total unit cost would equal $4.80. 
C) fixed cost per unit would equal $5.58. 
D) total costs would equal $55,800.

Question 4

The management of Fagundes Corporation would like to have a better understanding of the behavior of its inspection costs.The company has provided the following data:   Management believes that inspection cost is a mixed cost that depends on direct labor-hours.
Required:
Estimate the variable cost per direct labor-hour and the fixed cost per month using the high-low method.Show your work!

Accepted Answer

@#IMG-DLM& Variable cost = Change in cos

Question 5

Bellido Inc. ,a manufacturing company,has provided the following data for December:   Required:
Prepare an income statement in good form for December using the contribution approach.

Accepted Answer

The answer of Bellido Inc. ,a manufacturing company,has provided the...

Question 6

Unified Parcel,Inc. ,operates a local parcel delivery service.The company keeps detailed records relating to operating costs of trucks,and has found that if a truck is driven 110,000 miles per year the operating cost is 7.5 cents per mile.This cost increases to 8.75 cents per mile if a truck is driven 60,000 miles per year.
Required:
Estimate the cost formula for truck operating costs using the high-low method.

Accepted Answer

Total cost at high level of activity: 11

Question 7

Given the cost formula Y = $17,500 + $4X,at what level of activity will total cost be $42,500?

Accepted Answer

A) 10,625 units 
B) 4,375 units 
C) 6,250 units 
D) 5,250 units 
A) 10,625 units 
B) 4,375 units 
C) 6,250 units 
D) 5,250 units

Question 8

The contribution approach to the income statement classifies costs by behavior rather than by function.

Accepted Answer

A) True 
 B)False

Question 9

Annarummo Inc. ,an escrow agent,has provided the following data concerning its office expenses:   Management believes that office expense is a mixed cost that depends on the number of escrows completed.Note: Real estate purchases usually involve the services of an escrow agent that holds funds and prepares documents to complete the transaction.
-Using the high-low method,the estimate of the variable component of office expense per escrow completed is closest to:

Accepted Answer

A) $196.11 
B) $95.37 
C) $99.50 
D) $292.71 
A) $196.11 
B) $95.37 
C) $99.50 
D) $292.71

Question 10

Hiss Company's activity for the last six months is as follows:  
-Using the high-low method,the estimated monthly fixed component of the electrical cost is:

Accepted Answer

A) $260 
B) $235 
C) $280 
D) $800 
A) $260 
B) $235 
C) $280 
D) $800

Question 11

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 variable cost per unit for Maxwell Company is:

Accepted Answer

A) $0.56 
B) $1.79 
C) $2.00 
D) $1.95 
A) $0.56 
B) $1.79 
C) $2.00 
D) $1.95

Question 12

Which costs will change with a decrease in activity within the relevant range?

Accepted Answer

A) Total fixed costs and total variable cost. 
B) Unit fixed costs and total variable cost. 
C) Unit variable cost and unit fixed cost. 
D) Unit fixed cost and total fixed cost. 
A) Total fixed costs and total variable cost. 
B) Unit fixed costs and total variable cost. 
C) Unit variable cost and unit fixed cost. 
D) Unit fixed cost and total fixed cost.

Question 13

You are applying the scattergraph method and find that the regression line you have drawn passes through a data point with the following coordinates: 1,000 units and $9,600.The regression line passes through the Y axis at the $600 point.Which of the following is the cost formula that represents the slope of this line?

Accepted Answer

A) Y = $600 + $9.00X 
B) Y = $600 + $9.60X 
C) Y = $9,600 + $.06X 
D) None of the above is true. 
A) Y = $600 + $9.00X 
B) Y = $600 + $9.60X 
C) Y = $9,600 + $.06X 
D) None of the above is true.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

When the level of activity increases within the relevant range,how does each of the following change?

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 16

Callaham Corporation is a wholesaler that sells a single product.Management has provided the following cost data for two levels of monthly sales volume.The company sells the product for $115.80 per unit.  
-The best estimate of the total variable cost per unit is:

Accepted Answer

A) $84.50 
B) $100.90 
C) $106.90 
D) $105.70 
A) $84.50 
B) $100.90 
C) $106.90 
D) $105.70

Question 17

Grundmann Inc.reports that at an activity level of 6,500 machine-hours in a month,its total variable inspection cost is $487,110 and its total fixed inspection cost is $326,040.
-What would be the total variable inspection cost at an activity level of 6,600 machine-hours in a month? Assume that this level of activity is within the relevant range.

Accepted Answer

A) $494,604 
B) $331,056 
C) $487,110 
D) $813,150 
A) $494,604 
B) $331,056 
C) $487,110 
D) $813,150

Question 18

Tempcon,Inc.sells and installs furnaces for $3,000 per furnace.The following cost formula relates to last year's operations at Tempcon: Y = $125,000 + $1,800X
If Tempcon sold and installed 500 furnaces last year,what was its total contribution margin last year?

Accepted Answer

A) $475,000 
B) $900,000 
C) $1,025,000 
D) $600,000 
A) $475,000 
B) $900,000 
C) $1,025,000 
D) $600,000

Question 19

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

Accepted Answer

A) $1.50 per unit 
B) $8,000 plus $0.50 per unit 
C) $1.25 per unit 
D) $6,000 plus $0.75 per unit 
A) $1.50 per unit 
B) $8,000 plus $0.50 per unit 
C) $1.25 per unit 
D) $6,000 plus $0.75 per unit

Question 20

_________________ is a method of separating a mixed cost into its fixed and variable elements by fitting a regression line that minimizes the sum of the squared errors.

Accepted Answer

A) Quick and dirty method 
B) Scattergraph method 
C) High-low method 
D) Least-square regression method 
A) Quick and dirty method 
B) Scattergraph method 
C) High-low method 
D) Least-square regression method

A disadvantage of the high-low method of cost analysis is that:

Discretionary fixed costs:

At an activity level of 10,000 units,variable costs totaled $35,000 and fixed costs totaled $20,800.If 16,000 units are produced and this activity is within the relevant range,then:

Bellido Inc. ,a manufacturing company,has provided the following data for December: Required: Prepare an income statement in good form for December using the contribution approach.

Given the cost formula Y = $17,500 + $4X,at what level of activity will total cost be $42,500?

The contribution approach to the income statement classifies costs by behavior rather than by function.

Hiss Company's activity for the last six months is as follows: -Using the high-low method,the estimated monthly fixed component of the electrical cost 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 variable cost per unit for Maxwell Company is:

Which costs will change with a decrease in activity within the relevant range?

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

When the level of activity increases within the relevant range,how does each of the following change?

Callaham Corporation is a wholesaler that sells a single product.Management has provided the following cost data for two levels of monthly sales volume.The company sells the product for $115.80 per unit. -The best estimate of the total variable cost per unit is:

Tempcon,Inc.sells and installs furnaces for $3,000 per furnace.The following cost formula relates to last year's operations at Tempcon: Y = $125,000 + $1,800X If Tempcon sold and installed 500 furnaces last year,what was its total contribution margin last year?

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

_________________ is a method of separating a mixed cost into its fixed and variable elements by fitting a regression line that minimizes the sum of the squared errors.

Managerial Accounting and the Business Environment

Managerial Accounting and Cost Concepts

Cost-Volume-Profit Relationships

Systems Design: Job-Order Costing

Variable Costing: a Tool for Management

Activity-Based Costing: a Tool to Aid Decision Making

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Operating Performance Measures

Segment Reporting,decentralization,and the Balanced Scorecard

Relevant Costs for Decision Making

Capital Budgeting Decisions

Pricing Products and Services

Profitability Analysis

Least-Squares Regression Computations

The Predetermined Overhead Rate and Capacity

Abc Action Analysis

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

Transfer Pricing

Service Department Charges

The Concept of Present Value

Income Taxes in Capital Budgeting Decisions

Filters

Exam 3: Cost Behavior: Analysis and Use

A disadvantage of the high-low method of cost analysis is that:

Discretionary fixed costs:

At an activity level of 10,000 units,variable costs totaled $35,000 and fixed costs totaled $20,800.If 16,000 units are produced and this activity is within the relevant range,then:

Bellido Inc. ,a manufacturing company,has provided the following data for December: Required: Prepare an income statement in good form for December using the contribution approach.

Given the cost formula Y = $17,500 + $4X,at what level of activity will total cost be $42,500?

The contribution approach to the income statement classifies costs by behavior rather than by function.

Hiss Company's activity for the last six months is as follows: -Using the high-low method,the estimated monthly fixed component of the electrical cost 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 variable cost per unit for Maxwell Company is:

Which costs will change with a decrease in activity within the relevant range?

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

When the level of activity increases within the relevant range,how does each of the following change?

Callaham Corporation is a wholesaler that sells a single product.Management has provided the following cost data for two levels of monthly sales volume.The company sells the product for $115.80 per unit. -The best estimate of the total variable cost per unit is:

Tempcon,Inc.sells and installs furnaces for $3,000 per furnace.The following cost formula relates to last year's operations at Tempcon: Y = $125,000 + $1,800X If Tempcon sold and installed 500 furnaces last year,what was its total contribution margin last year?

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

_________________ is a method of separating a mixed cost into its fixed and variable elements by fitting a regression line that minimizes the sum of the squared errors.

Managerial Accounting and the Business Environment

Managerial Accounting and Cost Concepts

Cost-Volume-Profit Relationships

Systems Design: Job-Order Costing

Variable Costing: a Tool for Management

Activity-Based Costing: a Tool to Aid Decision Making

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Operating Performance Measures

Segment Reporting,decentralization,and the Balanced Scorecard

Relevant Costs for Decision Making

Capital Budgeting Decisions

Pricing Products and Services

Profitability Analysis

Least-Squares Regression Computations

The Predetermined Overhead Rate and Capacity

Abc Action Analysis

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

Transfer Pricing

Service Department Charges

The Concept of Present Value

Income Taxes in Capital Budgeting Decisions

Filters