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Exam 5: Cost Behavior

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Question 51

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Royal Enterprises has presented the following information for the past three months operations: a.Using the high-low method,calculate the fixed cost per month and variable cost per unit. b.What would total costs be for a month with 5,000 units produced?

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a.High month: August;low month: June.Fix...

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Question 52

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A cost that changes,in total,in direct proportion to changes in activity levels is a(n) :

A) absorption cost.
B) contribution margin.
C) fixed cost.
D) variable cost.

E) A) and C)
F) A) and B)

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Question 53

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Flint Enterprises had the following cost and production information for May: Inventory increased by 2,000 units during May.How much greater will Flint Enterprises' income be under absorption costing than under variable costing?

McNeil uses the high-low method of estimating costs.McNeil had total costs of $50,000 at its lowest level of activity,when 5,000 units were sold.When,at its highest level of activity,sales equaled 12,000 units,total costs were $78,000.What would McNeil estimate its total cost to be if sales equaled 8,000 units?

Booble,Inc.has a contribution margin ratio of 45%.This month,sales revenue was $200,000,and profit was $40,000.How much are Booble's fixed costs?

Island Enterprises has presented the following information for the past eight months operations: a.Using the high-low method,calculate the fixed cost per month and variable cost per unit. b.What would total costs be for a month with 3,000 units produced?

Variable costing uses a contribution margin income statement.

Which of the following is not correct about "R Square" in regression analysis?

Lavender Inc has the following information for its first year of operations: a.Prepare Lavender's full absorption costing income statement. b.Prepare Lavender's variable costing income statement.

Newport,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: a.What is Newport's total fixed cost? b.What is Newport's variable cost per unit? c.What total cost would Newport predict for a month in which they sold 5,000 units? d.What proportion of variation in Newport's cost is explained by variation in production?

Elm uses the high-low method of estimating costs.Elm had total costs of $250,000 at its lowest level of activity,when 5,000 units were sold.When,at its highest level of activity,sales equaled 10,000 units,total costs were $390,000.Elm would estimate variable cost per unit as:

A grocery store wants to encourage its customers to bring their own shopping bags,thus saving the store money on purchasing plastic or paper bags and saving the environment in the process.For an Earth Day promotion,the store gives away free canvas bags and engages in a substantial advertising campaign to highlight the initiative.Then,the store rewards customers who bring their own bags with a 5% discount on all future shopping trips.Which of the following is not a way this initiative might be reflected in the grocery store's contribution margin income statement?

A mixed cost:

A statistical method for finding the best-fitting cost equation to a set of data is the:

Sage,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: a.What is Sage's total fixed cost? b.What is Sage's variable cost per unit? c.What total cost would Sage predict for a month in which they sold 10,000 units?

Using the results of the least-squares regression analysis,which value estimates total fixed costs?

What is the difference between full absorption costing and variable costing?

Sugar Corp.has a selling price of $20,variable costs of $12 per unit,and fixed costs of $25,000.Maple expects profit of $300,000 at its anticipated level of production.If Sugar sells 5,000 units more than expected,how much higher will its profits be?

Rodeo,Inc.has a contribution margin ratio of 45%.This month,profit was $40,000 and fixed costs were $50,000.How much was Laredo's sales revenue?

Winston uses the high-low method.It had an average cost per unit of $10 at its lowest level of activity when sales equaled 10,000 units and an average cost per unit of $6.50 at its highest level of activity when sales equaled 20,000 units.What would Winston estimate its total cost to be if sales equaled 8,000 units?