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Exam 6: Cost Behavior

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Question 121

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Johnson Trucking Company wants to determine a fuel surcharge to add to its customers' bills based on the number of miles driven to each area. It wants to separate the fixed and variable portion of the truck's operating costs so it has a better idea of how distance affects these costs. Johnson Trucking Company has the following data available. Using the high-low method, the monthly operating costs if Johnson Trucking Company drives 20,000 miles in a month will be

A) $28,650.
B) $10,500.
C) $25,500.
D) $15,000.

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Question 122

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Total mixed costs can be expressed as a combination of the fixed and sunk cost equations.

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Question 123

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Neon Company manufactures widgets. The following data is related to sales and production of the widgets for last year. Using variable costing, what is the operating income for last year?

Neon Company manufactures widgets. The following data is related to sales and production of the widgets for last year. Using absorption costing, what is operating income for last year?

Total costs for Locke & Company at 120,000 units are $289,000, while total fixed costs are $145,000. The total variable costs at a level of 250,000 units would be

All variable costs are listed ________ on a contribution margin income statement.

Which of the following would be considered a committed fixed cost?

The cost equation determined by regression analysis is usually more accurate than the line determined by the high-low method.

If inventory has grown, operating income will be higher under absorption costing than it is under variable costing.

The contribution margin income statement presents ________ below the contribution margin line.

Match the term on the right with the appropriate definition provided on the right.

Manufacturing overhead (consisting of costs like factory rent, factory utilities, factory maintenance, and other similar costs) is usually what type of cost?

In a regression output, the "X variable 1 coefficient" represents the variable cost component of a mixed cost equation.

An equation of a line for total costs is

Which step is performed first when using the high-low method?

Absorption costing is required to be used for

Your client's company wants to determine the relationship between its monthly operating costs and a potential cost driver. The output of regression analysis showed the following information: Intercept Coefficient = 75,828 X Variable 1 Coefficient = 52.61 R-square = 0.9756 Should your client use this information to predict monthly operating costs?

Lily's Pastries produces cupcakes, which sell for $5 each. During the current month, Lily produced 2,800 cupcakes, but only sold 2,700 cupcakes. The variable cost per cupcake was $3 and the sales commission per cupcake was $0.50. Total fixed manufacturing costs were $1,400 and total fixed marketing and administrative costs were $1,200. What is the product cost per cupcake under absorption costing?

Using account analysis, what type of cost is the rental of a space at $6,000 per month?

If the data points in a scatter plot fall in a fairly straight line, it means that there is a fairly strong relationship between cost and volume.