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Exam 3: Cost Behaviour

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Question 131

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The following chart shows three different costs: Cost A, Cost B, Cost C. For each cost, the chart shows the total cost and cost per unit at two different volumes within the same relevant range. Based on this information, identify each cost as fixed, variable or mixed.

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Question 132

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Indirect materials would likely be classified as fixed costs.

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Question 133

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Suzy's Cool Treatz is a snow cone stand near the local park. To plan for the future, the owner wants to determine her cost behaviour patterns. She has the following information available about her operating costs and the number of snow cones served. Suzy uses the high-low method to determine her operating cost equation and sells 4,500 cones in a month for $3.00 each. -What would Suzy's Cool Treatz operating income be if Suzi prepared a traditional income statement for the month?

The following data pertain to costs at Richardson Company: -If Richardson Company increases production to 50,000 units then the fixed cost per unit will be

The Gangwere Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Gangwere Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation. Required: Using the high-low method determine the forecasted cost for July if the number of hours used is expected to be 3,200.

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

Sugartown Corporation has total sales revenues of $225,000. If their total fixed costs are $40,000 and their total variable costs are $65,000, then the total contribution margin is

At Raines Company, total fixed and variable costs are $480,000 at a production level of 140,000 units. The company has total fixed costs of $200,000. -At Raines Company the variable cost per unit at 200,000 units is

GAAP allows companies to use the contribution margin format for external reporting purposes if they so choose.

The relevant range is the band of volume where total fixed and variable costs remain constant.

A "perfect" straight line would render an R-square value of zero.

YouCall offers a calling plan that charges $2.00 per month plus $0.05 per minute of call time. Under this plan, what is your monthly cost if you talk for a total of 100 minutes?

Xenna Company manufactures coffee tables. The following data is related to sales and production of the tables for last year. -Using variable costing, what is the variable cost of goods sold at Xenna Company for last month?

The following data pertain to costs at Richardson Company: -If Richardson Company increases production to 50,000 units then the variable cost per unit will be

Harbour Manufacturing is trying to predict the cost associated with producing its anchors. At a production level of 4,000 anchors, Harbour Manufacturing's average cost per anchor is $50.00. -At Harbour Manufacturing if $20,000 of the total costs are fixed, what is the variable cost of producing each anchor?

When predicting costs at different volumes, managers should consider which of the following?

The equation for total fixed costs is

Your telephone service provider charges a fixed monthly fee of $80.00 plus $0.10 cents per call for calls within Canada and $0.50 per minute for international calls. Under this plan what is your monthly phone cost if you make 100 calls within Canada and 45 minutes of international calls?

Wendell's Bicycles store buys bicycles on average for $500 and sells them on average for $800. He pays a sales commission of 10% of sales revenue to his sales staff. Wendell pays $1,500 a month rent for his store, and also pays $3,000 a month to his staff in addition to the commissions. Wendell sold 100 bicycles in June. -If Wendell prepares a contribution margin income statement for the month of June, what would be his contribution margin?

What factor related to manufacturing costs causes the difference in operating income computed using absorption costing and operating income computed using variable costing?