FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 3: Cost Behaviour

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 71

Multiple Choice

Review LaterAdd Note

Review Later

Select the appropriate cost behaviour for each of the costs listed below. -Salary of Chief Financial Officer

A) Variable
B) Fixed

C) A) and B)
D) undefined

Correct Answer

verified

Show Answer

Question 72

Multiple Choice

Review LaterAdd Note

Review Later

Select the appropriate type of fixed cost for each cost listed below. -Depreciation on equipment

A) Discretionary
B) Committed

C) A) and B)
D) undefined

Correct Answer

verified

Show Answer

Question 73

True/False

Review LaterAdd Note

Using Microsoft Excel,the function REGRESSION returns the parameters of a linear regression.

What is characteristic of variable costs within the relevant range?

Select the appropriate type of fixed cost for each cost listed below. -Executive travel costs

Which of the following processes requires one to know how costs change as output changes?

Select the appropriate cost behaviour for each of the costs listed below. -Real estate taxes

Select the appropriate cost behaviour for the following costs incurred by a bicycle manufacturer. -Cost of assembly-line workers

What is a variable cost at an equestrian facility?

Mixed costs have both a fixed and a discretionary component.

$\begin{array}{lrr}\text { Type of Cost } &\text { March }&\text { April } \\\text { Insurance } & \$ 5,000 & \$ 5,000 \\\text { Utilities } & 4,000 & 5,000 \\\text { Depreciation } & 3,500 & 3,500 \\\text { Materials } & 10,000 & 20,000\end{array}$ -Refer to the Figure.Which of the following can be assumed from the information above?

Coefficients shown by a regression program are: $\begin{array} { l l } \text { Intercept } & 7,600 \\\mathrm { X } \text { Variable 1 } & 5.10\end{array}$ Required: A. Using the results of regression, calculate the fixed cost of maintenance and the variable rate per machine hour. B. Using the results of regression, construct the cost formula for the total maintenance cost. C. Calculate the budgeted cost for maintenance assuming that 610 hours are worked next month.

Fixed costs are costs that vary in total within the relevant range as the level of output increases or decreases.

Why is managerial judgment essential to predicting cost behaviour?

$\begin{array}{lrr}\text { Month } & \text { Electricity } & \text { Machine } \\ & \underline{\text { cost }} & \underline{\text { hours }}\\\hline\text { June } & \$ 25,160 & 4,500 \\\text { July } & 26,170 & 4,810 \\\text { August } & 27,250 & 5,120 \\\text { September } & 26,680 & 5,010 \\\text { October } & 27,950 & 5,430 \\\text { November } & 27,500 & 5,190\end{array}$ -Refer to the Figure.Which of the following is the set of high and low months? High Low

Churchill Company has the following information available regarding costs at various levels of monthly production: $\begin{array}{lrr}\text { Production volume } & 7,000 & 10,000 \\\text { Direct materials } & \$ 70,000 & \$ 100,000 \\\text { Direct labour } & 56,000 & 80,000 \\\text { Indirect materials } & 21,000 & 30,000\\\text { Supervisors' salaries } & 12,000 & 12,000 \\\text { Depreciation on plant } & 10,000 & 10,000 \\\text { Maintenance } & 32,000 & 44,000 \\\text { Utilities } & 15,000 & 21,000\\\text { Insurance on plant and equipment } & 1,600 & 1,600 \\\text { Property taxes on plant } & 2,000 & 2,000 \\\text { Total } & \$ 219,600 & \$ 300,600 \\\end{array}$ Required: A. Identify each cost as being variable, fixed, or mixed by writing the name of each cost under one of the following headings: $\text { Variable Costs } \quad \text { Fixed Costs } \quad \text { Mized Costs }$ B. Develop an equation for total monthly production costs. C. Predict total costs for a monthly production volume of 8,000 units.

Sydney Company makes weather balloons.The company controller wanted to calculate the fixed and variable costs associated with the maintenance costs incurred by the factory.Data for the past six months were collected. $\begin{array}{lrr}\text { Month } & \text { Maintenance } & \text { Machine } \\& \text { cost } & \text { hours }\\\text { January } & \$ 10,120 & 526 \\\text { February } & 9,560 & 389 \\\text { March } & 9,712 & 412 \\\text { April } & 10,460 & 569 \\\text { May } & 10,226 & 541 \\\text { June } & 9,686 & 399\end{array}$ Required: A. Using the high low method, calcul ate the fixed cost of maintenance and the variable rate per machine hour. B. Using the high low method, construct the cost formul a for the total maintenance cost. C. Calculate the budgeted cost for maintenance assuming that 700 hours are worked next month.

Sudbury Company operates a chain of trendy nail salons.The company's chief executive officer is interested in accumulating some information on the overhead costs incurred by the company.You have been asked to analyze the following six months' worth of data. $\begin{array}{lrr}&\text { Overhead }&\text { No. of }\\\text { Month }&\text { cost }&\text { Appointments }\\\text { July } & \$ 60,160 & 867 \\\text { August } & 56,500 & 624 \\\text { September } & 58,900 & 689 \\\text { October } & 63,500 & 974 \\\text { November } & 59,325 & 730 \\\text { December } & 62,400 & 901\end{array}$ A regression analysis produced the following coefficients. $\begin{array}{ll}\text { Intercept } & 42,900 \\\text { X Variable 1 } & 20.46\end{array}$ Required: A. Using the results of regression, construct a cost formula for the total overhead cost. B. The CEO would like to limit total overhead cost in future months to 20% of total revenues. Will that be possible if total revenues are expected to average $300,000 per month and total appointments per month are expected to average 1,000? Show all of your calculations.

"Outliers" are points that do NOT seem to fit the general pattern of behaviour.

What is the range of activity within which a cost function is valid?