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Exam 17: Cost-Volume-Profit Relationships

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Question 21

True/False

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In a scattergraph of cost and activity, activity is the independent variable because it causes variations in the cost.

A) True
B) False

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Question 22

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Using the least-squares regression method, the estimate of the variable component of maintenance cost per machine-hour is closest to:

A) $9.76
B) $6.00
C) $4.43
D) $4.57

E) None of the above
F) A) and D)

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Question 23

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The R² (i.e., R-squared)varies from 0% to 100%, and the lower the percentage, the better the fit of the data to a straight line.

Andom Corporation has provided the following production and average cost data for two levels of monthly production volume.The company produces a single product. The best estimate of the total monthly fixed manufacturing cost is:

Your boss would like you to estimate the fixed and variable components of a particular cost.Actual data for this cost over four recent periods appear below. Using the least-squares regression method, what is the cost formula for this cost?

Using the high-low method of analysis, what are the company's estimated variable selling and administrative expenses per unit?

The Stephens Leadership Center provides training seminars in personal development and time management.The company is relatively new and management is seeking information regarding the Center's cost structure.The following information has been gathered since the inception of the business in January of the current year: Required: a.Using the high-low method, estimate the variable cost per seminar and the total fixed cost per month. b.Using the least-squares method, estimate the variable cost per seminar and the total fixed cost per month.

Using the high-low method, the estimate of the fixed component of inspection cost per month is closest to:

Using the high-low method of analysis, the estimated variable cost per machine hour for electricity is closest to:

Below are cost and activity data for a particular cost over the last four periods.Your boss has asked you to analyze this cost so that management will have a better understanding of how this cost changes in response to changes in activity. Required: Using the least-squares regression method, estimate the cost formula for this cost.

Grawburg Inc.maintains a call center to take orders, answer questions, and handle complaints.The costs of the call center for a number of recent months are listed below: Management believes that the cost of the call center is a mixed cost that depends on the number of calls taken. Required: Estimate the variable cost per call and fixed cost per month using the least-squares regression method.

Using the high-low method, the estimate of the variable component of inspection cost per unit produced is closest to:

The management of Hamano Corporation would like for you to analyze their repair costs, which are listed below: Management believes that repair cost is a mixed cost that depends on the number of machine-hours.Using the least-squares regression method, the estimates of the variable and fixed components of repair cost would be closest to:

The best estimate of the total monthly fixed cost is:

Using the high-low method of analysis, the estimated monthly fixed component of lubrication cost is closest to:

Deidoro Company has provided the following data for maintenance cost: Maintenance cost is a mixed cost with variable and fixed components.The fixed and variable components of maintenance cost are closest to:

Managers can use a variety of methods to estimate the fixed and variable components of a mixed cost.In account analysis, an account is classified as either variable or fixed based on the analyst's prior knowledge of how the cost in the account behaves.

The variable cost per setup for utilities is most likely closest to:

If 7,800 setups are projected for the next period, total expected overhead cost would be closest to:

A soft drink bottler incurred the following factory utility cost: $9,246 for 5,200 cases bottled and $8,997 for 4,900 cases bottled.Factory utility cost is a mixed cost containing both fixed and variable components.The variable factory utility cost per case bottled is closest to: