Question 1

The following data pertains to activity and utility cost for two recent periods:  Utility cost is a mixed cost with both fixed and variable components.Using the high-low method, the cost formula for utility cost is:

Accepted Answer

A)  Y = $1.65 X 
B)  Y = $1.75 X
C)  Y = $3,750 + $1.75 X
D)  Y = $6,000 + $1.25 XE) C) and D)
F) None of the above

Question 2

What is Casablanca's independent variable?

Accepted Answer

A)  the year
B)  the machine hours
C)  the total overhead cost
D)  the relevant rangeE) All of the above
F) B) and D)

Question 3

Farac Corporation has provided the following production and total cost data for two levels of monthly production volume.The company produces a single product.  The best estimate of the total cost to manufacture 4,300 units is closest to:

Accepted Answer

A)  $674,890
B)  $665,855
C)  $695,740
D)  $635,970E) B) and C)
F) A) and D)

Question 4

The best estimate of the total variable manufacturing cost per unit is:

Accepted Answer

A)  $90.00
B)  $77.20
C)  $12.80
D)  $20.70E) B) and C)
F) All of the above

Question 5

Hara Corporation is a wholesaler that sells a single product.Management has provided the following cost data for two levels of monthly sales volume.The company sells the product for $159.80 per unit.  The best estimate of the total variable cost per unit is:

Accepted Answer

A)  $77.00
B)  $60.60
C)  $149.10
D)  $138.80E) B) and D)
F) B) and C)

Question 6

The best estimate of the total variable manufacturing cost per unit is:

Accepted Answer

A)  $132.70
B)  $88.40
C)  $23.70
D)  $109.00E) B) and D)
F) None of the above

Question 7

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

Accepted Answer

A)  $822
B)  $743
C)  $38
D)  $944E) A) and B)
F) All of the above

Question 8

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

Accepted Answer

A)  $1.50
B)  $1.25
C)  $0.67
D)  $1.40E) All of the above
F) None of the above

Question 9

The highest and lowest costs are always used to analyze a mixed cost under the high-low method.

Accepted Answer

A) True 
 B)False

Question 10

Dacosta Corporation has provided the following production and total 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:

Accepted Answer

A)  $1,599,000
B)  $1,664,350
C)  $814,800
D)  $1,729,700E) A) and D)
F) All of the above

Question 11

Using the least-squares regression method, the estimate of the fixed component of maintenance cost per month is closest to:

Accepted Answer

A)  $5,139
B)  $2,806
C)  $4,973
D)  $2,738E) A) and C)
F) All of the above

Question 12

The R2 (i.e., R-squared)tells us the percentage of the variation in the dependent variable (cost)that is explained by variation in the independent variable (activity).

Accepted Answer

A) True 
 B)False

Question 13

A major advantage of the high-low method of cost estimation is that it omits all data from the analysis other than the lowest and highest costs.

Accepted Answer

A) True 
 B)False

Question 14

What would be the competitor's prediction of total expected costs at 18,000 units?

Accepted Answer

A)  $16,860
B)  $26,400
C)  $29,100
D)  $30,000E) B) and D)
F) A) and C)

Question 15

The best estimate of the total variable cost per unit is:

Accepted Answer

A)  $82.90
B)  $128.50
C)  $104.00
D)  $125.00E) None of the above
F) B) and C)

Question 16

The engineering approach to the analysis of mixed costs involves a detailed statistical analysis of cost behavior using methods that minimize the squared errors.

Accepted Answer

A) True 
 B)False

Question 17

The least-squares regression method computes the regression line that minimizes the sum of the squared deviations from the plotted points to the line.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following statements is true when referring to the high-low method of cost analysis?

Accepted Answer

A)  The high-low method has no major weaknesses.
B)  The high-low method is very hard to apply.
C)  In essence, the high-low method draws a straight line through two data points.
D)  The high-low method uses all of the available data to estimate fixed and variable costs.E) B) and D)
F) All of the above

Question 19

Gamach Corporation is a wholesaler that sells a single product.Management has provided the following cost data for two levels of monthly sales volume.The company sells the product for $104.50 per unit.  The best estimate of the total monthly fixed cost is:

Accepted Answer

A)  $102,000
B)  $518,900
C)  $556,800
D)  $481,000E) A) and C)
F) None of the above

Question 20

Using the least-squares regression method of analysis, the estimated variable lubrication cost per machine hour is closest to:

Accepted Answer

A)  $0.80
B)  $1.56
C)  $1.40
D)  $1.28E) C) and D)
F) A) and B)

Exam 17: Cost-Volume-Profit Relationships

What would be the competitor's prediction of total expected costs at 18,000 units?

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Which of the following statements is true when referring to the high-low method of cost analysis?

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Using the least-squares regression method of analysis, the estimated variable lubrication cost per machine hour is closest to:

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Farac Corporation has provided the following production and total cost data for two levels of monthly production volume.The company produces a single product. The best estimate of the total cost to manufacture 4,300 units is closest to:

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The least-squares regression method computes the regression line that minimizes the sum of the squared deviations from the plotted points to the line.

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The best estimate of the total variable manufacturing cost per unit is:

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

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

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What is Casablanca's independent variable?

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The following data pertains to activity and utility cost for two recent periods: Utility cost is a mixed cost with both fixed and variable components.Using the high-low method, the cost formula for utility cost is:

Correct AnswerverifiedShow Answer

The highest and lowest costs are always used to analyze a mixed cost under the high-low method.

Correct AnswerverifiedShow Answer

Dacosta Corporation has provided the following production and total 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:

Correct AnswerverifiedShow Answer

A major advantage of the high-low method of cost estimation is that it omits all data from the analysis other than the lowest and highest costs.

Correct AnswerverifiedShow Answer

The engineering approach to the analysis of mixed costs involves a detailed statistical analysis of cost behavior using methods that minimize the squared errors.

Correct AnswerverifiedShow Answer

The R2 (i.e., R-squared)tells us the percentage of the variation in the dependent variable (cost)that is explained by variation in the independent variable (activity).

Correct AnswerverifiedShow Answer

The best estimate of the total variable cost per unit is:

Correct AnswerverifiedShow Answer

The best estimate of the total variable manufacturing cost per unit is:

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Using the least-squares regression method, the estimate of the fixed component of maintenance cost per month is closest to:

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Hara Corporation is a wholesaler that sells a single product.Management has provided the following cost data for two levels of monthly sales volume.The company sells the product for $159.80 per unit. The best estimate of the total variable cost per unit is:

Correct AnswerverifiedShow Answer

Gamach Corporation is a wholesaler that sells a single product.Management has provided the following cost data for two levels of monthly sales volume.The company sells the product for $104.50 per unit. The best estimate of the total monthly fixed cost is:

Correct AnswerverifiedShow Answer

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The R² (i.e., R-squared)tells us the percentage of the variation in the dependent variable (cost)that is explained by variation in the independent variable (activity).

Correct Answer
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