Exam 2: Cost Concepts, Behaviour, and Estimation

Tom and Mike are installing new flooring in their home. The house has 5 rooms of approximately equal size where the flooring will be replaced. Tom and Mike spent 3 hours removing the old flooring from the first room. If Tom and Mike are operating with an 85% learning curve, what is the estimated average time to remove the flooring from all 5 rooms? Note: ln(85%) / ln(2) = -0.234.

Smith Company is attempting to develop the cost function for repair costs. The following past data are available: Machine Hours Repair Costs 4,800 \ 6,385 3,400 4,585 4,000 5,285 5,900 7,085 Using the high-low method, what is the fixed repair cost?

Fixed costs per unit:

The major disadvantage of the high-low method is that:

Which of the following could be defined as a cost object?

The depreciation on a factory machine is a:

Uncertainties and information quality are evaluated when determining relevant costs, then not considered again.

Estimating a cost function using past cost data to help determine future costs is useful if:

Milano Company has an average overhead cost per hour of $10.50 at 3,500 machine hours, and at 3,000 hours it is $11.25. The company managers wish to estimate the overhead cost function. What is the variable overhead cost per machine hour?

Opportunity costs are:

When the cost object is a unit produced, straight-line depreciation on manufacturing equipment would be a: Variable Cost Fixed Cost Direct Cost a) No Yes No b) Yes No No c) Yes No Yes d) No Yes Yes

A firm has the capacity to produce 3,100 units per week. At 80% capacity, the average total cost per unit is $12.50 and the average variable cost per unit is $7.50. What is the total fixed cost per week, assuming the firm is still operating within its relevant range?

When the cost object is a unit produced, lubricating oil for production machines would be a(n):

In a regression equation, fixed costs are represented by the:

Textbook costs are an opportunity cost of earning a college degree.

Mixed costs:

Indirect costs are:

If we want to estimate the cost of lumber for manufacturing chairs, the cost function most likely reflects:

The total cost of materials, where the supplier charges $9/kg if 0-1000 kilograms are purchased, $8/kg if 1001-2000 kilograms are purchased, and $7/kg if 2001 or more kilograms are purchased, is a:

Salaries and wages you could earn while in college constitute a sunk cost.