Exam 6: Cost Behavior

The Akron Slugger Company produces various types of wooden baseball bats. It has calculated the average cost per unit of a production level of 7,500 bats to be $10.00. If $22,500 of the costs are fixed, and the plant manager uses the average cost per unit to predict total costs, her forecast for 8,500 bats will be

If a scatter plot reveals a fairly weak relationship between cost and volume, the manager should select a different activity for modeling cost behavior.

The HF Corporation manufactures and sells toy gyroscopes. The following data is related to sales and production of the toy gyroscopes for last year. Using variable costing, what is the contribution margin for last year?

Rent on a factory building would likely be classified as a fixed cost.

The HF Corporation manufactures and sells toy gyroscopes. The following data is related to sales and production of the toy gyroscopes for last year. Using absorption costing, what is gross profit for last month?

George Company has a relevant range of 150,000 units to 400,000 units. The company has total fixed costs of $525,000. Total fixed and variable costs are $612,500 at a production level of 175,000 units. The variable cost per unit at 300,000 units is

The high-low method is theoretically better than regression analysis because the high-low method uses more data points than regression analysis.

With respect to total variable costs, which of the following statements is true?

When graphing total variable costs, the cost line begins at the origin.

Management has little or no control over

The high-low method basically fits a line through the highest and lowest ________ points.

Total mixed cost graphs slope upward but do not begin at the origin.

Sally's Gift Baskets sells gift baskets, on average, for $125; each gift basket costs, on average, $60. Debby pays salaries each month of $1,300 and her store rent is $1,000 per month. She also pays sales commissions of 5% of the sales price. In May, 140 gift baskets were sold. Required: a. Prepare a traditional income statement for the month of May. b. Prepare a contribution margin income statement for the month of May.

Within the relevant range, which of the following statements is true with respect to fixed costs per unit?

What term represents the total variable cost component in the equation: y = vx + f?

Sugartown Corporation has total sales revenues of $930,000. If its total fixed costs are $182,000 and its total variable costs are $267,000, then the total contribution margin is

Jeans's Fitness Club provides monthly memberships as well as personal training sessions. The personal trainers earn 50% of the revenue for all personal training sessions. The Fitness Club also sells nutrition products. Jeans's general ledger accounts indicate the following for the year. The front desk staff wages expense remains the same throughout the year. If a contribution margin income statement is prepared for the year, what is the contribution margin?

An expense such as advertising could be considered a discretionary fixed cost.

A contribution margin income statement allows managers to see which costs will change with changes in volume and which costs will remain fixed.

The following data pertain to costs at Summit Company: The variable cost per unit is