Exam 5: Planning Budgeting and Behaviour

European International has 3 separate business units in the following countries. Data for each of the business units is given below: France 5pin italy Selling price per unit £35 £38 £42 Manufacturing cost £4,000 per month plus £17 per £3,500 per month plus £18 per £5,000 per month plus £20 per unit unit unit Administrative £2,500 per month plus £2.50 £2,900 per month plus £2.90 £3,500 per month plus £3.50 expense per unit per unit per unit Sales commissions 15\% of sales 16\% of sales 20\% of sales Advertising expense £2,000 per month £3,000 per month £2,000 per month - If the business unit in Spain plans to produce sell 3,000 units next month, the expected contribution margin would be

European International has 3 separate business units in the following countries. Data for each of the business units is given below: France 5pin italy Selling price per unit £35 £38 £42 Manufacturing cost £4,000 per month plus £17 per £3,500 per month plus £18 per £5,000 per month plus £20 per unit unit unit Administrative £2,500 per month plus £2.50 £2,900 per month plus £2.90 £3,500 per month plus £3.50 expense per unit per unit per unit Sales commissions 15\% of sales 16\% of sales 20\% of sales Advertising expense £2,000 per month £3,000 per month £2,000 per month -If the business unit in Italy expects to produce and sell 5,000 units next month, the expected net operating income would be

Carr Company reports the following data for the first six months of the year: $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ MachineElectrica Month Hours Cost January. 400 £40 February 300 £30 March 400 £50 April 300 £40 May 200 £30 June 200 £20 -Using the least-squares regression method, the estimated variable electrical cost per machine hour is closest to

Stott Company requires one dockhand for every 500 packages loaded daily. The wages for these dockhands would be classified as

Bee Company is a honey wholesaler. An income statement and other data for the second quarter of the year are given below: -Bee Company's net operating income for the second quarter using the contribution approach is

How does the distinction between fixed and variable costs vary between a service and a manufacturing operation?

The concept of the relevant range does not apply when dealing with step variable costs

Explain the differences between Committed and Discretionary costs. Why is it important to differentiate?

A variable cost remains constant in total amount, but varies per unit of activity

3: Explain and differentiate between fixed, variable, semi-variable and semi-fixed costs.

European International has 3 separate business units in the following countries. Data for each of the business units is given below: France 5pin italy Selling price per unit £35 £38 £42 Manufacturing cost £4,000 per month plus £17 per £3,500 per month plus £18 per £5,000 per month plus £20 per unit unit unit Administrative £2,500 per month plus £2.50 £2,900 per month plus £2.90 £3,500 per month plus £3.50 expense per unit per unit per unit Sales commissions 15\% of sales 16\% of sales 20\% of sales Advertising expense £2,000 per month £3,000 per month £2,000 per month -If the business unit in France expects to produce and sell 2,000 units next month, the total expected manufacturing cost would be

When more than one factor causes variations in the variable element of a mixed cost, multiple regression analysis should be used.

European International has 3 separate business units in the following countries. Data for each of the business units is given below: France 5pin italy Selling price per unit £35 £38 £42 Manufacturing cost £4,000 per month plus £17 per £3,500 per month plus £18 per £5,000 per month plus £20 per unit unit unit Administrative £2,500 per month plus £2.50 £2,900 per month plus £2.90 £3,500 per month plus £3.50 expense per unit per unit per unit Sales commissions 15\% of sales 16\% of sales 20\% of sales Advertising expense £2,000 per month £3,000 per month £2,000 per month -If the business unit in France plans to produce and sell 4,000 units next month, the expected gross margin would be

The R2 (i.e., R-squared) is a measure of the goodness-of-fit in least-squares regression, True or

The contribution format is widely used for preparing external financial statements

If the business unit in France plans to produce sell 3,000 units next month, the expected contribution margin would be

If the business unit in Italy plans to produce and sell 4,000 units next month, the expected gross margin would be

The Blaine Company is a highly automated manufacturer. At an activity level of 6,000 machine setups, total overhead costs equal £240,000. Of this amount, depreciation totals £80,000 (all fixed) and lubrication totals £72,000 (all variable). The remaining £88,000 of the total overhead cost consists of utility cost (mixed). At an activity level of 9,000 setups, utility cost totals £112,000. Assume that the relevant range includes all of the activity levels mentioned in this problem. - The total fixed overhead costs for Blaine Company are most likely closest to

Account analysis is a method for analysing cost behavior in which each account under consideration is classified as either variable or fixed based upon the analyst's prior knowledge of how the cost in the account behaves.

Compton Company is a wholesale distributor of educational CD-ROMs. The company's records indicate the following: This Year Last Year Units Sold 250,000 200,000 Sales Revenue £1,250,000 £1,000,000 Less: Cost of Goods Sold Gross Margin 375,000 300,000 Less: Operating Expenses Net Operating Income £153,000 £90,000 -What is the company's contribution margin for this year?