Exam 5: Planning Budgeting and Behaviour

Rible Company has observed that at an activity level of 8,000 units the cost for maintenance is £15,000, and at 10,000 units the cost for maintenance is £16,500. Using the high-low method, the cost formula for maintenance is

In describing the cost equation, Y = a + bX, 'a' is

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 5,000 units next month, the expected net operating income would be

The following data pertains to activity and maintenance costs for two recent years: Year 2 Year 1 Activity level in units 12,000 8,000 Maintenance cost £15,000 £12,000 Using the high-low method, the cost formula for maintenance would be:

Differentiate between cost analysis from an accounting point of view and an engineering approach.

In practice, how practical is it to split costs into fixed and variable ones?

The high-low method uses cost and activity data from just two periods to establish a cost formula

Fixed cost remains constant if expressed on a unit basis

If the level of activity increases within the relevant range

The cost of goods sold in a merchandising firm typically would be classified as a