Exam 3: Cost Behavior

Total costs may be computed as follows:

Figure 3-9 Hereford Company is planning to introduce a new product with an 80 percent learning rate for production for batches of 1,000 units. The variable labor costs are $30 per unit for the first 1,000-unit batch. Each batch requires 100 hours. There are $10,000 in fixed costs not subject to learning. -Refer to Figure 3-9. What is the cumulative total time (labor hours) to produce 2,000 units based on the cumulative average-time learning curve?

Which of the following is an advantage of using the scatterplot method over the high-low method to estimate costs?

Given the following graphs, which graph represents fixed costs?

When a firm acquires the resources needed to perform an activity, it is obtaining

Figure 3-8 The following computer printout estimated overhead costs using multiple regression: During the year the company used 1,000 setup hours and 500 parts. -Refer to Figure 3-8. What is the predicted overhead cost?

The costs incurred that provide long-term activity capacity, usually as the result of strategic planning are called:

The method may be used to determine the activities and amounts for cost behavior.

Mixed costs, by definition, contain both

The high-low method may give unsatisfactory results if

Figure 3-5 Longberry Corporation manufactures and sells party items. The following representative direct labor hours and production costs are provided for a four-month period: -Refer to Figure 3-5. The monthly production cost can be expressed as

A correlation coefficient near 0 means that two variables are .

Which of the following statements is NOT true?

In the formula Y = F + VX, Y refers to the

Fixed cost per unit is $7 when 25,000 units are produced and $5 when 35,000 units are produced. What is the total fixed cost when nothing is produced?

Figure 3-5 Longberry Corporation manufactures and sells party items. The following representative direct labor hours and production costs are provided for a four-month period: -Refer to Figure 3-5. Using the high-low method, what is the cost formula for estimating costs?

A function displays a constant level of cost for a range of output and then jumps to a higher level.

Barron Enterprises has the following information about its truck fleet miles and operating costs: What is the best estimate of total costs using the high-low method if the expected fleet mileage for 2018 is 500,000 Miles?

Figure 3-4 The following information is available for electricity costs for the last six months of the year: -Refer to Figure 3-4. Using the high-low method, estimated variable cost per unit of production is

For each of the following situations, draw a graph that best describes the cost behavior pattern. The vertical axis represents costs, and the horizontal axis represents volume. a. Direct materials per unit b. Depreciation expense on a building per unit c. An employee paid $50 per hour with a guaranteed salary of $1,000 per week d. A consultant paid $100 per hour with a maximum fee of $2,000 e. Salaries of teachers where each teacher can handle a maximum of 15 students