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Exam 5: Cost Behavior

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Question 1

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Palm,which uses the high-low method,had an average cost per unit of $50 at its lowest level of activity when sales equaled 1,000 units and an average cost per unit of $32.50 at its highest level of activity when sales equaled 2,000 units.Palm would estimate fixed costs as:

A) $30.00
B) $82.50
C) $17,500
D) $35,000

E) A) and B)
F) A) and C)

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Question 2

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Fremont,which uses the high-low method,reported total costs of $10 per unit at its lowest production level,5,000 units.When production tripled to its highest level,the total cost per unit dropped to $5.Fremont would estimate its variable cost per unit as:

A) $2.50
B) $5.00
C) $15.00
D) ($5.00)

E) B) and C)
F) A) and B)

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Question 3

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Onini,Inc.produces one product with two production levels: 20,000 units and 80,000 units.At each production level,Onini's per-unit costs for Costs A,B,and C are: What type of cost is each?

We generally need ________ data points to get reliable regression results using the least-squares regression method.

Laredo,Inc.has a contribution margin ratio of 45%.This month,sales revenue was $200,000,and profit was $40,000.If sales revenue increases by $20,000,by how much will profit increase?

Total contribution margin is defined as:

Fixed costs are expressed ________ because that is the amount of cost that is truly fixed.

Kent Corp.has fixed costs of $25,000.Kent expects net operating income of $300,000 at its anticipated level of production,65,000 units.What is Kent's unit contribution margin?

Which of the following statements is correct about relevant range?

Which of the following is a variable cost?

Vaughn,Inc.sold 17,000 units last year for $50 each.Variable costs per unit were $15 for direct materials,$15 for direct labor,and $10 for variable overhead.Fixed costs were $10,000 in manufacturing overhead and $50,000 in nonmanufacturing costs. a.What is the total contribution margin? b.What is the unit contribution margin? c.What is the contribution margin ratio? d.If sales increase by 5,000 units,by how much will profits increase?

Aspen Inc has the following information for its first year of operations: a.Prepare Aspen's full absorption costing income statement. b.Prepare Aspen's variable costing income statement.

The contribution margin income statement is appropriate for external users.

Which of the following is a mixed cost?

Meadow uses the high-low method.It had total costs of $500,000 at its lowest level of activity when 5,000 units were sold.When,at its highest level of activity,sales equaled 12,000 units,total costs were $780,000.Meadow would estimate fixed costs as:

Rose Corp.has contribution margin of $65,000,variable costs of $10 per unit,and fixed costs of $25,000.If Rose sells 13,000 units,what was the selling price per unit?

Carson,which uses the high-low method of estimating costs,reported total costs of $24 per unit when production was at its lowest level,at 10,000 units.When production doubled to its highest level,the total cost per unit dropped to $15.Carson would estimate its total fixed cost as:

A company's normal operating activity is to produce 500 units per month.During its first two months of operations,it produced 100 units per month.Following a great article about the product,product sales spiked to 1,000 units per month,but the spike only lasted for one month.Which of the following best approximates the company's relevant range?

Star,Inc.used Excel to run a least-squares regression analysis,which resulted in the following output: How much of the variation in cost is explained by production?

Flint Enterprises had the following cost and production information for April: Inventory increased by 4,000 units during April.What is Flint Enterprise's income under variable costing?