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Exam 5: Cost Behavior

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Question 41

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Boxwood Company sells wooden boxes from a kiosk in a mall.Fixed costs are $2,500 per month and the variable cost is $2.75 per item.Complete the following table for the levels of units sold.

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Total fixed cost remains $2,500,but fix...

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Question 42

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Sparrow,Inc.used the high-low method to estimate that its fixed costs are $105,000.At its low level of activity,50,000 units,average cost was $2.60 per unit.What would Sparrow predict as its variable cost per unit?

A) $0.50
B) $1.55
C) $2.10
D) $2.60

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Question 43

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The cost estimating approach that involves "eye-balling" the closest fitting line to the data is the:

Lark,which uses the high-low method,had total costs of $25,000 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 $39,000.Lark would estimate fixed costs as:

The unit contribution margin:

Step costs are fixed over some range of activity and then increase like a variable cost.

Orchid Corp.has a selling price of $15,variable costs of $10 per unit,and fixed costs of $25,000.If Orchid sells 13,000 units,contribution margin will equal:

Jasmine Corp.has a selling price of $15,variable costs of $10 per unit,and fixed costs of $25,000.Contribution margin is $85,000.How many units did Jasmine sell?

Contribution margin plus variable cost per unit equals total sales revenue.

A scattergraph is a graph with:

A fixed cost will stay constant on a per unit basis as the volume increases.

A step cost:

Sugarloaf Enterprises has presented the following information for the past three months operations: a.Using the high-low method,calculate the fixed cost per month and variable cost per unit. b.What would total costs be for a month with 3,000 units produced?

Chilton,Inc.sold 11,000 units last year for $20 each.Variable costs per unit were $4 for direct materials,$1.50 for direct labor,and $2.50 for variable overhead.Fixed costs were $60,000 in manufacturing overhead and $40,000 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 2,000 units,by how much will profits increase?

Citrus,Inc.used the high-low method to estimate that its fixed costs are $210,000.At its low level of activity,100,000 units,average cost was $2.60 per unit.What would Citrus predict its average cost per unit to be when production is 200,000 units?

Flint Enterprises had the following cost and production information for May: Inventory increased by 2,000 units during May.What is Flint Enterprise's income under absorption costing?

Bronze Products has presented the following information for the past eight months operations: a.Using the high-low method,calculate the fixed cost per month and variable cost per unit. b.What would total costs be for a month with 5,000 units produced?

Regression analysis is a cost-estimating approach that uses ________ to find the cost line.

The contribution margin ratio is:

Profit will be the same under variable costing as under full absorption costing whenever: