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Exam 3: Cost Behaviour: Analysis and Use

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Question 31

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Anaconda Mining Company shipped 9,000 tons of copper concentrate for $450,000 in March and 11,000 tons for $549,000 in April.Use the high-low method to estimate the shipping costs for 12,000 tons to be shipped in May.

A) $548,780.
B) $549,020.
C) $594,000.
D) $598,500.FC = 450,000 - 9,000 * 49.50 = $4,500

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Question 32

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In order for a cost to be variable,it must vary with either units produced or units sold.

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Question 33

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The contribution approach to constructing an income statement emphasizes the functions of production,administration and sales.

What is the best estimate of the company's variable operating expenses per unit?

Which of the following should be the first step in the analysis of cost behaviour?

Reddy Company has the following cost formulas for overhead: Based on these cost formulas,what is the expected total overhead cost at 600 machine hours?

Suppose the sales for the third quarter was the equivalent of 1,000 units and that the fixed manufacturing and non-manufacturing costs were valid between the relevant range of 800 and 1,200 units.If Sorter Company had sold 100 additional units,it would have reported what amount of additional operating income?

The following information summarizes the company's cost structure Assume that all of the activity levels mentioned in this problem are within the relevant range. Required: Prepare a schedule showing predictions for the following items at the 40,000 unit level of activity: a)Total variable cost. b)Total fixed cost. c)Variable cost per unit. d)Fixed cost per unit.

Using the least squares regression method,the estimated variable lubrication cost per machine hour is closest to which of the following?

What is the variable cost for maintenance per machine hour?

Average maintenance costs are $1.50 per machine hour at an activity level of 8,000 machine hours and $1.20 per machine hour at an activity level of 13,000 machine hours.Assuming that this activity is within the relevant range,total expected maintenance cost for a budgeted activity level of 10,000 machine hours would be closest to which of the following?

(Appendix 3A)Below are cost and activity data for a particular cost over the last four periods.Your boss has asked you to analyze this cost so that management will have a better understanding of how this cost changes in response to changes in activity. Required: Using the least-squares regression method and the equations for a and b,estimate the cost formula for this cost.

The planning horizons for committed fixed costs and discretionary fixed costs are generally the same.

A mixed cost is partially variable and partially fixed.

A cost that is obtainable in large chunks and that increases or decreases only in response to fairly wide changes in the activity level is known as a step-variable cost.

The contribution approach to the income statement classifies costs by behaviour rather than by function.

Indirect costs,such as manufacturing overhead,are always fixed costs.

What is the expected contribution margin next month?

Which of the following assumptions is implicit in the simplified contribution approach income statement?

Given the cost formula Y = $17,500 + $4X,at what level of activity will total cost be $42,500?