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Exam 13: Analyzing Mixed Costs

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Question 21

Multiple Choice

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Hiss Corporation's activity for the last six months is as follows: Using the high-low method of analysis, the estimated variable cost per machine hour for electricity is closest to:

A) $0.40
B) $0.65
C) $0.70
D) $0.67

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

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Question 22

Multiple Choice

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Wilson Corporation's activity for the first six of the current year is as follows: Using the high-low method, the fixed portion of the electrical cost each month would be: (Round your intermediate calculations to 2 decimal places.)

A) $400
B) $760
C) $280
D) $190

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

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Question 23

Multiple Choice

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Wilson Corporation's activity for the first six of the current year is as follows: Using the high-low method, the variable cost per machine hour would be:

Lacourse Inc.'s inspection costs are listed below: Management believes that inspection cost is a mixed cost that depends on units produced. Using the least-squares regression method, the estimate of the fixed component of inspection cost per month is closest to:

Bakan Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product. The best estimate of the total variable manufacturing cost per unit is: (Round your intermediate calculations to 2 decimal places.)

The following production and average cost data for two levels of monthly production volume have been supplied by a company that produces a single product: The best estimate of the total monthly fixed manufacturing cost is: (Round your intermediate calculations to 2 decimal places.)

Farac Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. The best estimate of the total cost to manufacture 4,300 units is closest to: (Round your intermediate calculations to 2 decimal places.)

Least-squares regression selects the values for the intercept and slope of a straight line that minimize the sum of the errors.

Managers can use a variety of methods to estimate the fixed and variable components of a mixed cost. In account analysis, an account is classified as either variable or fixed based on the analyst's prior knowledge of how the cost in the account behaves.

Jorgenson Corporation has provided the following data for the first five months of the year: Using the high-low method of analysis, the estimated variable lubrication cost per machine hour is closest to:

Supply costs at Coulthard Corporation's chain of gyms are listed below: Management believes that supply cost is a mixed cost that depends on client-visits. Use the high-low method to estimate the variable and fixed components of this cost. Compute the variable component first, rounding off to the nearest whole cent. Then compute the fixed component, rounding off to the nearest whole dollar. Those estimates are closest to: (Round your intermediate calculations to 2 decimal places.)

Hiss Corporation's activity for the last six months is as follows: Using the high-low method of analysis, the estimated fixed cost per month for electricity is closest to: (Round your intermediate calculations to 2 decimal places.)

Caraco Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product. The best estimate of the total cost to manufacture 7,300 units is closest to: (Round your intermediate calculations to 2 decimal places.)

The management of Casablanca Manufacturing Corporation believes that machine-hours is an appropriate measure of activity for overhead cost. Shown below are machine-hours and total overhead costs for the past six months: Assume that the relevant range includes all of the activity levels mentioned in this problem. If Casablanca expects to incur 185,000 machine hours next month, what will the estimated total overhead cost be using the high-low method? (Round your intermediate calculations to 2 decimal places.)

The Blaine Corporation is a highly automated manufacturer. At an activity level of 6,000 machine setups, total overhead costs equal $240,000. Of this amount, depreciation totals $80,000 (all fixed) and lubrication totals $72,000 (all variable) . The remaining $88,000 of the total overhead cost consists of utility cost (mixed) . At an activity level of 9,000 setups, utility cost totals $112,000. Assume that the relevant range includes all of the activity levels mentioned in this problem. The variable cost per setup for utilities is most likely closest to:

Inspection costs at one of Ratulowski Corporation's factories are listed below: Management believes that inspection cost is a mixed cost that depends on units produced. Using the high-low method, the estimate of the variable component of inspection cost per unit produced is closest to:

Jorgenson Corporation has provided the following data for the first five months of the year: $\begin{array}{lcc} & \text { Machine Hours } & \begin{array}{c}\text { Lubrication } \\\text { Cost }\end{array} \\\text { January } & 240 & \$ 1,500 \\\text { February } & 320 & \$ 1,600 \\\text { March } & 400 & \$ 1,740 \\\text { April } & 300 & \$ 1,580 \\\text { May } & 340 & \$ 1,680\end{array}$ Using the high-low method of analysis, the estimated monthly fixed component of lubrication cost is closest to: (Round your intermediate calculations to 2 decimal places.)

Wuensch Inc., an escrow agent, has provided the following data concerning its office expenses: Management believes that office expense is a mixed cost that depends on the number of escrows completed. Note: Real estate purchases usually involve the services of an escrow agent that holds funds and prepares documents to complete the transaction. Using the high-low method, the estimate of the fixed component of office expense per month is closest to: (Round your intermediate calculations to 2 decimal places.)

Iacob Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $103.40 per unit. The best estimate of the total contribution margin when 5,300 units are sold is: (Round your intermediate calculations to 2 decimal places.)

Babuca Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. The best estimate of the total monthly fixed manufacturing cost is: (Round your intermediate calculations to 2 decimal places.)