ch 5 b

13) In describing the cost formula equation, Y = a + bX, which of the following is correct: A) "Y" is the independent variable. B) "a" is the variable cost per unit. C) "a" and "b" are valid for all levels of activity. D) in the high-low method, "b" equals the change in cost divided by the change in activity.

d

17) Maintenance costs at a Straiton Corporation factory are listed below: Machine- Hours Maintenance Cost March 3,627 $ 54,384 April 3,588 $ 53,980 May 3,637 $ 54,453 June 3,638 $ 54,491 July 3,572 $ 53,843 August 3,611 $ 54,196 September 3,644 $ 54,550 October 3,609 $ 54,181 November 3,669 $ 54,767 Management believes that maintenance cost is a mixed cost that depends on machine-hours. Use the high-low method to estimate the variable and fixed components of this cost. Compute the variable component first and round off to the nearest whole cent. Compute the fixed component second and round off to the nearest whole dollar. These estimates would be closest to: A) $0.10 per machine-hour; $54,382 per month B) $15.00 per machine-hour; $54,316 per month C) $9.12 per machine-hour; $21,309 per month D) $9.53 per machine-hour; $19,801 per month

d

21) Supply costs at Coulthard Corporation's chain of gyms are listed below: Client- Visits Supply Cost March 12,855 $ 23,598 April 12,283 $ 23,278 May 13,104 $ 23,742 June 12,850 $ 23,607 July 12,493 $ 23,415 August 12,794 $ 23,562 September 12,686 $ 23,496 October 12,765 $ 23,541 November 13,018 $ 23,687 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: A) $1.85 per client-visit; $23,547 per month B) $1.77 per client-visit; $557 per month C) $0.55 per client-visit; $16,579 per month D) $0.57 per client-visit; $16,273 per month

d

25) A soft drink bottler incurred the following factory utility cost: $9,246 for 5,200 cases bottled and $8,997 for 4,900 cases bottled. Factory utility cost is a mixed cost containing both fixed and variable components. The variable factory utility cost per case bottled is closest to: A) $1.81 B) $1.78 C) $1.84 D) $0.83

d

26) Andom Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product. Production volume 1,000 units 2,000 units Direct materials $ 15.20 per unit $ 15.20 per unit Direct labor $ 30.50 per unit $ 30.50 per unit Manufacturing overhead $ 54.10 per unit $ 37.40 per unit The best estimate of the total monthly fixed manufacturing cost is: A) $74,800 B) $54,100 C) $99,800 D) $33,400

d

29) The following data pertains to activity and utility cost for two recent periods: Activity level (units) 15,000 12,000 Utility cost $ 24,750 $ 21,000 Utility cost is a mixed cost with both fixed and variable components. Using the high-low method, the cost formula for utility cost is: A) Y = $1.65 X B) Y = $1.75 X C) Y = $3,750 + $1.75 X D) Y = $6,000 + $1.25 X

d

30) Dacosta Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. Production volume 6,000 units 7,000 units Direct materials $ 369,600 $ 431,200 Direct labor $ 309,600 $ 361,200 Manufacturing overhead $ 919,800 $ 937,300 The best estimate of the total monthly fixed manufacturing cost is: A) $1,599,000 B) $1,664,350 C) $814,800 D) $1,729,700

d

32) Your boss would like you to estimate the fixed and variable components of a particular cost. Actual data for this cost over four recent periods appear below. Activity Cost Period 1 22 $ 121 Period 2 28 $ 132 Period 3 21 $ 117 Period 4 29 $ 134 Using the least-squares regression method, what is the cost formula for this cost? A) Y = $75.89 + $1.02X B) Y = $72.64 + $2.13X C) Y = $ 0.00 + $5.04X D) Y = $75.50 + $2.02X

d

35) One of Matthew Corporation's competitors has learned that Matthew has a total expense per unit of $1.50 at the 15,000 unit level of activity and total expense per unit of $1.45 at the 20,000 unit level of activity. Assume that the relevant range includes all of the activity levels mentioned in this problem. What would be the competitor's prediction of total fixed cost per period? A) $22,500 B) $28,000 C) $13,600 D) $ 3,000

d

40) Wilson Corporation's activity for the first six of the current year is as follows: Machine-Hours Electrical Cost January 2,000 $ 1,560 February 3,000 $ 2,200 March 2,400 $ 1,750 April 1,900 $ 1,520 May 1,800 $ 1,480 June 2,100 $ 1,600 Using the high-low method, the variable cost per machine hour would be: A) $0.67 B) $0.64 C) $0.40 D) $0.60

d

41) Wilson Corporation's activity for the first six of the current year is as follows: Machine-Hours Electrical Cost January 2,000 $ 1,560 February 3,000 $ 2,200 March 2,400 $ 1,750 April 1,900 $ 1,520 May 1,800 $ 1,480 June 2,100 $ 1,600 Using the high-low method, the fixed portion of the electrical cost each month would be: A) $400 B) $760 C) $280 D) $190

a

14) Larker Brothers, Inc., used the high-low method to derive its cost formula for electrical power cost. According to the cost formula, the variable cost per unit of activity is $4 per machine-hour. Total electrical power cost at the high level of activity was $19,200 and at the low level of activity was $18,400. If the high level of activity was 3,300 machine hours, then the low level of activity was: A) 3,100 machine hours B) 3,200 machine hours C) 3,000 machine hours D) 2,900 machine hours

a

15) Gamach 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 $104.50 per unit. Sales volume (units) 5,000 6,000 Cost of sales $ 295,000 $ 354,000 Selling and administrative costs $ 186,000 $ 202,800 The best estimate of the total monthly fixed cost is: A) $102,000 B) $518,900 C) $556,800 D) $481,000

a

16) Hara 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 $159.80 per unit. Sales volume (units) 6,000 7,000 Cost of sales $ 363,600 $ 424,200 Selling and administrative costs $ 531,000 $ 547,400 The best estimate of the total variable cost per unit is: A) $77.00 B) $60.60 C) $149.10 D) $138.80

a

20) Bakan Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product. Production volume 3,000 units 4,000 units Direct materials $ 86.30 per unit $ 86.30 per unit Direct labor $ 26.40 per unit $ 26.40 per unit Manufacturing overhead $ 75.90 per unit $ 60.40 per unit The best estimate of the total variable manufacturing cost per unit is: A) $126.60 B) $86.30 C) $13.90 D) $112.70

a

22) Electrical costs at one of Finfrock Corporation's factories are listed below: Machine- Hours Electrical Cost March 3,642 $ 40,537 April 3,616 $ 40,319 May 3,667 $ 40,706 June 3,634 $ 40,462 July 3,665 $ 40,703 August 3,659 $ 40,680 September 3,644 $ 40,547 October 3,612 $ 40,268 November 3,624 $ 40,364 Management believes that electrical cost is a mixed cost that depends on machine-hours. 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: A) $7.96 per machine-hour; $11,517 per month B) $11.13 per machine-hour; $40,510 per month C) $9.61 per machine-hour; $5,533 per month D) $0.13 per machine-hour; $40,246 per month

a

28) Farac Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. Production volume 4,000 units 5,000 units Direct materials $ 208,800 $ 261,000 Direct labor $ 119,200 $ 149,000 Manufacturing overhead $ 319,200 $ 329,500 The best estimate of the total cost to manufacture 4,300 units is closest to: A) $674,890 B) $665,855 C) $695,740 D) $635,970

a

31) Seifer Inc.'s inspection costs are listed below: Units Produced Inspection Costs April 119 $ 8,558 May 117 $ 8,535 June 113 $ 8,415 July 125 $ 8,736 August 152 $ 9,357 September 108 $ 8,320 October 120 $ 8,603 November 192 $ 10,337 Management believes that inspection cost is a mixed cost that depends on the number of units produced. Using the least-squares regression method, the estimates of the variable and fixed components of inspection cost would be closest to: A) $24.08 per unit plus $5,709 per month B) $67.74 per unit plus $8,858 per month C) $24.37 per unit plus $5,658 per month D) $24.01 per unit plus $5,727 per month

a

34) One of Matthew Corporation's competitors has learned that Matthew has a total expense per unit of $1.50 at the 15,000 unit level of activity and total expense per unit of $1.45 at the 20,000 unit level of activity. Assume that the relevant range includes all of the activity levels mentioned in this problem. What would be the competitor's prediction of variable cost per unit for Matthew Corporation? A) $1.30 B) $0.77 C) $1.50 D) $1.45

a

38) 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: Production volume 2,000 units 4,000 units Direct materials $ 88.40 per unit $ 88.40 per unit Direct labor $ 20.60 per unit $ 20.60 per unit Manufacturing overhead $ 86.90 per unit $ 55.30 per unit The best estimate of the total variable manufacturing cost per unit is: A) $132.70 B) $88.40 C) $23.70 D) $109.00

a

42) Inspection costs at one of Ratulowski Corporation's factories are listed below: Units Produced Inspection Costs April 777 $ 10,176 May 807 $ 10,404 June 798 $ 10,355 July 835 $ 10,665 August 822 $ 10,542 September 795 $ 10,313 October 805 $ 10,409 November 853 $ 10,795 December 796 $ 10,310 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: A) $8.14 B) $7.05 C) $0.12 D) $12.89

a

44) Compton Corporation is a wholesale distributor of educational CD-ROMs. The company's records indicate the following: This Year Last Year Units Sold 250,000 200,000 Sales $ 1,250,000 $ 1,000,000 Cost of goods sold 875,000 700,000 Gross margin 375,000 300,000 Selling and administrative expenses 222,000 210,000 Net operating income $ 153,000 $ 90,000 Using the high-low method of analysis, what are the company's estimated variable selling and administrative expenses per unit? A) $0.24 B) $4.17 C) $0.88 D) $0.96

a

46) Compton Corporation is a wholesale distributor of educational CD-ROMs. The company's records indicate the following: This Year Last Year Units Sold 250,000 200,000 Sales $ 1,250,000 $ 1,000,000 Cost of goods sold 875,000 700,000 Gross margin 375,000 300,000 Selling and administrative expenses 222,000 210,000 Net operating income $ 153,000 $ 90,000 What is the company's contribution margin for this year? A) $315,000 B) $(667,500) C) $375,000 D) $213,000

a

47) 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: A) $ 8.00 per setup B) $12.44 per setup C) $ 4.00 per setup D) $14.66 per setup

a

51) Babuca Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. Production volume 5,000 units 6,000 units Direct materials $ 103,500 $ 124,200 Direct labor $ 282,500 $ 339,000 Manufacturing overhead $ 667,000 $ 679,800 The best estimate of the total variable manufacturing cost per unit is: A) $90.00 B) $77.20 C) $12.80 D) $20.70

a

55) Electrical costs at one of Rome Corporation's factories are listed below: Machine-Hours Electrical Cost March 458 $ 1,007 April 423 $ 934 May 440 $ 979 June 409 $ 902 July 426 $ 952 August 372 $ 822 September 414 $ 926 October 431 $ 949 November 468 $ 1,025 Management believes that electrical cost is a mixed cost that depends on machine-hours. Using the high-low method, the estimate of the variable component of electrical cost per machine-hour is closest to: A) $2.11 B) $1.80 C) $2.21 D) $0.47

a

64) Jorgenson Corporation has provided the following data for the first five months of the year: Machine Hours Lubrication Cost January 240 $ 1,500 February 320 $ 1,600 March 400 $ 1,740 April 300 $ 1,580 May 340 $ 1,680 Using the high-low method of analysis, the estimated variable lubrication cost per machine hour is closest to: A) $1.50 B) $1.25 C) $0.67 D) $1.40

a

18) 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. Sales volume (units) 5,000 6,000 Cost of sales $ 315,500 $ 378,600 Selling and administrative costs $ 162,500 $ 177,600 The best estimate of the total contribution margin when 5,300 units are sold is: A) $56,710 B) $133,560 C) $41,340 D) $213,590

b

19) Edal Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. Production volume 5,000 units 6,000 units Direct materials $ 266,500 $ 319,800 Direct labor $ 52,000 $ 62,400 Manufacturing overhead $ 748,500 $ 769,200 The best estimate of the total variable manufacturing cost per unit is: A) $63.70 B) $84.40 C) $53.30 D) $20.70

b

23) Deidoro Company has provided the following data for maintenance cost: Prior Year Current Year Machine hours 8,000 10,000 Maintenance cost $ 26,600 $ 31,000 Maintenance cost is a mixed cost with variable and fixed components. The fixed and variable components of maintenance cost are closest to: A) $26,600 per year; $3.10 per machine hour B) $9,000 per year; $2.20 per machine hour C) $9,000 per year; $3.10 per machine hour D) $26,600 per year; $2.20 per machine hour

b

27) The following data pertains to activity and maintenance cost for two recent periods: Activity level (units) 8,000 7,000 Maintenance cost $ 34,000 $ 31,500 Maintenance cost is a mixed cost with both fixed and variable components. Using the high-low method, the cost formula for maintenance cost is: A) Y = $4.25 X B) Y = $14,000 + $2.50 X C) Y = $2,500 + $4.25 X D) Y = $4.50 X

b

33) The management of Hamano Corporation would like for you to analyze their repair costs, which are listed below: Machine- Hours Repair Costs April 4,459 $ 98,523 May 4,426 $ 98,296 June 4,493 $ 98,781 July 4,417 $ 98,207 August 4,432 $ 98,349 September 4,446 $ 98,420 October 4,489 $ 98,749 November 4,475 $ 98,654 Management believes that repair cost is a mixed cost that depends on the number of machine-hours. Using the least-squares regression method, the estimates of the variable and fixed components of repair cost would be closest to: A) $22.11 per machine-hour plus $98,497 per month B) $7.37 per machine-hour plus $65,670 per month C) $8.19 per machine-hour plus $62,015 per month D) $7.55 per machine-hour plus $64,859 per month

b

36) One of Matthew Corporation's competitors has learned that Matthew has a total expense per unit of $1.50 at the 15,000 unit level of activity and total expense per unit of $1.45 at the 20,000 unit level of activity. Assume that the relevant range includes all of the activity levels mentioned in this problem. What would be the competitor's prediction of total expected costs at 18,000 units? A) $16,860 B) $26,400 C) $29,100 D) $30,000

b

48) 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 total fixed overhead costs for Blaine Corporation are most likely closest to: A) $112,000 B) $120,000 C) $ 40,000 D) $ 80,000

b

53) Wuensch Inc., an escrow agent, has provided the following data concerning its office expenses: Escrows Completed Office Expenses April 53 $ 7,427 May 94 $ 9,201 June 37 $ 6,769 July 87 $ 8,902 August 40 $ 6,875 September 38 $ 6,797 October 82 $ 8,681 November 35 $ 6,678 December 62 $ 7,836 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 variable component of office expense per escrow completed is closest to: A) $45.44 B) $42.76 C) $88.22 D) $131.00

b

57) Callander 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 $140.50 per unit. Sales volume (units) 6,000 7,000 Cost of sales $ 497,400 $ 580,300 Selling and administrative costs $ 273,600 $ 294,700 The best estimate of the total monthly fixed cost is: A) $875,000 B) $147,000 C) $771,000 D) $823,000

b

61) 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: Machine- Hours Overhead Cost Jan 150,000 $ 339,000 Feb 140,000 $ 339,000 Mar 160,000 $ 350,000 Apr 130,000 $ 319,500 May 170,000 $ 362,500 Jun 200,000 $ 400,000 Assume that the relevant range includes all of the activity levels mentioned in this problem. What is Casablanca's independent variable? A) the year B) the machine hours C) the total overhead cost D) the relevant range

b

62) Hiss Corporation's activity for the last six months is as follows: Machine Hours Electrical Cost July 2,000 $ 1,560 August 3,000 $ 2,230 September 2,400 $ 1,750 October 1,900 $ 1,520 November 1,800 $ 1,450 December 2,100 $ 1,600 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

b

65) Jorgenson Corporation has provided the following data for the first five months of the year: Machine Hours Lubrication Cost January 240 $ 1,500 February 320 $ 1,600 March 400 $ 1,740 April 300 $ 1,580 May 340 $ 1,680 Using the high-low method of analysis, the estimated monthly fixed component of lubrication cost is closest to: A) $1,120 B) $1,140 C) $1,170 D) $1,130

b

66) Jorgenson Corporation has provided the following data for the first five months of the year: Machine- Hours Lubrication Cost January 240 $ 1,500 February 320 $ 1,600 March 400 $ 1,740 April 300 $ 1,580 May 340 $ 1,680 Using the least-squares regression method of analysis, the estimated variable lubrication cost per machine hour is closest to: A) $0.80 B) $1.56 C) $1.40 D) $1.28

b

68) Lacourse Inc.'s inspection costs are listed below: Units Produced Inspection Costs January 647 $ 15,309 February 724 $ 15,965 March 694 $ 15,715 April 645 $ 15,271 May 696 $ 15,745 June 665 $ 15,442 July 718 $ 15,933 August 699 $ 15,739 Management believes that inspection cost is a mixed cost that depends on units produced. Using the least-squares regression method, the estimate of the variable component of inspection cost per unit produced is closest to: A) $22.80 B) $8.82 C) $8.27 D) $8.78

b

71) Recent maintenance costs of Divers Corporation are listed below: Machine-Hours Maintenance Costs February 527 $ 5,144 March 499 $ 5,033 April 542 $ 5,220 May 541 $ 5,196 June 489 $ 4,973 July 543 $ 5,200 August 558 $ 5,288 September 513 $ 5,060 Management believes that maintenance cost is a mixed cost that depends on machine-hours. Using the least-squares regression method, the estimate of the fixed component of maintenance cost per month is closest to: A) $5,139 B) $2,806 C) $4,973 D) $2,738

b

24) Caraco Corporation has provided the following production and average cost data for two levels of monthly production volume. The company produces a single product. Production volume 7,000 units 8,000 units Direct materials $ 87.40 per unit $ 87.40 per unit Direct labor $ 20.20 per unit $ 20.20 per unit Manufacturing overhead $ 101.50 per unit $ 90.80 per unit The best estimate of the total cost to manufacture 7,300 units is closest to: A) $1,487,375 B) $1,448,320 C) $1,500,750 D) $1,526,430

c

43) Inspection costs at one of Ratulowski Corporation's factories are listed below: Units Produced Inspection Costs April 777 $ 10,176 May 807 $ 10,404 June 798 $ 10,355 July 835 $ 10,665 August 822 $ 10,542 September 795 $ 10,313 October 805 $ 10,409 November 853 $ 10,795 December 796 $ 10,310 Management believes that inspection cost is a mixed cost that depends on units produced. Using the high-low method, the estimate of the fixed component of inspection cost per month is closest to: A) $10,344 B) $10,441 C) $3,852 D) $10,176

c

52) Babuca Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. Production volume 5,000 units 6,000 units Direct materials $ 103,500 $ 124,200 Direct labor $ 282,500 $ 339,000 Manufacturing overhead $ 667,000 $ 679,800 The best estimate of the total cost to manufacture 5,300 units is closest to: A) $1,116,180 B) $1,062,915 C) $1,080,000 D) $1,009,650

c

56) Electrical costs at one of Rome Corporation's factories are listed below: Machine-Hours Electrical Cost March 458 $ 1,007 April 423 $ 934 May 440 $ 979 June 409 $ 902 July 426 $ 952 August 372 $ 822 September 414 $ 926 October 431 $ 949 November 468 $ 1,025 Management believes that electrical cost is a mixed cost that depends on machine-hours Using the high-low method, the estimate of the fixed component of electrical cost per month is closest to: A) $822 B) $743 C) $38 D) $944

c

58) Callander 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 $140.50 per unit. Sales volume (units) 6,000 7,000 Cost of sales $ 497,400 $ 580,300 Selling and administrative costs $ 273,600 $ 294,700 The best estimate of the total variable cost per unit is: A) $82.90 B) $128.50 C) $104.00 D) $125.00

c

60) 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: Machine-Hours Overhead Cost Jan 150,000 $ 339,000 Feb 140,000 $ 339,000 Mar 160,000 $ 350,000 Apr 130,000 $ 319,500 May 170,000 $ 362,500 Jun 200,000 $ 400,000 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? A) $212,750 B) $359,750 C) $382,750 D) $381,700

c

63) Hiss Corporation's activity for the last six months is as follows: Machine Hours Electrical Cost July 2,000 $ 1,560 August 3,000 $ 2,230 September 2,400 $ 1,750 October 1,900 $ 1,520 November 1,800 $ 1,450 December 2,100 $ 1,600 Using the high-low method of analysis, the estimated fixed cost per month for electricity is closest to: A) $260 B) $235 C) $280 D) $800

c

67) Jorgenson Corporation has provided the following data for the first five months of the year: Machine-Hours Lubrication Cost January 240 $ 1,500 February 320 $ 1,600 March 400 $ 1,740 April 300 $ 1,580 May 340 $ 1,680 Using the least-squares regression method of analysis, the estimated monthly fixed component of lubrication cost is closest to: A) $1,050 B) $1,060 C) $1,121 D) $1,144

c

69) Lacourse Inc.'s inspection costs are listed below: Units Produced Inspection Costs January 647 $ 15,309 February 724 $ 15,965 March 694 $ 15,715 April 645 $ 15,271 May 696 $ 15,745 June 665 $ 15,442 July 718 $ 15,933 August 699 $ 15,739 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: A) $9,608 B) $15,640 C) $9,587 D) $15,271

c

70) Recent maintenance costs of Divers Corporation are listed below: Machine-Hours Maintenance Costs February 527 $ 5,144 March 499 $ 5,033 April 542 $ 5,220 May 541 $ 5,196 June 489 $ 4,973 July 543 $ 5,200 August 558 $ 5,288 September 513 $ 5,060 Management believes that maintenance cost is a mixed cost that depends on machine-hours. Using the least-squares regression method, the estimate of the variable component of maintenance cost per machine-hour is closest to: A) $9.76 B) $6.00 C) $4.43 D) $4.57

c

37) 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: Production volume 2,000 units 4,000 units Direct materials $ 88.40 per unit $ 88.40 per unit Direct labor $ 20.60 per unit $ 20.60 per unit Manufacturing overhead $ 86.90 per unit $ 55.30 per unit The best estimate of the total monthly fixed manufacturing cost is: A) $221,200 B) $391,800 C) $173,800 D) $126,400

d

39) 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: Production volume 2,000 units 4,000 units Direct materials $ 88.40 per unit $ 88.40 per unit Direct labor $ 20.60 per unit $ 20.60 per unit Manufacturing overhead $ 86.90 per unit $ 55.30 per unit The best estimate of the total cost to manufacture 2,200 units is closest to: A) $396,220 B) $430,980 C) $361,460 D) $418,340

d

45) Compton Corporation is a wholesale distributor of educational CD-ROMs. The company's records indicate the following: This Year Last Year Units Sold 250,000 200,000 Sales $ 1,250,000 $ 1,000,000 Cost of goods sold 875,000 700,000 Gross margin 375,000 300,000 Selling and administrative expenses 222,000 210,000 Net operating income $ 153,000 $ 90,000 Using the high-low method of analysis, what are the company's estimated total fixed selling and administrative expenses per year? A) $60,000 B) $174,000 C) $150,000 D) $162,000

d

49) 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. If 7,800 setups are projected for the next period, total expected overhead cost would be closest to: A) $156,000 B) $236,000 C) $214,400 D) $276,000

d

50) Babuca Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. Production volume 5,000 units 6,000 units Direct materials $ 103,500 $ 124,200 Direct labor $ 282,500 $ 339,000 Manufacturing overhead $ 667,000 $ 679,800 The best estimate of the total monthly fixed manufacturing cost is: A) $1,098,000 B) $1,053,000 C) $1,143,000 D) $603,000

d

54) Wuensch Inc., an escrow agent, has provided the following data concerning its office expenses: Escrows Completed Office Expenses April 53 $ 7,427 May 94 $ 9,201 June 37 $ 6,769 July 87 $ 8,902 August 40 $ 6,875 September 38 $ 6,797 October 82 $ 8,681 November 35 $ 6,678 December 62 $ 7,836 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: A) $7,685 B) $7,182 C) $6,678 D) $5,182

d

59) Callander 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 $140.50 per unit. Sales volume (units) 6,000 7,000 Cost of sales $ 497,400 $ 580,300 Selling and administrative costs $ 273,600 $ 294,700 The best estimate of the total contribution margin when 6,300 units are sold is: A) $75,600 B) $97,650 C) $362,880 D) $229,950

d