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Exam 5: Cost Behavior and Estimation

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Question 51

Multiple Choice

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Star, Inc. used Excel to run a least-squares regression analysis, which resulted in the following output: What is Star's variable cost per unit?

A) $0.92
B) $2.84
C) $11.57
D) $12.55

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Question 52

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Chill Out Novelties sells ice cream bars from a kiosk near campus. Fixed costs are $200 per week and the variable cost is $0.50 per ice cream bar. Complete the following table for the levels of ice cream bars sold per week. Round your answers to two decimal places.

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Question 53

Multiple Choice

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Star, Inc. used Excel to run a least-squares regression analysis, which resulted in the following output: What total cost would Star predict for a month in which production is 2,000 units?

A cost driver:

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

Harbor Images has collected the following cost data for various levels of activity: a. Using the high-low method, determine the variable cost per image created and the total fixed cost. b. Estimate the total costs when 5,500 images are created.

Star, Inc. used Excel to run a least-squares regression analysis, which resulted in the following output: What is Star's total fixed cost?

Firms may choose to use absorption costing or variable costing for external financial reporting purposes

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

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

A mixed cost has:

Variable costing uses a contribution margin income statement

Jasper Enterprises had the following cost and production information for April: What is Jasper Enterprise's income under absorption costing?

Mohave, Inc. produces approximately 4,000 units per month, and it places a quality assurance logo on each of its units. To use this logo, it must pay the quality assurance firm $5,000 per month plus $1 per unit. The cost to Mohave of using the quality assurance logo would be a:

Sage, Inc. used Excel to run a least-squares regression analysis, which resulted in the following output: a. What is Sage's total fixed cost? b. What is Sage's variable cost per unit? c. What total cost would Sage predict for a month in which they sold 10,000 units?

A mixed cost:

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.

Laurel Company sold 500 units for $450 each. Variable costs were $280 per unit, and total fixed expenses were $53,000. Prepare a contribution margin income statement.

Acme Company sold 900 units for $110 each. Variable costs were $75 per unit and total fixed expenses were $22,000. Prepare a contribution margin income statement.

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