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    Cost Behavior

    Uploaded by

    Lea Joaquin
    This document contains questions about cost behavior and cost estimation techniques like the high-low method. It tests understanding of key cost accounting concepts like dependent and independent variables, slope and constant of a cost function, and using the high-low method to estimate total costs at different activity levels. The questions provide data on costs, machine hours, labor hours, or other cost drivers and ask the examinee to calculate values like slope, constant, and estimated total costs.

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    Cost Behavior

    Uploaded by

    Lea Joaquin
    95 views5 pages
    This document contains questions about cost behavior and cost estimation techniques like the high-low method. It tests understanding of key cost accounting concepts like dependent and independent variables, slope and constant of a cost function, and using the high-low method to estimate total costs at different activity levels. The questions provide data on costs, machine hours, labor hours, or other cost drivers and ask the examinee to calculate values like slope, constant, and estimated total costs.

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    This document contains questions about cost behavior and cost estimation techniques like the high-low method. It tests understanding of key cost accounting concepts like dependent and independent variables, slope and constant of a cost function, and using the high-low method to estimate total costs at different activity levels. The questions provide data on costs, machine hours, labor hours, or other cost drivers and ask the examinee to calculate values like slope, constant, and estimated total costs.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    95 views5 pages

    Cost Behavior

    Uploaded by

    Lea Joaquin
    This document contains questions about cost behavior and cost estimation techniques like the high-low method. It tests understanding of key cost accounting concepts like dependent and independent variables, slope and constant of a cost function, and using the high-low method to estimate total costs at different activity levels. The questions provide data on costs, machine hours, labor hours, or other cost drivers and ask the examinee to calculate values like slope, constant, and estimated total costs.

    Copyright:

    © All Rights Reserved
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    of 5

    Cost Behavior

    1. The cost to be predicted is referred to as the:


    A) independent variable
    B) dependent variable
    C) cost driver
    D) regression

    2. The independent variable:


    A) is also referred to as the cost driver
    B) may also be called the cost-allocation base if referring to an indirect cost
    C) should have an economically plausible relationship with the dependent variable
    D) All of these answers are correct.

    3. When using the high-low method, the two observations used are the high and low observations of
    the:
    A) cost driver
    B) dependent variables
    C) slope coefficient
    D) residual term

    4. When using the high-low method, the denominator of the equation that determines the slope is
    the:
    A) dependent variable
    B) independent variable
    C) difference between the high and low observations of the cost driver
    D) difference between the high and low observations of the dependent variables

    5. The high-low method:


    A) easily handles estimating the relationship between the dependent variable and two or more
    independent variables
    B) is more accurate than the regression method
    C) calculates the slope coefficient using only two observed values within the relevant range
    D) uses the residual term to measure goodness of fit

    For numbers 6 to 8

    6. What is the slope coefficient per machine-hour?


    A) $56.66
    B) $0.10
    C) $40.00
    D) $50.00

    7. What is the constant for the estimating cost equation?


    A) $4,000
    B) $13,600
    C) $16,000
    D) $20,000
    8. What is the estimate of the total cost when 300 machine-hours are used?
    A) $4,000
    B) $8,000
    C) $12,000
    D) $16,000

    For numbers 9 to 11

    9. What is the slope coefficient per machine-hour?


    A) $250.00
    B) $25
    C) $20.00
    D) $200.00

    10. What is the constant for the estimating cost equation?


    A) $250,000
    B) $450,000
    C) $50,000
    D) $0

    11. What is the estimate of the total cost when 1,100 machine-hours are used?
    A) $250,000
    B) $270,000
    C) $300,000
    D) $400,000

    For numbers 12 to 14

    12. What is the slope coefficient per labor-hour?


    A) $4.67
    B) $3.76
    C) $2.40
    D) $0.42

    13. What is the constant?


    A) $34,000
    B) $24,000
    C) $10,000
    D) $83,500

    14. What is the estimate of total labor costs at Alice Company when 10,000 labor-hours are used?
    A) $17,000
    B) $41,000
    C) $21,167
    D) $27,000
    For numbers 15 to 16

    15. What is the cost function?


    A) y = $43,191 + $0.19X
    B) y = $4,875 + $4.28X
    C) y = $41,900 + $0.23X
    D) y = $2,430 + $4.28X

    16. What is the estimated total cost at an operating level of 8,000 hours?
    A) $43,740
    B) $36,670
    C) $46,875
    D) $37,125

    For numbers 17 to 18

    17. How would the cost function be stated?


    A) y = $440 + $1.12X
    B) y = $3,562.30 + $0.144X
    C) y = $107.20 + $1.12
    D) y = $7,850 + $0.132X

    18. What is the estimated total cost at an operating level of 5,000 units?
    A) $6,227.20
    B) $6,040.00
    C) $4,283.20
    D) $8,510.00
    For numbers 19 to

    19. How is the cost function stated?


    A) y = $26,672 + $1.84X
    B) y = $21,360 + $10.40
    C) y = $10,112 + $8.64X
    D) y = $3,600 + $10.40X

    20. What is the estimated total cost at an operating level of 2,850 hours?
    A) $25,692
    B) $33,240
    C) $32,016
    D) $34,736

    The managers of the production department have decided to use the production levels of 2011 and
    2014 as examples of the highest and lowest years of operating levels. Data for those years are as
    follows:

    21. What is the value of the slope?


    22. What is the value of the constant?

    23. Wimmer's Storage ran its freezer in February, a slow month, for 360 hours for a total cost of
    $57,600. In July, a peak month, the freezer ran for 720 hours for a total cost of $82,080. What is the
    estimated total cost at an operating level of 500 hours?

    For number 24:


    24. Using the high-low method and the information provided above, estimate the total cost at 36,000
    units of output.

    25. As part of his job as cost analyst, Max Thompson collected the following information concerning
    the operations of the Machining Department:

    If June's estimated machine-hours total 4,200, what are the total estimated costs of the Machining
    Department? (Use High-Low Method)

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