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A mixed cost
is fixed over a wider range of activity than a step cost.
is a fixed cost over the relevant range and a variable cost everywhere else.
contains both fixed and variable components.
always increases on a per unit basis.
Bud uses the high-low method of estimating costs. Bud had total costs of $50,000 at its lowest level of activity, when 5,000 units were sold. When, at its highest level of activity, sales equaled 12,000 units, total costs were $78,000. Bud would estimate variable cost per unit as
Which of the following is a variable cost?
A cost that is $20,000 when production is 50,000, and $20,000 when production is 70,000.
A cost that is $20,000 when production is 50,000, and $28,000 when production is 70,000.
A cost that is $20,000 when production is 50,000, and $40,000 when production is 70,000.
A cost that is $40,000 when production is 50,000, and $40,000 when production is 70,000.
The per-unit amount of three different production costs for Jones, Inc., are as follows:
PRODUCTION COST A COST B COST C
20 000 $12.00 $15.00 $20.00
80 000 $12.00 $11.25 $5.00
What type of cost is each of these three costs?
Cost A is mixed, Cost B is variable, Cost C is mixed
Cost A is fixed, Cost B is mixed, Cost C is variable.
Cost A is fixed, Cost B is variable, Cost C is mixed.
Cost A is variable, Cost B is mixed, Cost C is fixed.
A graph of the relationship between total cost and activity level is called a
contribution margin graph
The high-low method uses cost and activity data from just two data points to establish the formula for a mixed cost.
The high-low method uses the highest and lowest costs regardless of whether they are from the data points with the highest and lowest activity levels.
Data concerning Nelson Company's activity for the first six months of the year appear below:
Machine Hours Electrical Cost
January $4000 $3,120
February 6,000 4,460
March 4,800 3,500
April 5,800 5,040
May 3,600 2,900
June 4,200 3,200
Required: Using the high-low method of analysis, estimate the variable
electrical cost per machine hour.
Consider the following data produced by a company over the last two years.
Activity level (000 units) Total production cost ($000)
20X1Q1 15 300
20X1 Q2 45 615
20X1 Q3 25 470
20X1 Q4 55 680
20X2 Q1 30 520
20X2 Q2 20 350
20X2 Q3 35 590
20X2 Q4 60 740
Using regression analysis calculate r2