Question : 81. Marcye Co. manufactures office furniture. During the most productive month : 1226890

 

 

81. Marcye Co. manufactures office furniture. During the most productive month of the year, 3,500 desks were manufactured at a total cost of $84,400. In its slowest month, the company made 1,100 desks at a cost of $46,000. Using the high-low method of cost estimation, total fixed costs are: A. $56,000B. $28,400C. $17,600D. cannot be determined from the data given

 

82. Given the following cost and activity observations for Bounty Company’s utilities, use the high-low method to calculate Bounty’ variable utilities costs per machine hour.

 

Cost

Machine Hours

March

$3,100

 

15,000

 

April

2,700

 

10,000

 

May

2,900

 

12,000

 

June

3,600

 

18,000

 

 

 

 

 

 

 A. $10.00B. $.67C. $.63D. $.11

 

83. Given the following cost and activity observations for Smithson Company’s utilities, use the high-low method to calculate Smithson’s fixed costs per month.  Round variable cost per unit to two decimal places in your calculations. 

 

Cost

Machine Hours

January

$52,200

 

20,000

 

February

75,000

 

29,000

 

March

57,000

 

22,000

 

April

64,000

 

24,500

 

 

 

 

 

 

 A. $1,600B. $2,530C. $22,800D. $50,600

 

84. Given the following cost and activity observations for Taco Company’s utilities, use the high-low method to calculate Taco’s variable utilities costs per machine hour. 

 

Cost

Machine Hours

May

$8,300

 

15,000

 

June

10,400

 

20,000

 

July

7,200

 

12,000

 

August

9,500

 

18,000

 

 

 

 

 

 

 A. $10.00B. $.60C. $.40D. $.52

 

85. Manley Co. manufactures office furniture. During the most productive month of the year, 4,500 desks were manufactured at a total cost of $86,625. In its slowest month, the company made 1,800 desks at a cost of $49,500. Using the high-low method of cost estimation, total fixed costs are: A. $61,875B. $33,875C. $24,750D. cannot be determined from the data given

 

86. Which of the following statements is true regarding fixed and variable costs? A. Both costs are constant when considered on a per unit basis.B. Both costs are constant when considered on a total basis.C. Fixed costs are constant in total, and variable costs are constant per unit.D. Variable costs are constant in total, and fixed costs vary in total.

 

87. As production increases, what would you expect to happen to fixed cost per unit? A. IncreaseB. DecreaseC. Remain the sameD. Either increase or decrease, depending on the variable costs

 

88. Knowing how costs behave is useful to management for all the following reasons except for A. predicting customer demand.B. predicting profits as sales and production volumes change.C. estimating costs.D. changing an existing product production.

 

89. The manufacturing cost of Prancer Industries for three months of the year are provided below: 

 

Total Cost

Production

April

$ 60,700

1,200 Units

May

80,920

1,800        

June

100,300

2,400        

 

 

 

Using the high-low method, the variable cost per unit, and the total fixed costs are: A. $32.30 per unit and $77,520 respectively.B. $33 per unit and $21,100 respectively.C. $32 per unit and $76,800 respectively.D. $32.30 per unit and $22,780 respectively.

 

90. As production increases, what should happen to the variable costs per unit? A. Stay the same.B. Increase.C. Decrease.D. Either increase or decrease, depending on the fixed costs.