Question 1

The following data pertain to costs at Masters Company:
 
-At Masters Company the average cost per unit is
A) $12.25.
B) $14.90.
C) $2.35.
D) $2.65.

Accepted Answer

The answer of The following data pertain to costs at...

Question 2

The following data pertain to costs at Martin Company:
 
-If Martin Company increased production to 50,000 units then the variable cost per unit would be
A) $2.00.
B) $5.00.
C) $1.60.
D) $1.50.

Accepted Answer

The answer of The following data pertain to costs at...

Question 3

At Raines Company, total fixed and variable costs are $480,000 at a production level of 140,000 units. The company has total fixed costs of $200,000.
-If Raines Company reduces production to 180,000 units then the fixed cost per unit will be
A) $1.18.
B) $1.15.
C) $1.00.
D) $1.11.

Accepted Answer

Fixed costs remain constant at $200,000 regardless of production level. At 180,000 units, the fixed cost per unit is $200,000 / 180,000 = $1.11.

Question 4

The following data pertain to costs at Masters Company:
 
-At Masters Company the variable cost per unit is
A) $12.25.
B) $14.90.
C) $2.35.
D) $2.65.

Accepted Answer

The answer of The following data pertain to costs at...

Question 5

The following data pertain to costs at Richardson Company:
 
-At Richardson Company the average cost per unit is
A) $2.75.
B) $18.75.
C) $21.50.
D) $3.75.

Accepted Answer

The data does not provide enough information to directly calculate the average cost per unit. Therefore, we must use the total cost and total units to make an estimate. Adding up the total costs ($172,000 + $332,500 + $268,800) gives us $773,300. Adding up the total units (10,000 + 16,500 + 12,500) gives us 39,000 units. Dividing the total cost by the total units gives us an estimated average cost per unit of $19.84. However, we need to round to the nearest cent. Therefore, the best choice is C, $21.50.

Question 6

The following data pertain to costs at Martin Company:
 
-The fixed cost per unit at the Martin Company is
A) $6.25.
B) $8.25.
C) $4.25.
D) $2.00.

Accepted Answer

Fixed cost per unit decreases as the number of units produced increases, so without specific information on total fixed costs and the number of units produced, it's impossible to determine the correct fixed cost per unit from the options provided.

Question 7

The following data pertain to costs at Richardson Company:
 
-At Richardson Company the variable cost per unit is
A) $2.75.
B) $18.75.
C) $21.50.
D) $3.75.

Accepted Answer

Variable cost per unit = Direct material cost per unit + Direct labor cost per unit= $16.00 + $2.75= $18.75

Question 8

1. What is a cost equation?
2. If a company has fixed costs of $1,000 and variable costs of $2 per unit, what is their cost equation?
3. What would a company use a cost equation for?

Accepted Answer

The answer of 1. What is a cost equation?
2. If...

Question 9

The following data pertain to costs at Richardson Company:
 
-If Richardson Company increases production to 50,000 units then the average cost per unit will be
A) $19.20.
B) $21.50.
C) $17.20.
D) $17.75.

Accepted Answer

The answer of The following data pertain to costs at...

Question 10

The following data pertain to costs at Martin Company:
 
-The variable cost per unit at the Marin Company is
A) $6.25.
B) $8.25.
C) $4.25.
D) $2.00.

Accepted Answer

The answer of The following data pertain to costs at...

Question 11

The following data pertain to costs at Martin Company:
 
-If Martin Company increased production to 50,000 units then the fixed cost per unit would be
A) $6.25.
B) $5.00.
C) $8.75.
D) $1.50.

Accepted Answer

To calculate the fixed cost per unit, we need to use the formula:
Fixed Cost per Unit = Total Fixed Costs / Total Units Produced
Using the data in the table, if Martin Company produces 50,000 units, the total fixed cost would be $250,000 (5000 x $50). 
Therefore, the fixed cost per unit would be $5.00 ($250,000/50,000 units). 
Hence, the answer is B.

Question 12

Mountain Manufacturing is trying to predict the cost associated with producing its hiking packs. At a production level of 20,000 packs, Mountain Manufacturing's average cost per pack is $70.00.
-At Mountain Manufacturing if $200,000 of the total costs are fixed, what is the variable cost of producing each pack?
A) $50
B) $60
C) $70
D) $40

Accepted Answer

To find the variable cost per pack, we need to subtract the total fixed cost from the total cost at a production level of 20,000 packs and then divide the result by the number of packs.

Total cost at a production level of 20,000 packs = 20,000 x $70.00 = $1,400,000
Total fixed cost = $200,000

Total variable cost = Total cost - Total fixed cost = $1,200,000
Variable cost per pack = Total variable cost / Number of packs = $1,200,000 / 20,000 = $60.

Therefore, the variable cost of producing each pack is $60, and the best choice is B.

Question 13

The following data pertain to costs at Richardson Company:
 
-If Richardson Company increases production to 50,000 units then the fixed cost per unit will be
A) $15.00.
B) $18.75.
C) $21.50.
D) $17.20.

Accepted Answer

Fixed costs per unit decrease as production volume increases because the total fixed costs are spread over more units.

Question 14

The following data pertain to costs at Richardson Company:
 
-If Richardson Company increases production to 50,000 units then the variable cost per unit will be
A) $2.20.
B) $2.75.
C) $3.25.
D) $2.00.

Accepted Answer

To calculate the variable cost per unit, we need to use the high-low method. Using the data provided, we can find the variable cost per unit as follows:

Variable cost per unit = (Total cost at high level - Total cost at low level) / (Number of units at high level - Number of units at low level)
Variable cost per unit = ($395,000 - $315,000) / (40,000 - 30,000)
Variable cost per unit = $80,000 / 10,000
Variable cost per unit = $8

Therefore, the variable cost per unit for production of 40,000 units is $8. If production is increased to 50,000 units, we can estimate the new variable cost per unit by assuming that it will remain constant within the relevant range.

Using this assumption, we can estimate the new variable cost per unit as follows:

New variable cost per unit = $8 × (40,000 / 50,000)
New variable cost per unit = $6.40

Therefore, if Richardson Company increases production to 50,000 units, the estimated variable cost per unit will be $6.40. However, the closest answer choice is B, $2.75, which is not correct.

Question 15

Mountain Manufacturing is trying to predict the cost associated with producing its hiking packs. At a production level of 20,000 packs, Mountain Manufacturing's average cost per pack is $70.00.
-At Mountain Manufacturing if $200,000 of the costs are fixed, and the plant manager uses the cost equation to predict total costs, her forecast for 25,000 packs will be
A) $1,500,000.
B) $1,750,000.
C) $1,400,000.
D) $1,700,000.

Accepted Answer

First, calculate the variable cost per pack: At 20,000 packs, the total cost is 20,000 * $70 = $1,400,000. Subtracting the fixed costs ($200,000) gives $1,200,000 in variable costs, or $60 per pack. For 25,000 packs, the total cost is 25,000 * $60 (variable cost) + $200,000 (fixed cost) = $1,500,000 + $200,000 = $1,700,000.

Question 16

At Raines Company, total fixed and variable costs are $480,000 at a production level of 140,000 units. The company has total fixed costs of $200,000.
-If Raines Company reduces production to 180,000 units then the variable cost per unit will be
A) $1.18.
B) $1.15.
C) $2.00.
D) $1.11.

Accepted Answer

Variable costs at 140,000 units = Total costs - Fixed costs = $480,000 - $200,000 = $280,000. Variable cost per unit = $280,000 / 140,000 = $2.00. Variable cost per unit remains constant regardless of the number of units produced.

Question 17

Mountain Manufacturing is trying to predict the cost associated with producing its hiking packs. At a production level of 20,000 packs, Mountain Manufacturing's average cost per pack is $70.00.
-At Mountain Manufacturing if $200,000 of the costs are fixed, and the plant manager uses the average cost per unit to predict total costs, her forecast for 25,000 packs will be
A) $1,750,000.
B) $1,550,000.
C) $1,400,000.
D) $700,000.

Accepted Answer

At 20,000 packs, the average cost is $70.00 per pack, which includes both fixed and variable costs. The total cost at this production level is 20,000 packs * $70.00/pack = $1,400,000. Given that $200,000 of this is fixed cost, the variable cost is $1,400,000 - $200,000 = $1,200,000. The variable cost per pack is therefore $1,200,000 / 20,000 packs = $60.00. For 25,000 packs, the total variable cost is 25,000 packs * $60.00/pack = $1,500,000. Adding the fixed cost of $200,000, the total forecasted cost for 25,000 packs is $1,500,000 + $200,000 = $1,700,000. However, the correct calculation based on the average cost method (which was the method asked about but not correctly applied in the explanation) would actually involve using the average cost per unit to predict total costs directly, leading to the correct choice being A) $1,750,000, as it reflects an incorrect application of the method described. The correct approach using the average cost directly would involve multiplying the new quantity of packs (25,000) by the average cost per pack ($70.00), which indeed results in $1,750,000.

Question 18

At Raines Company, total fixed and variable costs are $480,000 at a production level of 140,000 units. The company has total fixed costs of $200,000.
-At Raines Company the variable cost per unit at 200,000 units is
A) $1.43.
B) $2.00.
C) $3.43.
D) $1.40.

Accepted Answer

To find the variable cost per unit, we need to use the total cost equation: Total Cost = Total Fixed Cost + (Variable Cost per Unit x Number of Units)

Using the information given in the question, we can create the following equation at a production level of 140,000 units:
Total Cost = $480,000
$480,000 = $200,000 + (Variable Cost per Unit x 140,000)
$280,000 = Variable Cost per Unit x 140,000
Variable Cost per Unit = $2.00

Therefore, at a production level of 200,000 units, the variable cost per unit would still be $2.00.

Question 19

At Raines Company, total fixed and variable costs are $480,000 at a production level of 140,000 units. The company has total fixed costs of $200,000.
-At Raines Company the fixed cost per unit at a production level of 200,000 units is
A) $3.43.
B) $2.40.
C) $1.00.
D) $1.43.

Accepted Answer

Fixed costs remain constant regardless of the production level. Therefore, the fixed cost per unit at a production level of 200,000 units is $200,000 / 200,000 units = $1.00.

Question 20

Mountain Manufacturing is trying to predict the cost associated with producing its hiking packs. At a production level of 20,000 packs, Mountain Manufacturing's average cost per pack is $70.00.
-At Mountain Manufacturing what is the total cost of producing 20,000 packs?
A) $1,600,000
B) $1,200,000
C) $1,400,000
D) $700,000

Accepted Answer

To find the total cost of producing 20,000 packs, we can simply multiply the average cost per pack by the number of packs produced. So, total cost = $70.00 x 20,000 = $1,400,000. Therefore, the best choice is C.

Quiz 3: Cost Behaviour

The following data pertain to costs at Masters Company: -At Masters Company the average cost per unit is

The following data pertain to costs at Martin Company: -If Martin Company increased production to 50,000 units then the variable cost per unit would be

At Raines Company, total fixed and variable costs are $480,000 at a production level of 140,000 units. The company has total fixed costs of $200,000. -If Raines Company reduces production to 180,000 units then the fixed cost per unit will be

The following data pertain to costs at Masters Company: -At Masters Company the variable cost per unit is

The following data pertain to costs at Richardson Company: -At Richardson Company the average cost per unit is

The following data pertain to costs at Martin Company: -The fixed cost per unit at the Martin Company is

The following data pertain to costs at Richardson Company: -At Richardson Company the variable cost per unit is

1. What is a cost equation? 2. If a company has fixed costs of $1,000 and variable costs of $2 per unit, what is their cost equation? 3. What would a company use a cost equation for?

The following data pertain to costs at Richardson Company: -If Richardson Company increases production to 50,000 units then the average cost per unit will be

The following data pertain to costs at Martin Company: -The variable cost per unit at the Marin Company is

The following data pertain to costs at Martin Company: -If Martin Company increased production to 50,000 units then the fixed cost per unit would be

The following data pertain to costs at Richardson Company: -If Richardson Company increases production to 50,000 units then the fixed cost per unit will be

The following data pertain to costs at Richardson Company: -If Richardson Company increases production to 50,000 units then the variable cost per unit will be

At Raines Company, total fixed and variable costs are $480,000 at a production level of 140,000 units. The company has total fixed costs of $200,000. -If Raines Company reduces production to 180,000 units then the variable cost per unit will be

At Raines Company, total fixed and variable costs are $480,000 at a production level of 140,000 units. The company has total fixed costs of $200,000. -At Raines Company the variable cost per unit at 200,000 units is

At Raines Company, total fixed and variable costs are $480,000 at a production level of 140,000 units. The company has total fixed costs of $200,000. -At Raines Company the fixed cost per unit at a production level of 200,000 units is

Mountain Manufacturing is trying to predict the cost associated with producing its hiking packs. At a production level of 20,000 packs, Mountain Manufacturing's average cost per pack is $70.00. -At Mountain Manufacturing what is the total cost of producing 20,000 packs?