1)You are applying the scattergraph method and find that the regression line you have
drawn passes through a data point with the following coordinates: 7,500 units and
$10,000. The regression line passes through the Y axis at the $4,000 point. Which of the
following is the cost formula that represents the slope of this line?
a. Y=$4,000+$1.25X
b. Y=$4,000+$0.80X
c. Y=$10,000+$1.33X
d. None of the above is true
2) Contribution margin is computed as sales revenue minus:
a. fixed expenses
b. variable expenses
c. cost of goods sold d. cost of goods
manufactured
3) A consulting company would like to develop a method of predicting its total costs in a
period. The following past costs have been recorded by the company in two periods:
Number of client hours= 420 515
Total cost=$82,200 $90,275
The best estimate of the cost formula for the company (where X is the number of client-
hours) is:
a. Y = $46,500 + $85 X
b. Y = $42,000 + $95 X
c. Y = $46,500 – $85 X
d. Y = $51,500 – $95 X
4) Gasson Company is a merchandising firm. Next month the company expects to sell
800 units. The following data describe the company's revenue and cost structure:
Selling price per unit=$40
Sales commission= 5%
Purchase price(cost) per unit=$18
Advertising expense=$4,000 per month
Administrative expense=$4,500 per month plus 15% of sales
Assume that all activity mentioned in this problem is within the relevant range.
The expected total administrative expense next month is:
$9,300
5) At an activity level of 8,400 machine-hours in a month, Braughton Corporation's total
variable maintenance and repair cost is $697,284 and its total fixed maintenance and
repair cost is $464,100. What would be the total maintenance and repair cost, both fixed
and variable, at an activity level of 8,500 units in a month? Assume that this level of
activity is within the relevant range.
$1,169,685