SE_Ch03

# SE_Ch03 - SAMPLE EXAM: CHAPTER 3 *SEE SOLUTION ON THE LAST...

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SAMPLE EXAM: CHAPTER 3 ***SEE SOLUTION ON THE LAST PAGE*** USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT 2 QUESTIONS: (round calculations to TWO decimal places) MONTH HOURS USED UTILITIES COST January 7,000 \$15,000 February 19,000 \$30,000 March 15,000 \$28,000 April 11,000 \$21,000 May 12,000 \$24,000 June 20,000 \$31,900 1. Determine the variable component using the high-low method. a. \$ .19 b. \$ .23 c. \$0.77 d. \$1.30 e. \$2.14 2. Determine the monthly fixed component of utilities cost using the high-low method. a. \$3,000 b. \$2,500 c. \$7,500 d. \$5,250 e. \$5,900 3. As a firm begins to operate outside the relevant range, the accuracy of cost estimates for fixed and variable costs: a. increase b. decrease c. stay the same d. decrease for variable costs but accuracy of cost estimates for fixed costs do not change. 4. Blythe Corp. classifies fixed costs as either committed or discretionary for planning purposes. Fixed costs that Blythe Corp. consider to be committed fixed costs:

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## This note was uploaded on 11/22/2011 for the course ACCT 230 taught by Professor Allen during the Fall '08 term at Texas A&M.

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SE_Ch03 - SAMPLE EXAM: CHAPTER 3 *SEE SOLUTION ON THE LAST...

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