Unformatted text preview: : The Barnett Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Barnett Company has heard about a method of measuring cost functions called the highlow method and has decided to use it in this situation.
Cost
$24,900
24,000
36,400
44,160
45,000 123) Hours
5,250
5,500
7,500
9,750
9,500 What is the cost function? A) y = $43,191 + $0.19X B) y = $4,875 + $5.25X C) y = $41,900 + $0.23X D) y = $2,430 +
$4.28X Answer: D Explanation: D) b
Diff: 3 T a 4 AACSB: Analytical skills 124) What is the estimated total cost at an operating level of 8,000 hours? A) $43,740 B) $36,670 C) $46,875 D) $37,125 Answer: B Explanation: B) b
$
a
$ highlow method, cost predictions Objective: 4 AACSB: Analytical skills Answer the following questions using the information below: Presented below are the production data for the first six months of the year for the mixed costs incurred by Gallup Company.
Month
January
February
March
April
May
June Cost
$4,890
4,024
6,480
8,840
5,800
7,336 Units
4,100
3,200
5,300
7,500
4,800
6,600 Gallup Company uses the highlow method to analyze mixed costs. 125) How would the cost function be stated? A) y = $440 + $1.12X B) y = $3,562.30 + $0.144X C) y = $107.20 + $1.224X D) y = $7,850 +
$0.132X Answer: A Explanation: A) b Diff: 3 T a 4 AACSB: Analytical skills 126) What is the estimated total cost at an operating level of 5,000 units? A) $6,227.20 B) $6,040.00 C) $4,283.20 D) $8,510.00 Answer: B Explanation: B) b
$
a
y highlow method, cost predictions Objective: 4 AACSB: Analytical skills Answer the following questions using the information below: The Gangwere Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Gangwere Company has heard about a method of measuring cost functions called the highlow method and has decided to use it in this situation.
Month
January
February
March
April
May
June 127) Cost
$40,000
24,400
31,280
36,400
44,160
42,400 Hours
3,500
2,000
2,450
3,000
3,900
3,740 How is the cost function stated? A) y = $26,672 + $1.84X B) y = $21,360 + $1.52X C) y = $10,112 + $8.64X D) y = $3,600 +
$10.40X Answer: D Explanation: D) b
Diff: 3 T a 4 AACSB: Analytical skills 128) What is the estimated total cost at an operating level of 2,850 hours? A) $25,692 B) $33,240 C) $32,016 D) $34,736 Answer: B Explanation: B) b
$
a
y highlow method, cost predictions Objective: 4 A...
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 Spring '08
 BROWN
 AACSB, Reflective thinking

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