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53) Wuensch Inc., an escrow agent, has provided the following data concerning its office
expenses:
Escrows Completed
Office
Expenses
April
53
$
7,427
May
94
$
9,201
June
37
$
6,769
July
87
$
8,902
August
40
$
6,875
September
38
$
6,797
October
82
$
8,681
November
35
$
6,678
December
62
$
7,836
Management believes that office expense is a mixed cost that depends on the number of escrows
completed. Note: Real estate purchases usually involve the services of an escrow agent that holds
funds and prepares documents to complete the transaction.
Using the high-low method, the estimate of the variable component of office expense per escrow
completed is closest to:
A) $45.44
B) $42.76
C) $88.22
D) $131.00
54) Wuensch Inc., an escrow agent, has provided the following data concerning its office
expenses:
Escrows Completed
Office
Expenses
April
53
$
7,427
May
94
$
9,201
June
37
$
6,769
July
87
$
8,902
August
40
$
6,875
September
38
$
6,797
October
82
$
8,681
November
35
$
6,678
December
62
$
7,836
Management believes that office expense is a mixed cost that depends on the number of escrows
completed. Note: Real estate purchases usually involve the services of an escrow agent that holds
funds and prepares documents to complete the transaction.
Using the high-low method, the estimate of the fixed component of office expense per month is
closest to:
A) $7,685
B) $7,182
C) $6,678
D) $5,182
55) Electrical costs at one of Rome Corporation's factories are listed below:
Machine-Hours
Electrical
Cost
March
458
$
1,007
April
423
$
934
May
440
$
979
June
409
$
902
July
426
$
952
August
372
$
822
September
414
$
926
October
431
$
949
November
468
$
1,025
Management believes that electrical cost is a mixed cost that depends on machine-hours.
Using the high-low method, the estimate of the variable component of electrical cost per
machine-hour is closest to:
A) $2.11
B) $1.80
C) $2.21
D) $0.47
56) Electrical costs at one of Rome Corporation's factories are listed below:
Machine-Hours
Electrical
Cost
March
458
$
1,007
April
423
$
934
May
440
$
979
June
409
$
902
July
426
$
952
August
372
$
822
September
414
$
926
October
431
$
949
November
468
$
1,025
Management believes that electrical cost is a mixed cost that depends on machine-hours.
Using the high-low method, the estimate of the fixed component of electrical cost per month is
closest to:
A) $822
B) $743
C) $38
D) $944
57) Callander Corporation is a wholesaler that sells a single product. Management has provided
the following cost data for two levels of monthly sales volume. The company sells the product
for $140.50 per unit.
Sales volume (units)
6,000
7,000
Cost of sales
$
497,400
$
580,300
Selling and administrative costs
$
273,600
$
294,700
The best estimate of the total monthly fixed cost is:
A) $875,000
B) $147,000
C) $771,000
D) $823,000
58) Callander Corporation is a wholesaler that sells a single product. Management has provided
the following cost data for two levels of monthly sales volume. The company sells the product
for $140.50 per unit.
Sales volume (units)
6,000
7,000
Cost of sales
$
497,400
$
580,300
Selling and administrative costs
$
273,600
$
294,700
The best estimate of the total variable cost per unit is:
A) $82.90
B) $128.50
C) $104.00
D) $125.00
59) Callander Corporation is a wholesaler that sells a single product. Management has provided
the following cost data for two levels of monthly sales volume. The company sells the product
for $140.50 per unit.
Sales volume (units)
6,000
7,000
Cost of sales
$
497,400
$
580,300
Selling and administrative costs
$
273,600
$
294,700
The best estimate of the total contribution margin when 6,300 units are sold is:
A) $75,600
B) $97,650
C) $362,880
D) $229,950
60) The management of Casablanca Manufacturing Corporation believes that machine-hours is
an appropriate measure of activity for overhead cost. Shown below are machine-hours and total
overhead costs for the past six months:
Machine-
Hours
Overhead
Cost
Jan
150,000
$
339,000
Feb
140,000
$
328,000
Mar
160,000
$
350,000
Apr
130,000
$
319,500
May
170,000
$
362,500
Jun
200,000
$
400,000
Assume that the relevant range includes all of the activity levels mentioned in this problem.
If Casablanca expects to incur 185,000 machine hours next month, what will the estimated total
overhead cost be using the high-low method?
A) $212,750
B) $359,750
C) $382,750
D) $381,700
61) The management of Casablanca Manufacturing Corporation believes that machine-hours is
an appropriate measure of activity for overhead cost. Shown below are machine-hours and total
overhead costs for the past six months:
Machine-
Hours
Overhead
Cost
Jan
150,000
$
339,000
Feb
140,000
$
328,000
Mar
160,000
$
350,000
Apr
130,000
$
319,500
May
170,000
$
362,500
Jun
200,000
$
400,000
Assume that the relevant range includes all of the activity levels mentioned in this problem.
What is Casablanca's independent variable?
A) the year
B) the machine hours
C) the total overhead cost
D) the relevant range
62) Hiss Corporation's activity for the last six months is as follows:
Machine Hours
Electrical
Cost
July
2,000
$
1,560
August
3,000
$
2,230
September
2,400
$
1,750
October
1,900
$
1,520
November
1,800
$
1,450
December
2,100
$
1,600
Using the high-low method of analysis, the estimated variable cost per machine hour for
electricity is closest to:
A) $0.40
B) $0.65
C) $0.70
D) $0.67
63) Hiss Corporation's activity for the last six months is as follows:
Machine Hours
Electrical
Cost
July
2,000
$
1,560
August
3,000
$
2,230
September
2,400
$
1,750
October
1,900
$
1,520
November
1,800
$
1,450
December
2,100
$
1,600
Using the high-low method of analysis, the estimated fixed cost per month for electricity is
closest to:
A) $260
B) $235
C) $280
D) $800
64) Jorgenson Corporation has provided the following data for the first five months of the year:
Machine Hours
Lubrication
Cost
January
240
$
1,500
February
320
$
1,600
March
400
$
1,740
April
300
$
1,580
May
340
$
1,680
Using the high-low method of analysis, the estimated variable lubrication cost per machine hour
is closest to:
A) $1.50
B) $1.25
C) $0.67
D) $1.40
65) Jorgenson Corporation has provided the following data for the first five months of the year:
Machine Hours
Lubrication
Cost
January
240
$
1,500
February
320
$
1,600
March
400
$
1,740
April
300
$
1,580
May
340
$
1,680
Using the high-low method of analysis, the estimated monthly fixed component of lubrication
cost is closest to:
A) $1,120
B) $1,140
C) $1,170
D) $1,130
