66) 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 least-squares regression method of analysis, the estimated variable lubrication cost per
machine hour is closest to:
A) $0.80
B) $1.56
C) $1.40
D) $1.28
67) 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 least-squares regression method of analysis, the estimated monthly fixed component of
lubrication cost is closest to:
A) $1,050
B) $1,060
C) $1,121
D) $1,144
68) Lacourse Inc.’s inspection costs are listed below:
Units
Produced
Inspection
Costs
January
647
$
15,309
February
724
$
15,965
March
694
$
15,715
April
645
$
15,271
May
696
$
15,745
June
665
$
15,442
July
718
$
15,933
August
699
$
15,739
Management believes that inspection cost is a mixed cost that depends on units produced.
Using the least-squares regression method, the estimate of the variable component of inspection
cost per unit produced is closest to:
A) $22.80
B) $8.82
C) $8.27
D) $8.78
69) Lacourse Inc.’s inspection costs are listed below:
Units
Produced
Inspection
Costs
January
647
$
15,309
February
724
$
15,965
March
694
$
15,715
April
645
$
15,271
May
696
$
15,745
June
665
$
15,442
July
718
$
15,933
August
699
$
15,739
Management believes that inspection cost is a mixed cost that depends on units produced.
Using the least-squares regression method, the estimate of the fixed component of inspection
cost per month is closest to:
A) $9,608
B) $15,640
C) $9,587
D) $15,271
70) Recent maintenance costs of Divers Corporation are listed below:
Machine-
Hours
Maintenance
Costs
February
527
$
5,144
March
499
$
5,033
April
542
$
5,220
May
541
$
5,196
June
489
$
4,973
July
543
$
5,200
August
558
$
5,288
September
513
$
5,060
Management believes that maintenance cost is a mixed cost that depends on machine-hours.
Using the least-squares regression method, the estimate of the variable component of
maintenance cost per machine-hour is closest to:
A) $9.76
B) $6.00
C) $4.43
D) $4.57
71) Recent maintenance costs of Divers Corporation are listed below:
Machine-
Hours
Maintenance
Costs
February
527
$
5,144
March
499
$
5,033
April
542
$
5,220
May
541
$
5,196
June
489
$
4,973
July
543
$
5,200
August
558
$
5,288
September
513
$
5,060
Management believes that maintenance cost is a mixed cost that depends on machine-hours.
Using the least-squares regression method, the estimate of the fixed component of maintenance
cost per month is closest to:
A) $5,139
B) $2,806
C) $4,973
D) $2,738
72) Arlo’s T-shirt Shop only has three costs: T-shirt cost, rent cost on the shop, and utilities cost.
Arlo’s sells the T-shirts for $14.50 each. Management has prepared the following cost
information for next month:
At 8,000
At 10,000
T-shirts
T-shirts
T-shirt cost
$48,000
$60,000
Rent cost
$3,600
$3,600
Utilities cost
$6,800
$8,300
Assume that all of the activity levels mentioned in this problem are within the relevant range.
Required:
a. Calculate Arlo’s total variable cost if 9,000 T-shirts are sold next month.
b. Prepare Arlo’s contribution format income statement if 10,000 T-shirts are sold.
T-shirt cost ($6 per T-shirt × 9,000 T-shirts)
Utilities cost ($0.75 per T-shirt × 9,000 T-shirts)
Total variable cost
89
73) Butler Sales Company is a distributor that has an exclusive franchise to sell a particular
product made by another company. Butler Sales Company’s traditional format income statements
for the last two years are given below:
This Year
Last Year
Units sold
200,000
160,000
Sales revenue
$1,000,000
$800,000
Cost of goods sold
700,000
560,000
Gross margin
300,000
240,000
Selling and administrative expense
210,000
198,000
Net operating income
$90,000
$ 42,000
Selling and administrative expense is a mixture of fixed costs and variable costs that vary with
respect to the number of units sold.
Required:
a. Estimate the company’s variable selling and administration expense per unit, and its total fixed
selling and administrative expense per year.
b. Compute the company’s contribution margin for this year.
91
74) The Stephens Leadership Center provides training seminars in personal development and
time management. The company is relatively new and management is seeking information
regarding the Center’s cost structure. The following information has been gathered since the
inception of the business in January of the current year:
Seminars Offered
Costs Incurred
January
10
$17,000
February
12
$18,800
March
15
$20,900
April
18
$23,762
May
16
$21,800
June
13
$19,400
Required:
a. Using the high-low method, estimate the variable cost per seminar and the total fixed cost per
month.
b. Using the least-squares method, estimate the variable cost per seminar and the total fixed cost
per month.
