Exercises on Cost Behavior Analysis and Use A.

44. At an activity level of 10,000 units, variable costs totaled $35,000 and fixed costs totaled
$20,800. If 16,000 units are produced and this activity is within the relevant range, then:
A. total cost would equal $89,280.
B. total unit cost would equal $4.80.
C. fixed cost per unit would equal $5.58.
D. total costs would equal $55,800.

47. Given the cost formula Y = $17,500 + $4X, at what level of activity will total cost be
$42,500?
A. 10,625 units
B. 4,375 units
C. 6,250 units
D. 5,250 units

49. At an activity level of 4,500 machine-hours in a month, Novosel Corporation's total variable
maintenance and repair cost is $394,830 and its total fixed maintenance and repair cost is
$105,570. What would be the total maintenance and repair cost, both fixed and variable, at an
activity level of 4,600 units in a month? Assume that this level of activity is within the relevant
range.
A. $511,520
B. $505,960
C. $509,174
D. $500,400

Rymore Company would like to classify the following costs according to their cost behavior:

86. Which of the following classifications best describes the behavior of Cost A?
A. Mixed
B. Variable
C. Fixed
D. None of these
87. Which of the following classifications best describes the behavior of Cost B?
A. Mixed
B. Variable
C. Fixed
D. None of these

88. Which of the following classifications best describes the behavior of Cost C?
A. Mixed
B. Variable
C. Fixed
D. None of these

Bacho Corporation reports that at an activity level of 5,400 units, its total variable cost is
$416,934 and its total fixed cost is $142,560.

89. What would be the total variable cost at an activity level of 5,500 units? Assume that this
level of activity is within the relevant range.
A. $424,655
B. $559,494
C. $416,934
D. $145,200

90. What would be the average fixed cost per unit at an activity level of 5,500 units? Assume that
this level of activity is within the relevant range.
A. $26.40
B. $103.61
C. $25.92
D. $51.98
 Exercises on Cost Behavior Analysis and Use A.2

52. The following data pertains to activity and utility costs for two recent years:

Using the high-low method, the cost formula for utilities is:
A. $1.50 per unit
B. $8,000 plus $0.50 per unit
C. $1.25 per unit
D. $6,000 plus $0.75 per unit

57. Maintenance costs at a Neller Corporation factory are listed below:

Management believes that maintenance cost is a mixed cost that depends on machine-hours.
Using the high-low method to estimate the variable and fixed components of this cost, these
estimates would be closest to:
A. $1.85 per machine-hour; $21,325 per month
B. $3.77 per machine-hour; $15,648 per month
C. $9.07 per machine-hour; $26,762 per month
D. $0.27 per machine-hour; $26,071 per month

119. Unified Parcel, Inc., operates a local parcel delivery service. The company keeps detailed
records relating to operating costs of trucks, and has found that if a truck is driven 110,000 miles
per year the operating cost is 7.5 cents per mile. This cost increases to 8.75 cents per mile if a
truck is driven 60,000 miles per year.

Required:

Estimate the cost formula for truck operating costs using the high-low method.
 Exercises on Cost Behavior Analysis and Use A.3

62. Kalbach Corporation, a manufacturing company, has provided the following financial data
for November:

The company had no beginning or ending inventories. The contribution margin for November
was:
A. $285,000
B. $166,000
C. $310,000
D. $36,000

In October, Haldeman Corporation, a manufacturing company, reported the following financial

data:

The company had no beginning or ending inventories.

109. The contribution margin for October was:

A. $5,000
B. $183,000
C. $264,000
D. $282,000
110. The gross margin for October was:
A. $282,000
B. $183,000
C. $264,000
D. $5,000