Question

1.The controller of JoyCo has requested a quick estimate of the manufacturing supplies needed for the month of July when production is expected to be 470,000 units. Below are actual data from the prior three months of operations. Production in units Manufacturing supplies March 450,000 $ 723,060 April 540,000 $ 853,560 May 480,000 $ 766,560 Using these data and the high-low method, what is the best estimate of the cost of manufacturing supplies that would be needed for July? (Assume all activity is within the relevant range).

Select one: a. $ 805,284 b. $ 1,188,756 c. $ 755,196 d. $ 752,060

2.You are applying the scattergraph method and find that the regression line you have drawn passes through a data point with the following coordinates: 1,000 units and $9,600. The regression line passes through the y-axis at the $600 point. Which of the following is the COST formula (not profit formula) that represents the slope of this line?

Select one: a. Y = $600 + $9.00x b. Y = $600 + 9.60x c. Y = $9,600 + $0.06x d. None of these is true

3. Hawkins, Inc. is not sure how the cost of utilities is behaving. He decides to run a least-squares regression to determine the line of best fit and other pertinent statistics. He finds the line of best fit (cost formula) to be; Y = 18,000 + $4.50 x and the adjusted R-squared = 0.45. This cost is most likely a:

Select one: a. Pure variable cost b. Mixed cost c. Pure fixed cost d. Pure sunk cost

4. Assuming sales price and fixed costs remain constant, if variable costs per unit decrease, the break even point (in units) will:

Select one: a. Remain unchanged b. Decrease c. Increase d. Not enough information to answer the question

5. If the contribution margin decreases, which one of the following has most likely happened?

Select one: a. Demand has increased and the company has raised sales prices b. The company has hired additional executives c. The raw materials supplier is charging less for individual materials d. The company gives annual wage raises to assembly laborers

Answer 1

Q1
	Expected Production	470000
	Manufacturing supply	?
		Expected Production	Manufacturing supply
	March	450000	723060
	April	540000	853560
	May	480000	766560
		Formuala for variable cost used= (cost at high-cost at low)/(highest units-lowest units)
		Variable mnaufacturin cost per unit	1.45
		Total cost for 450000 units	723060
		=1.45*450000+Fixed cost=723060
			=723060-(1.45*450000)
		Fixed Cost =	70560
	Manufacturing supply for 470000 units	752060	=1.45*470000+70560
	Answer :d $752060
Q2	Fixed cost=Regression of line passes through y axis i.e $600
	Two point on regression line (0,600) & (1000,9600)
	We could find slope i.e variable cost
	Variable cost=(9600-600)/1000=9
	Cost formula y=600+$9x
	Answer:a
Q3	y=18,000 +$4.5 x
	It represent 18000 as fixed cost and 4.5 per unit variable cost
	b:mixed cost
Q4	Breakeven units=Fixed cost /(Selling price per unit -variable price per unit)
	Now if variable cost per unit decreases means denominator increases and numerator being constant. Breakeven units decreases.
	Answer: b decreases
Q5	Contribution margin=Selling Price-Variable cost
	Wages to assembly labourers is variable cost
	Answer: d The company gives annual wage raises to assembly laborers