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Cost Behavior Analysis Techniques

The document provides cost data for Egg Company over a range of units produced. It gives the total costs and per unit costs for producing 60, 80, and 100 units. It asks to express the cost formula in line equation form Y=a+bX and calculate the expected total cost if 75 units are produced. It also provides emergency department cost and patient admission data for a hospital over 9 months. It asks to use the high-low method to determine the variable cost per patient, annual fixed costs, monthly cost function, and estimated cost if 20 patients are expected next month.

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Cher Na
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331 views5 pages

Cost Behavior Analysis Techniques

The document provides cost data for Egg Company over a range of units produced. It gives the total costs and per unit costs for producing 60, 80, and 100 units. It asks to express the cost formula in line equation form Y=a+bX and calculate the expected total cost if 75 units are produced. It also provides emergency department cost and patient admission data for a hospital over 9 months. It asks to use the high-low method to determine the variable cost per patient, annual fixed costs, monthly cost function, and estimated cost if 20 patients are expected next month.

Uploaded by

Cher Na
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

COST BEHAVIOR ANALYSIS BORIS A.

SEVILLA

Egg Company manufactures and sells a single product. A partially


completed schedule of the company’s total and per unit costs over a
relevant range of 60 to 100 units produced each year is given below:

Units Produced 60 80 100


Total Costs
(A) VC P 120 P P
(B) FC P P 600
(C) Total Costs P P 760 P

Per Unit Costs


(D) Variable Costs P P P
(E) Fixed Costs P P P

Required:

Express the cost formula based on the line equation form Y = a + bX

If the company produces 75 units, then how much is the expected


total costs?
The controller of Sure Dead Hospital would like to come up with a
cost formula that links emergency department cost to the number of
patients admitted during a month. The emergency department’s
costs and the number of patients admitted during the past nine
months follow:

Month Number of Patients Emergency Department’s Cost


April 18 P 15,600
May 19 P 15,200
June 17 P 13,700
July 15 P 14,600
August 15 P 14,300
September 11 P 13,200
October 11 P 12,800
November 48 P 72,500
December 16 P 14,000

Required: Using the high-low method, determine:


1. Variable cost per unit
2. Annual fixed costs
3. Emergency department’s monthly cost function
4. Department’s estimated cost if 20 patients are expected to
be admitted next month

Mockingbird Company applies the high-low method of cost


estimation to customer order data for the first 4 months of 2018:
Month Orders Cost (P)
January 1,200 3,120
February 1,300 3,185
March 1,800 4,320
April 1,700 3,895
What is the estimated variable cost component per order?
a. P 2.00 c. P 2.48
b. P 2.42 d. P 2.50
In March, Starbox had electrical costs of P 225.00 when the total
volume was 4,500 cups of coffee served. In April, electrical costs
were P 227.50 for 4,750 cups of coffee. Using the high-low method,
what is the estimated fixed cost of electricity per year?
a. P 180 c. P 225
b. P 200 d. P 2,160

White Manufacturers provided you with the following flexible budget


of factory overhead at three different capacity levels:
Capacity Factory Overhead
60% P 98,000
70% P 106,000
85% P 118,000
What will be the flexible budget of factory overhead at 90% capacity?
a. P 112,000 c. P 130,000
b. P 122,000 d. P 132,000
Pandesal Company’s total overhead costs at various levels of
activity are presented below:

Month Machine Hours Total Overhead Costs


March 500 P 970
April 400 P 851
May 600 P 1,089
June 700 P 1,208

The breakdown of the overhead costs in April at 400 machine hour


level of activity is as follows:

Supplies (V) P 260


Salaries (F) P 300
Utilities (Mixed) P 291
Total P 851

Required:

1. How much of June’s overhead cost of P 1,208 consisted of


utilities cost?
2. Using high-low method, determine the cost function for
utilities cost.
3. Using high-low method, determine the cost function for total
overhead costs.
The following cost data for different hours of operations are made
available to you by Florida Manufacturing Company for your
analysis:

Number of months 10
Sum of Hours 350
Sum of Costs 1,000
Sum of Hours x Costs 39,200
Sum of Hours Squared 14,250

What is the monthly fixed cost?


a. P 26.50 c. P 318.00
b. P 35.00 d. P 420.00

Which of these correlation coefficients represents strongest


relationship between two variables?

a. + 0.50
b. – 0.80
c. – 0.05
d. + 1.05

What is the appropriate range for the coefficient of determination?

a. 0 to +1
b. -1 to +1
c. -1 to 0
d. 0 to infinity

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