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Questions and Answers
What is the variable cost per guest calculated using the High-Low Method?
What is the variable cost per guest calculated using the High-Low Method?
What formula is used to find the slope in the High-Low Method?
What formula is used to find the slope in the High-Low Method?
From the High-Low Method, what is the fixed cost component when the total mixed cost is $209,600?
From the High-Low Method, what is the fixed cost component when the total mixed cost is $209,600?
In the equation $y = 8x + 8,000$, what does 'y' represent?
In the equation $y = 8x + 8,000$, what does 'y' represent?
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Which tool in Excel is used for regression analysis?
Which tool in Excel is used for regression analysis?
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What should be highlighted in the input ‘Y’ Range during regression analysis?
What should be highlighted in the input ‘Y’ Range during regression analysis?
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What is the first step to conduct regression analysis in Excel after adding the Analysis Toolpack?
What is the first step to conduct regression analysis in Excel after adding the Analysis Toolpack?
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What does 'x' represent in the equation $y = 8x + 8,000$?
What does 'x' represent in the equation $y = 8x + 8,000$?
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What is the contribution margin for AAA Fitness Equipment for the month ended July 31?
What is the contribution margin for AAA Fitness Equipment for the month ended July 31?
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In variable costing, which costs are assigned only to products?
In variable costing, which costs are assigned only to products?
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Under absorption costing, which of the following is true?
Under absorption costing, which of the following is true?
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What is the formula for calculating the contribution margin?
What is the formula for calculating the contribution margin?
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Which of the following statements about fixed manufacturing overhead is correct?
Which of the following statements about fixed manufacturing overhead is correct?
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What is a characteristic of variable costs?
What is a characteristic of variable costs?
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Which of the following best describes fixed costs?
Which of the following best describes fixed costs?
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What does the relevant range refer to in cost behavior?
What does the relevant range refer to in cost behavior?
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When would a company likely incur higher fixed costs?
When would a company likely incur higher fixed costs?
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What impact does a volume discount have on variable costs?
What impact does a volume discount have on variable costs?
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In what scenario might fixed costs become variable?
In what scenario might fixed costs become variable?
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What analysis method can be used to predict costs based on historical data?
What analysis method can be used to predict costs based on historical data?
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Which type of income statement presentation uses the contribution margin?
Which type of income statement presentation uses the contribution margin?
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Which method is utilized to identify if a relationship exists between the cost driver and total cost?
Which method is utilized to identify if a relationship exists between the cost driver and total cost?
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How is the high point selected in the high-low method?
How is the high point selected in the high-low method?
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What is a key advantage of utilizing regression analysis to derive the cost equation?
What is a key advantage of utilizing regression analysis to derive the cost equation?
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What benefit does the contribution margin income statement provide to managers?
What benefit does the contribution margin income statement provide to managers?
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Which statement accurately reflects a characteristic of account analysis?
Which statement accurately reflects a characteristic of account analysis?
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What is the primary characteristic of fixed costs within the relevant range?
What is the primary characteristic of fixed costs within the relevant range?
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What effect does an increase in hotel capacity have on variable costs per unit?
What effect does an increase in hotel capacity have on variable costs per unit?
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How are curvilinear costs best approximated?
How are curvilinear costs best approximated?
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Why is the average cost per member not an effective metric for predicting total costs at different levels?
Why is the average cost per member not an effective metric for predicting total costs at different levels?
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What is the total fixed cost per month for Fitness-for-Life?
What is the total fixed cost per month for Fitness-for-Life?
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What happens to the average cost per member as the number of members increases from 100 to 750?
What happens to the average cost per member as the number of members increases from 100 to 750?
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When calculating total operating costs, which costs must be combined?
When calculating total operating costs, which costs must be combined?
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What is the fixed cost per member when the club operates at 500 members?
What is the fixed cost per member when the club operates at 500 members?
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Study Notes
Cost Behaviours
- Variable Costs: Increase with volume
- Fixed Costs: Remain constant, regardless of changes in volume
- Relevant Range: The range of operations within which the total fixed costs and the variable cost per unit remain constant
High-Low Method
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Formula:
- Variable cost per unit = (Change in cost)/(Change in volume)
- Slope = Change in cost / change in volume
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Steps to determine fixed costs:
- Total mixed cost - Total variable cost = Fixed cost
- Total Mixed Costs = Variable cost component + Fixed cost component
Regression Analysis
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Using Data Analytics Tools in Excel:
- Add-ins > Analysis Toolpack > Go
- Data tab > Data Analysis > Regression
Contribution Margin Income Statement
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Organized by Behaviour:
- Variable Costs
- Fixed Costs
- Contribution Margin: Sales - Variable Costs
Variable Costing vs. Absorption Costing
- Variable Costing: Assigns only variable manufacturing costs to products (DM, DL, Variable MOH), fixed manufacturing overhead = period cost, used for internal management decisions, required by financial reporting standards for external reporting
- Absorption Costing: Assigns all manufacturing costs, both variable and fixed, to products, product costs include ALL inventoriable costs, traditional income statement
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Description
Explore the concepts of cost behaviors, including variable and fixed costs, through various methods such as the High-Low method and regression analysis. This quiz will also cover the contribution margin income statement and differences between variable costing and absorption costing. Ideal for accounting students and professionals looking to deepen their understanding.
