81. Marcye Co. manufactures office furniture. During the most productive month of the year, 3,500 desks were manufactured at a total cost of $84,400. In its slowest month, the company made 1,100 desks at a cost of $46,000. Using the high-low method of cost estimation, total fixed costs are:
A. $56,000
B. $28,400
C. $17,600
D. cannot be determined from the data given
82. Given the following cost and activity observations for Bounty Company’s utilities, use the high-low method to calculate Bounty’ variable utilities costs per machine hour.
83. Given the following cost and activity observations for Smithson Company’s utilities, use the high-low method to calculate Smithson’s fixed costs per month. Round variable cost per unit to two decimal places in your calculations.
84. Given the following cost and activity observations for Taco Company’s utilities, use the high-low method to calculate Taco’s variable utilities costs per machine hour.
85. Manley Co. manufactures office furniture. During the most productive month of the year, 4,500 desks were manufactured at a total cost of $86,625. In its slowest month, the company made 1,800 desks at a cost of $49,500. Using the high-low method of cost estimation, total fixed costs are:
A. $61,875
B. $33,875
C. $24,750
D. cannot be determined from the data given
86. Which of the following statements is true regarding fixed and variable costs?
A. Both costs are constant when considered on a per unit basis.
B. Both costs are constant when considered on a total basis.
C. Fixed costs are constant in total, and variable costs are constant per unit.
D. Variable costs are constant in total, and fixed costs vary in total.
87. As production increases, what would you expect to happen to fixed cost per unit?
A. Increase
B. Decrease
C. Remain the same
D. Either increase or decrease, depending on the variable costs
88. Knowing how costs behave is useful to management for all the following reasons except for
A. predicting customer demand.
B. predicting profits as sales and production volumes change.
C. estimating costs.
D. changing an existing product production.
89. The manufacturing cost of Prancer Industries for three months of the year are provided below:
90. As production increases, what should happen to the variable costs per unit?
A. Stay the same.
B. Increase.
C. Decrease.
D. Either increase or decrease, depending on the fixed costs.