21) What would be their estimated cost per unit if Raymaster expects to sell 2,000 units next year?

A) $300

B) $312

C) $370

D) $498

E) $500


22) What is the predicted indirect manufacturing labour cost if 160 machine-hours are budgeted and 170 are actually worked, assuming the estimated cost function is y = $81.04 + 5.32x?

A) $985.44

B) $932.24

C) $904.40

D) $851.20

E) $81.04


23) A nonlinear cost function

A) has two constants and a single slope.

B) does not effectively describe the behaviour of costs all of the time.

C) never describes the behaviour of costs in relation to the cost driver.

D) always describes the behaviour of costs in relation to the cost drivers.

E) means the relevant range cannot be determined for that cost.


24) Time-series data analysis includes

A) using a variety of time periods to measure the predictor variable.

B) using the highest and lowest observation.

C) observing different entities during the same time period.

D) comparing information in different cost pools.

E) analyzing cost drivers at different levels of production.

Answer the following question(s) using the information below.


Penny’s TV and Appliance Store is a small company that has the following information pertaining to 2012 operations.


Sales (2,000 televisions)


Cost of goods sold


Store manager’s salary per year


Operating costs per year


Advertising and promotion per year


Commissions (4% of sales)



25) What was the variable cost per unit sold for 2012?

A) $18

B) $235

C) $339

D) $200

E) $218


26) What were total fixed costs for 2012?

A) $242,000

B) $436,000

C) $678,000

D) $227,000

E) $278,000


27) What are the estimated total costs if Penny’s expects to sell 3,000 units next year?

A) $896,000

B) $678,000

C) $1,259,000

D) $269,000

E) $542,000


28) Which cost estimation method is being used by Penny’s TV and Appliance Store?

A) the industrial engineering method

B) the conference method

C) the high-low method

D) the quantitative analysis method

E) the account analysis method


29) Write a linear cost function equation for each of the following conditions. Use y for estimated costs and X for activity of the cost driver.


a.Direct manufacturing labour is $10 per hour.

b.Direct materials cost $9.20 per cubic metre.

c.Utilities have a minimum charge of $1,000, plus a charge of $0.05 per kilowatt-hour.

d.Machine operating costs include $200,000 of machine amortization per year, plus $75 of utility costs for each day the machinery is in operation.




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