Which of the following measures of activity would be the most probable cost driver for Data Processing?
- Number of transactions processed.
- Number of calls to toll-free customer telephone line.
- Number of new employees hired.
- Hours of Computer Processing Unit (CPU).
Select the incorrect statement:
- It is possible to use a linear cost equation to predict costs as long as volumes remain within the relevant range.
- The relevant range is the normal volume of activity.
- On the relevant range, managers can assume that the total fixed costs is constant.
- The relevant range refers to the volumes of activity for which a given linear cost equation is valid
CoffeeDrop produces and sells bags of coffee. Its management accountant has determined that if the company produces 700 bags in a month, the average operating cost per unit (including both fixed and variable operating expenses) is C4.93 per bag. If the company produces 1,000 bags in a month, the average operating cost per unit is C4.35 per bag instead. What is the variable cost per bag?
Olivia Grey is the management accountant of Paddle, a company producing tablets. She gathered the following information about the total overhead cost over the past four periods:
|Month||Machine-hours||Total overhad costs|
In addition, Olivia also decomposed the total overhead costs incurred in May between its different subcomponents:
|Costs in May||Amount|
Rent of the equimpent (fixed)
Indirect labor (mixed)
|Total overhead cost||383,071.80|
What is the amount of fixed indirect labor costs? Hint: use the high-low method
To estimate the parameters of a cost equation with only one cost driver and using the linear regression, what are the minimum requirements in terms
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