Reference no: EM132537330

Chrystal Company incurred the following costs for the months of January and February:

Type of Cost January / February

Insurance $7,000 $7,000

Utilities 2,600 3,800

Depreciation 2,000 2,000

Materials 5,000 8,000

Question 1: Assume that output was 1,000 units in January and 3,000 units in February, utility cost is a mixed cost, and the fixed cost of utilities was $2,000. What was the variable rate per unit of output for utilities cost?

a.$0.40

b.$0.60

c.$0.20

d.$0.30

Question 2: If production volume decreases from 15,000 units to 12,000 units, _____.

a.mixed and variable costs will decrease by 45%

b.average unit costs will decrease by 30%

c.total fixed costs will increase by 25%

d.total fixed costs will decrease by 25%

Question 3: Fixed costs are costs that in total:

a.are constant within the relevant range as the level of output changes.

b.increase as the miscellaneous expenses decrease.

c.decrease as the per unit variable cost increases.

d.All of these choices are correct.

Question 4: The method of least squares:

a.is a statistical way of separating a mixed cost into fixed and variable components.

b.always produces the same cost formula when used on the same data set.

c.is a way to find the best-fitting line through a set of data points.

d.All of these choices are correct.

Question 5: The high-low method:

a.has the advantage of subjectivity.

b.is the most accurate cost estimation method.

c.is the most accurate methods.

d.is not affected by the presence of outliers.