1. Which of the following would most likely be classified as a variable cost?

a. Direct Materials

b. Factory Rent

c. Property Taxes on a store

d. Indirect Labor

2. Which of the following costs would decrease as a result of the number of units produced increasing?

a. Variable Cost per Unit

b. Fixed Costs per Unit

c. Total Variable Costs

d. Total Fixed Costs

3. The slope of a cost function can be defined as

a. the rate at which the cost is rising per unit change in volume.

b. the cost that the company will have if no units are produced.

c. the rate at which the number of units that are being produced is rising.

4. The two points used to find the slope of the cost line using the Scattergraph Method are

a. the midpoint and the point of highest volume

b. the Y-intercept and the point of lowest volume

c. the point of highest volume and the point of lowest volume

d. the midpoint and the Y-intercept

5. Which of the following methods would give the most accurate formula for budgeting future costs:

a. Scattergraph

b. High-Low

c. Linear (also called Least Squares) Regression

The following data applies to questions 6 and 7:

Jones Co. had the following data for units produced and maintenance costs in each of the four quarters of their prior fiscal year:

QUARTER 1: 48 units and $110

QUARTER 2: 58 units and $126

QUARTER 3: 44 units and $105

QUARTER 4: 54 units and $119

6. Using the High-Low Method, the slope of the budget line would be

a. $1.50

b. $2.00

c. $2.25

d. $2.50

7. Using the High-Low Method and your answer from #6 above, calculate the fixed costs (Y-intercept) for the budget line

a. $43

b. $39

c. $41

d. $37

The following data applies to questions 8 and 9:

Jackson Co. had the following data for units produced and maintenance costs in each of the four quarters of their prior fiscal year:

QUARTER 1: 10 units and $61

QUARTER 2: 13 units and $73

QUARTER 3: 9 units and $60

QUARTER 4: 12 units and $70

8. Using the Linear Regression Method, the slope of the budget line would be

a. $3.00

b. $3.25

c. $3.50

d. $3.75

9. Using the Linear Regression Method and your answer from #8 above, calculate the fixed costs (Y-

intercept) for the budget line

a. $23.50

b. $28.75

c. $27.50

d. $25.75

10. The cost budget formula for a particular mixed cost is: $450 + ($1.85 x units). The total budgeted

cost for a volume of 2,500 units would be:

a. $4,875

b. $5,625

c. $4,625

d. $5,075