Figure 3-3. Okafor Company manufactures skis. The management accountant wants to calculate the fixed and variable costs associated with the leasing of machinery. Data for the past four months were collected. Machine Lease cost hours

Month Lease cost Machine hours

April $21,000 550

May $16,500 420

June $19,000 510

July $22,230 570

1 Refer to Figure 3-3. Using the high-low method calculate the variable rate for the lease cost

a. $38.18

b. $38.20

c. $61.50

d. $37.25 2.

Refer to Figure 3-3. Using the high-low method calculate the fixed cost of leasing

a. $482

b. $516

c. $420

d. $456

3. Refer to Figure 3-3. What would Okafor Company's cost formula be to estimate the cost of leasing within the relevant range? a. total lease cost = $456 + ($38.20 machine hours)

b. total lease cost = $516 + ($38.18 machine hours)

c. total lease cost = $420 + ($37.25 machine hours)

d. none of these are correct

4. Refer to Figure 3-3. What would the estimate of Okafor Company's total lease cost be at a level of 500 machine hours?

a. $19,606

b. $19,556

c. $16,464

d. $18,546

Figure 3-4. Botana Company constructed the following formula for monthly utility cost.

Total utility cost = $1,200 + ($8.10 labor hours)

Assume that 775 labor hours are budgeted for the month of April.

5. Refer to Figure 3-4. Calculate the total variable utility cost for the month of April.

a. $1,200.00

b. $7,477.50

c. $6,277.50

d. $5,077.50 6.

Refer to Figure 3-4. Calculate the total utility cost for the month of April.

a. $7,477.50

b. $6,277.50

c. $1,200.00

d. $5,077.50 7.

Refer to Figure 3-4. If Botana Company incurs 9,600 labor hours for the year, what would be the estimate of total utility cost?

a. $76,560

b. $78,960

c. $92,160

d. none of these are correct

Figure 3-5. Maxwell Company makes treadmills. The company controller wants to calculate the fixed and variable costs associated with the janitorial costs incurred in the factory. Data for the past four months were collected.

Month Janitoral Cost Machine hours

September $11,000 575

October 11,400 610

November 10,200 510

December 10,725 550

8. Refer to Figure 3-5. Using the high-low method calculate the fixed cost of the janitorial services

a. $4,080

b. $7,320

c. $6,120

d. none of these are correct

9. Refer to Figure 3-5. What would Maxwell Company's estimate of total janitorial cost be at a level of 600 machine hours?

a. $11,280

b. $7,500

c. $4,080

d. $6,120

Figure 3-7. Margola Company produces hand-held calculators. The company controller wanted to calculate the fixed and variable costs associated with the maintenance cost incurred by the factory. Data for the past four months were collected.

Month Mainetnance Cost Machine hours

June $4,180 328

July 3,956 310

August 4,686 386

September 4,240 352

Coefficients shown by a regression program are: Intercept 1,150 X Variable 1 9.06 10.

Refer to Figure 3-7. Using the results of regression, calculate the fixed cost of maintenance.

a. $1,150.00

b. $978.37

c. $9.06

d. None of these are correct.