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When developing cost functions, which of the following statement is FALSE? A) The cost function does not have to be reliable. OB) The cost function

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When developing cost functions, which of the following statement is FALSE? A) The cost function does not have to be reliable. OB) The cost function must be believable. C) Personal observations of costs and activities provide the best evidence of a plausible relationship between a cost and its cost driver. D) The cost function should explain past cost behavior. Hot Company, a producer of salsa, has the following information: Income tax rate 30% Selling price per unit $28.00 Variable cost per unit $3.00 Total fixed costs $90,000.00 The contribution margin per unit is OA) $5.00 B) $8.00 OC) $25.00 D) $2.00 Assume the following facts: Sales price $180 per unit Variable cost $110 per unit Total fixed costs $14,610 Targeted income $52,800 How many units must be sold to achieve the targeted income of $52,800? OA) 963 OB) 629 C) 1,155 D) 513 Moonlight Motel's cost function is given as: Y = $50,000+ $7.50X Where: Y = annual custodial cost X = number of guest-days of occupancy In the current year, Moonlight Motel has 8,000 guest days. In the next year, Moonlight Motel expects an occupancy level of 10,000 guest days. (All costs next year will remain in the same relevant range as the current year.) What is the expected total variable custodial cost for next year? OA) $60,000 B) $75,000 OC) $137,500 D) $125,000 A sorority held a party. The sorority prepared the following budget for 25 expected attendees: Room rental $170 Food 250 Entertainment 150 Decorations Total Costs $645 Twenty-five people attended the party. The costs incurred were: 75 Room rental Food Entertainment Decorations Total Costs $140 320 125 75 $660 What is the variance for the room rental cost? A) $30 Favorable B) $70 Unfavorable C) $35 Favorable D) $30 Unfavorable

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