QUESTION 18

1. Given the cost behavior in the table below, which of the three costs is a variable cost?

   		Cost 1		Cost 2		Cost 3
   Month	Units Produced	Total Costs	Cost per Unit	Total Costs	Cost per Unit	Total Costs	Cost per Unit
   1	50	$100	$2.00	$200	$4.00	$200	$4.00
   2	75	200	$2.67	$200	$2.67	$300	4.00

   		Cost 1
   		None of the three are variable costs
   		Cost 3
   		Cost 2

2. QUESTION 19

3. Which one of the following tools of analyses is not commonly used in cost estimation?

   		High-low estimation
   		Scatter diagrams
   		Least-squares regression
   		Activity based costing

4. QUESTION 20

5. Bishop, Inc. uses activity-based costing. The company produces X and Y. Information relating to the two products is as follows:

   	X	Y
   Units produced	38000	50000
   Machine-hours	15000	17000
   Direct labor-hours	16000	24000
   Materials handling (number of moves)	12000	16000
   Setups	20000	16000
   The following cost pools have been identified:
   Activity	Cost driver	Total cost
   Materials handling	Number of moves	504000
   Labor-related overhead	Direct labor hours	560000
   Setups	Number of setups	540000

   Setup costs will be allocated to products at the rate of:

   		$57 per setup
   		$15 per setup
   		$48 per setup
   		$36 per setup