25 The method of analyzing the behavior of semivariable cost

-25. The method of analyzing the behavior of semivariable costs that relies heavily on the ability of an observer to detect a pattern of cost behavior by reviewing past cost and volume data is the: a. High-low method. b. Method of least squares. c. Scattergraph method. d. Observation method. 26. After the observations of cost and production data are plotted on graph paper, a line i drawn by visual inspection representing the trend shown by most of the data points using the a. Observation method. b. High-low method. c. Method of least squares. d. Scattergraph method. 27. Flexible budgeting is a reporting system in which the: a. Budget shows estimated costs at different levels of production volume. b. Budget standards may be adjusted at will. c. Reporting dates vary according to the levels of activity reported upon. d. Statements included in the budget report vary from period to period. 28. Wiggins Company\'s flexible budget for 25,000 units shows $75,000 and $25,000 in variable and fixed costs, respectively. At 35,000 units, the flexible budget would show: a. Variable costs of $100,000 and fixed costs of $25,000. b. Variable costs of $90,000 and fixed costs of $30,000. c. Variable costs of $75,000 and fixed costs of $30,000 d. Variable costs of $105,000 and fixed costs of $25,000. -29. A major disadvantage of the scattergraph method of analyzing cost behavior is: a. It bases its solution on only two observations. b. It results in its analyzed cost being treated as either fixed or variable, based on which type of behavior it more closely resembles. c. Two persons could draw different lines through the data points. d. It enables non-representative points, called outliers, to be identified.

Solution

25. (D) Observation method

26. (D) Scattergraph method

27. (D) Statments included in the budget report vary from period to period

28. (D) Variable costs of $105,000 and fixed costs of $25,000