Exam 3: Cost Behavior
Exam 1: Introduction to Managerial Accounting63 Questions
Exam 2: Basic Managerial Accounting Concepts178 Questions
Exam 3: Cost Behavior176 Questions
Exam 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool167 Questions
Exam 5: Job-Order Costing171 Questions
Exam 6: Process Costing158 Questions
Exam 7: Activity-Based Costing and Management162 Questions
Exam 8: Absorption and Variable Costing,and Inventory Management110 Questions
Exam 9: Profit Planning165 Questions
Exam 10: Standard Costing: a Managerial Control Tool163 Questions
Exam 11: Flexible Budgets and Overhead Analysis156 Questions
Exam 12: Performance Evaluation and Decentralization157 Questions
Exam 13: Short-Run Decision Making: Relevant Costing154 Questions
Exam 14: Capital Investment Decisions163 Questions
Exam 15: Statement of Cash Flows146 Questions
Exam 16: Financial Statement Analysis169 Questions
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The cost of raw materials used is usually a fixed cost.
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(True/False)
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Correct Answer:
False
Blacken Company manufactures motorcycles.The company's management accountant wants to calculate the fixed and variable costs associated with utility cost incurred by the factory.Data for the past six months were collected.


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Correct Answer:
Required:
Figure 3-11. The following four months of data were collected on utility cost and the number of labor hours in a factory.
Refer to Figure 3-11.What would be the estimate of electricity cost if the factory incurred 4,700 labor hours next month?

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(Multiple Choice)
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Correct Answer:
C
__________________ is the general term for describing whether a cost changes when the level of output changes.
(Short Answer)
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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.
Refer to Figure 3-3.What would Okafor Company's cost formula be to estimate the cost of leasing within the relevant range?

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A discretionary fixed cost can be changed relatively easily at management discretion.
(True/False)
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A type of cost behavior where the true total cost function is increasing at a decreasing rate is called ______________.
(Short Answer)
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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.
Coefficients shown by a regression program are:
Refer to Figure 3-7.Using the results of regression,the cost formula for maintenance cost was


(Multiple Choice)
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The _________________________ is a way to see the cost relationship by plotting the data points on a graph.
(Short Answer)
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Consider each of the following independent situations.
Required: For each situation,describe the cost as one of the following: fixed cost,variable cost,mixed cost,or step cost.

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If output increases by 50% and is still within the relevant range
(Multiple Choice)
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Graphically,the ______________ is the point at which the cost line intercepts the cost (vertical)axis.
(Short Answer)
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The high-low method is an objective method to separate the cost behavior of a mixed cost.
(True/False)
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Just Burn It! Manufactures blank CDs.The company incurs $22,000 in monthly depreciation costs on its manufacturing equipment as well as monthly advertising costs of $2,000 to place ads in newspapers and on the radio.Each CD requires materials and manufacturing overhead resources.On average the company uses 26,000 pounds of material to manufacture 12,000 CDs per month.Each pound of material costs $2.50.The manufacturing overhead is driven by machine hours and on average the company incurs $30,000 in manufacturing overhead to produce 12,000 CDs per month.


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An advantage of the high-low method is that it is ___________.
or
or
(Short Answer)
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Which of the following would probably be a committed fixed cost for an accounting firm?
(Multiple Choice)
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The range of output over which the assumed cost relationship is valid for normal operations of a firm is called the
(Multiple Choice)
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Figure 3-9. The following cost formula was developed using monthly data for a retail clothing store.
Total cost = $75,620 + ($242 ´ number of customers)
Refer to Figure 3-9.The term "number of customers"
(Multiple Choice)
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