Question 1

Capacity costs committed to only in the shorter term are termed as:

Accepted Answer

A) discretionary fixed costs. 
B) relevant costs. 
C) committed fixed costs. 
D) flexible resources. 
A) discretionary fixed costs. 
B) relevant costs. 
C) committed fixed costs. 
D) flexible resources.

Question 2

Buckeye Company has provided the following data for maintenance cost: $$\begin{array} { | l | l | l | } 
\hline & \text { Prior Year } & \text { Current Year } \
\hline \text { Machine hours } & 12,500 & 15,000 \
\hline \text { Maintenance cost } & \$ 27,000 & \$ 31,000 \
\hline
\end{array}$$ The best estimate of the cost formula for maintenance is?

Accepted Answer

A) $27,000 per year plus $1.60 per machine hour. 
B) $21,625 per year plus $0.625 per machine hour. 
C) $7,000 per year plus $0.625 per machine hour. 
D) $7,000 per year plus $1.60 per machine hour. 
A) $27,000 per year plus $1.60 per machine hour. 
B) $21,625 per year plus $0.625 per machine hour. 
C) $7,000 per year plus $0.625 per machine hour. 
D) $7,000 per year plus $1.60 per machine hour.

Question 3

The scattergraph method yields cost estimates that are the most precise possible.

Accepted Answer

A) True 
 B)False

Question 4

Reference: 06-08
Wilson Company's activity for the first six months of the current year is as follows: $$\begin{array} { | l | l | l | } 
\hline & \text { June } & \text { July } \
\hline \text { Activity level in units } & 10,000 & 20,000 \
\hline & & \
\hline \text { Variable costs } & \$ 20,000 & \$ ? \
\hline \text { Fixed costs } & 15,000 & ? \
\hline \text { Mixed costs } & 10,000 & ? \
\hline \text { Total costs } & \$ 45,000 & \$ 70,000 \
\hline
\end{array}$$
-Using the high-low method, the fixed portion of the electrical cost each month would be

Accepted Answer

A) $190. 
B) $760. 
C) $400. 
D) $280. 
A) $190. 
B) $760. 
C) $400. 
D) $280.

Question 5

Which costs will change with a decrease in activity within the relevant range

Accepted Answer

A) Unit fixed costs and total variable cost. 
B) Unit variable cost and unit fixed cost. 
C) Unit fixed cost and total fixed cost. 
D) Total fixed costs and total variable cost. 
A) Unit fixed costs and total variable cost. 
B) Unit variable cost and unit fixed cost. 
C) Unit fixed cost and total fixed cost. 
D) Total fixed costs and total variable cost.

Question 6

Reference: 06-03
Gasson Company is a merchandising firm. Next month the company expects to sell 800 units. The following data describe the company's revenue and cost structure: $$\begin{array} { | l | l | } 
\hline \text { Selling price per unit } & \$ 40 \
\hline \text { Sales commission } & 5 \% \
\hline \text { Purchase price (cost) per unit } & \$ 18 \
\hline \text { Advertising expense } & \$ 4,000 \text { per month } \
\hline \text { Administrative expense } & \$ 4,500 \text { per month plus } 15 \% \text { of sales } \
\hline
\end{array}$$ Assume that all activity mentioned in this problem is within the relevant range.
-The expected gross margin next month is?

Accepted Answer

A) $11,200. 
B) $17,600. 
C) $14,400. 
D) $16,000. 
A) $11,200. 
B) $17,600. 
C) $14,400. 
D) $16,000.

Question 7

An increase in the activity level within the relevant range results in:

Accepted Answer

A) a proportionate increase in total fixed costs. 
B) an increase in fixed cost per unit. 
C) an unchanged fixed cost per unit. 
D) a decrease in fixed cost per unit. 
A) a proportionate increase in total fixed costs. 
B) an increase in fixed cost per unit. 
C) an unchanged fixed cost per unit. 
D) a decrease in fixed cost per unit.

Capacity costs committed to only in the shorter term are termed as:

Buckeye Company has provided the following data for maintenance cost: Prior Year Current Year Machine hours 12,500 15,000 Maintenance cost \ 27,000 \ 31,000 The best estimate of the cost formula for maintenance is?

The scattergraph method yields cost estimates that are the most precise possible.

Which costs will change with a decrease in activity within the relevant range

An increase in the activity level within the relevant range results in:

An Introduction to Managerial Accounting

Cost Concepts

Systems Design: Job-Order Costing

Process Costing

Activity-Based Costing

Budgeting

Cost-Volume-Profit Relationships

Relevant Costs: the Key to Decision Making

Capital Budgeting Decisions

Standard Costs and Variance Analysis

Organizational Structure and Performance Measurement

How Well Am I Doing Financial Statement Analysis Online

How Well Am I Doing Cash Flow Statement Online

Filters

Exam 6: Cost Behaviour: Analysis and Use

Capacity costs committed to only in the shorter term are termed as:

Buckeye Company has provided the following data for maintenance cost: Prior Year Current Year Machine hours 12,500 15,000 Maintenance cost \ 27,000 \ 31,000 The best estimate of the cost formula for maintenance is?

The scattergraph method yields cost estimates that are the most precise possible.

Which costs will change with a decrease in activity within the relevant range

An increase in the activity level within the relevant range results in:

An Introduction to Managerial Accounting

Cost Concepts

Systems Design: Job-Order Costing

Process Costing

Activity-Based Costing

Budgeting

Cost-Volume-Profit Relationships

Relevant Costs: the Key to Decision Making

Capital Budgeting Decisions

Standard Costs and Variance Analysis

Organizational Structure and Performance Measurement

How Well Am I Doing Financial Statement Analysis Online

How Well Am I Doing Cash Flow Statement Online

Filters