Question 1

The relationship between cost and activity is known as:

Accepted Answer

A)  cost estimation. 
B)  cost prediction. 
C)  cost behavior. 
D)  cost analysis. 
E)  cost approximation. 
A)  cost estimation. 
B)  cost prediction. 
C)  cost behavior. 
D)  cost analysis. 
E)  cost approximation.

Question 2

Trey, Inc. is studying marketing cost and sales volume, and has generated the following information by use of a scatter diagram and a least-squares regression analysis:
 
Trey is now preparing an estimate for monthly sales of 18,000 units. On the basis of the data presented, compute the most accurate sales forecast possible.

Accepted Answer

A)  $159,500. 
B)  $162,000. 
C)  $164,900. 
D)  $167,400. 
E)  None of the answers is correct. 
A)  $159,500. 
B)  $162,000. 
C)  $164,900. 
D)  $167,400. 
E)  None of the answers is correct.

Question 3

Which of the following costs exhibits both decreasing and increasing marginal costs over a specific range of activity?

Accepted Answer

A)  Semivariable cost. 
B)  Curvilinear cost. 
C)  Step-fixed cost. 
D)  Step-variable cost. 
E)  Fixed cost. 
A)  Semivariable cost. 
B)  Curvilinear cost. 
C)  Step-fixed cost. 
D)  Step-variable cost. 
E)  Fixed cost.

Question 4

The least-squares regression method of cost estimation relies on only two data points.

Accepted Answer

A) True 
 B)False

Question 5

Vargis Corporation has a machining capacity of 200,000 hours per year. Utilization of capacity is normally 75%; it has been as low as 40% and as high as 90%. An analysis of the accounting records revealed the following selected costs:
   
Vargis uses the high-low method to analyze cost behavior. 
Required: 
A. Classify each of the costs as being either variable, fixed, or semivariable.
B. Calculate amounts for the two unknowns in the preceding table.
C.
C. Calculate the total amount that Vargis would expect at a 75% utilization rate for Cost A, Cost B, and Cost
D. Develop an equation that Vargis can use to predict total cost for any level of hours within its range of operation.

Accepted Answer

A. Cost A: Fixed (same total amount at e

Question 6

Tallequah, Inc. uses the high-low method to analyze cost behavior. The company observed that at 20,000 machine hours of activity, total maintenance costs averaged $10.50 per hour. When activity jumped to 24,000 machine hours, which was still within the relevant range, the average total cost per machine hour was $9.75. On the basis of this information, the company's fixed maintenance costs were:

Accepted Answer

A)  $24,000. 
B)  $90,000. 
C)  $210,000. 
D)  $234,000. 
E)  None of the answers is correct. 
A)  $24,000. 
B)  $90,000. 
C)  $210,000. 
D)  $234,000. 
E)  None of the answers is correct.

Question 7

When graphed, a typical step-fixed cost appears as:

Accepted Answer

A)  a horizontal line. 
B)  a vertical line. 
C)  a series of staggered horizontal lines 
D)  a diagonal line that slopes downward to the right. 
E)  a diagonal line that slopes upward to the right. 
A)  a horizontal line. 
B)  a vertical line. 
C)  a series of staggered horizontal lines 
D)  a diagonal line that slopes downward to the right. 
E)  a diagonal line that slopes upward to the right.

Question 8

Use the following information to answer the following QuestionsSwan, Inc. uses the high-low method to analyze cost behavior. The company observed that at 22,000 machine hours of activity, total maintenance costs averaged $33.40 per hour. When activity jumped to 25,000 machine hours, which was still within the relevant range, the average total cost per machine hour was $30.40.
-On the basis of this information, what were total maintenance costs when Swan experienced 23,000 machine hours?

Accepted Answer

A)  $193,200. 
B)  $550,000. 
C)  $734,800. 
D)  $743,200. 
E)  $760,000. 
A)  $193,200. 
B)  $550,000. 
C)  $734,800. 
D)  $743,200. 
E)  $760,000.

Question 9

If the organization operates at an activity level outside the relevant range, any cost predictions based on data from the relevant range may not be very accurate.

Accepted Answer

A) True 
 B)False

Question 10

The following data relate to the Torrence Company for May and August of the current year:
 
-
May and August were the lowest and highest activity levels, and Torrence uses the high-low method to analyze cost behavior. Which of the following statements is true?

Accepted Answer

A)  The variable maintenance cost is $43 per hour. 
B)  The variable maintenance cost is $45 per hour. 
C)  The variable maintenance cost is $47 per hour. 
D)  The fixed maintenance cost is $725,000 per month. 
E)  More than one of the other answers is true. 
A)  The variable maintenance cost is $43 per hour. 
B)  The variable maintenance cost is $45 per hour. 
C)  The variable maintenance cost is $47 per hour. 
D)  The fixed maintenance cost is $725,000 per month. 
E)  More than one of the other answers is true.

The relationship between cost and activity is known as:

Which of the following costs exhibits both decreasing and increasing marginal costs over a specific range of activity?

The least-squares regression method of cost estimation relies on only two data points.

When graphed, a typical step-fixed cost appears as:

If the organization operates at an activity level outside the relevant range, any cost predictions based on data from the relevant range may not be very accurate.

The following data relate to the Torrence Company for May and August of the current year: - May and August were the lowest and highest activity levels, and Torrence uses the high-low method to analyze cost behavior. Which of the following statements is true?

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

Filters

Exam 6: Activity Analysis, Cost Behavior, and Cost Estimation

The relationship between cost and activity is known as:

Which of the following costs exhibits both decreasing and increasing marginal costs over a specific range of activity?

The least-squares regression method of cost estimation relies on only two data points.

When graphed, a typical step-fixed cost appears as:

If the organization operates at an activity level outside the relevant range, any cost predictions based on data from the relevant range may not be very accurate.

The following data relate to the Torrence Company for May and August of the current year: - May and August were the lowest and highest activity levels, and Torrence uses the high-low method to analyze cost behavior. Which of the following statements is true?

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

Filters