Question 1

The relevant range is that range of activity:

Accepted Answer

A) where a company achieves its maximum eﬃciency. 
B) where units produced equal units sold. 
C) where management expects the ﬁrm to operate. 
D) where the ﬁrm will earn a proﬁt. 
E) where expected results are abnormally high. 
A) where a company achieves its maximum eﬃciency. 
B) where units produced equal units sold. 
C) where management expects the ﬁrm to operate. 
D) where the ﬁrm will earn a proﬁt. 
E) where expected results are abnormally high.

Question 2

Which of the following choices correctly classiﬁes a committed ﬁxed cost and a discretionary ﬁxed cost?

Accepted Answer

A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E 
A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E

Question 3

Paige Corporation observed that when 25,000 units were sold, a particular cost amounted to $75,000, or $3.00 per unit.When volume increased by 10%, the cost totaled $82,500 (i.e., $3.00 per unit).The cost that Paige is studying can best be described as a:

Accepted Answer

A) variable cost. 
B) ﬁxed cost. 
C) semivariable cost. 
D) discretionary ﬁxed cost. 
E) step-ﬁxed cost. 
A) variable cost. 
B) ﬁxed cost. 
C) semivariable cost. 
D) discretionary ﬁxed cost. 
E) step-ﬁxed cost.

Question 4

Gentry Industries has the following information about maintenance costs in the past six months.   The cost formula that expresses the behavior of Gentry's maintenance cost is:

Accepted Answer

A) Y = $0 + $1,600X. 
B) Y = $160 + $6X. 
C) Y = $16,000 + $6X. 
D) Y = $0 + $6X. 
E) Y = $1,600 + $6X. 
A) Y = $0 + $1,600X. 
B) Y = $160 + $6X. 
C) Y = $16,000 + $6X. 
D) Y = $0 + $6X. 
E) Y = $1,600 + $6X.

Question 5

Brock Morton has a fast-food franchise and must pay a franchise fee of $45,000 plus 4% of gross sales.In terms of cost behavior, the fee is known as a:

Accepted Answer

A) variable cost. 
B) ﬁxed cost. 
C) step-ﬁxed cost. 
D) semivariable cost. 
E) curvilinear cost. 
A) variable cost. 
B) ﬁxed cost. 
C) step-ﬁxed cost. 
D) semivariable cost. 
E) curvilinear cost.

Question 6

Property taxes are an example of a(n):

Accepted Answer

A) committed ﬁxed cost. 
B) committed variable cost. 
C) discretionary ﬁxed cost. 
D) discretionary variable cost. 
E) engineered cost. 
A) committed ﬁxed cost. 
B) committed variable cost. 
C) discretionary ﬁxed cost. 
D) discretionary variable cost. 
E) engineered cost.

Question 7

Which of the following methods of cost estimation relies on only two data points?

Accepted Answer

A) Least-squares regression. 
B) The high-low method. 
C) The visual-ﬁt method. 
D) Account analysis. 
E) Multiple regression. 
A) Least-squares regression. 
B) The high-low method. 
C) The visual-ﬁt method. 
D) Account analysis. 
E) Multiple regression.

Question 8

Data below 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 $18 per hour. 
B) The variable maintenance cost is $22 per hour. 
C) The variable maintenance cost is $24 per hour. 
D) The ﬁxed maintenance cost is $72,000 per month. 
E) More than one of the other answers is true. 
A) The variable maintenance cost is $18 per hour. 
B) The variable maintenance cost is $22 per hour. 
C) The variable maintenance cost is $24 per hour. 
D) The ﬁxed maintenance cost is $72,000 per month. 
E) More than one of the other answers is true.

Question 9

Volcano Hot Wings has budgeted the following costs for a month in which 12,000 wings will be cooked and sold.   Each wing sells for $1.60 each.How much would Volcano Hot Wings' proﬁt increase if 100 more wings were sold?

Accepted Answer

A) $160.00 
B) $70.00 
C) $90.00 
D) $168.00 
E) None of these answer choices are correct. 
A) $160.00 
B) $70.00 
C) $90.00 
D) $168.00 
E) None of these answer choices are correct.

Question 10

Which type of ﬁxed cost (1) tends to be more long-term in nature and (2) can be cut back more easily in bad economic times without doing serious harm to organizational goals and objectives?

Accepted Answer

A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E 
A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E

Question 11

Barkoff Enterprises, which uses the high-low method to analyze cost behavior, has determined that machine hours best explain the company's utilities cost.The company's relevant range of activity varies from a low of 600 machine hours to a high of 1,100 machine hours, with the following data being available for the ﬁrst six months of the year:   Using the high-low method, the utilities cost for Barkoff associated with 980 machine hours would be:

Accepted Answer

A) $9,510. 
B) $9,660. 
C) $9,700. 
D) $9,790. 
E) None of the answers is correct. 
A) $9,510. 
B) $9,660. 
C) $9,700. 
D) $9,790. 
E) None of the answers is correct.

Question 12

Command Generators is in the process of preparing a production cost budget for August.Actual costs in July for the production of 60 generators were:   Materials and labor are the only variable costs.If production and sales are budgeted to increase to 70 generators in August, how much is the expected total cost on the August budget?

Accepted Answer

A) $17,850 
B) $16,600 
C) $9,100 
D) $15,300 
E) None of these answer choices is correct. 
A) $17,850 
B) $16,600 
C) $9,100 
D) $15,300 
E) None of these answer choices is correct.

Question 13

Which of the following is not an example of a committed ﬁxed cost?

Accepted Answer

A) Property taxes. 
B) Depreciation on buildings. 
C) Salaries of management personnel. 
D) Outlays for advertising programs. 
E) Equipment rental costs. 
A) Property taxes. 
B) Depreciation on buildings. 
C) Salaries of management personnel. 
D) Outlays for advertising programs. 
E) Equipment rental costs.

Question 14

An example of a discretionary cost is the cost of research and development.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following would not typically be classiﬁed as a discretionary ﬁxed cost?

Accepted Answer

A) Equipment depreciation. 
B) Employee development (education) programs. 
C) Advertising. 
D) Outlays for research and development. 
E) Charitable contributions. 
A) Equipment depreciation. 
B) Employee development (education) programs. 
C) Advertising. 
D) Outlays for research and development. 
E) Charitable contributions.

Question 16

Bogata Enterprises has determined that three variables play a key role in determining company revenues.To arrive at an objective forecast of revenues for the next accounting period, Bogata should use:

Accepted Answer

A) simple regression. 
B) multiple regression. 
C) a scatter diagram. 
D) complex regression. 
E) the high-low method. 
A) simple regression. 
B) multiple regression. 
C) a scatter diagram. 
D) complex regression. 
E) the high-low method.

Question 17

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 with the steps moving upward to the right. 
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 with the steps moving upward to the right. 
D) a diagonal line that slopes downward to the right. 
E) a diagonal line that slopes upward to the right.

Question 18

Multiple regression is a statistical method that estimates a linear (straight-line) relationship between one dependent variable and one independent variable.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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: Scatter Regression Diagram Analysis Variable cost per unit sold $ 6.50 $ 6.80 Total monthly ﬁxed cost $45,000 $42,500 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.

The relevant range is that range of activity:

Which of the following choices correctly classiﬁes a committed ﬁxed cost and a discretionary ﬁxed cost?

Paige Corporation observed that when 25,000 units were sold, a particular cost amounted to $75,000, or $3.00 per unit.When volume increased by 10%, the cost totaled $82,500 (i.e., $3.00 per unit).The cost that Paige is studying can best be described as a:

Gentry Industries has the following information about maintenance costs in the past six months. The cost formula that expresses the behavior of Gentry's maintenance cost is:

Brock Morton has a fast-food franchise and must pay a franchise fee of $45,000 plus 4% of gross sales.In terms of cost behavior, the fee is known as a:

Property taxes are an example of a(n):

Which of the following methods of cost estimation relies on only two data points?

Data below 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?

Volcano Hot Wings has budgeted the following costs for a month in which 12,000 wings will be cooked and sold. Each wing sells for $1.60 each.How much would Volcano Hot Wings' proﬁt increase if 100 more wings were sold?

Which type of ﬁxed cost (1) tends to be more long-term in nature and (2) can be cut back more easily in bad economic times without doing serious harm to organizational goals and objectives?

Which of the following is not an example of a committed ﬁxed cost?

An example of a discretionary cost is the cost of research and development.

Which of the following would not typically be classiﬁed as a discretionary ﬁxed cost?

Bogata Enterprises has determined that three variables play a key role in determining company revenues.To arrive at an objective forecast of revenues for the next accounting period, Bogata should use:

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

Multiple regression is a statistical method that estimates a linear (straight-line) relationship between one dependent variable and one independent variable.

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

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

Inventory Management and Economic Order Quantity (EOQ) Analysis

Filters

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

The relevant range is that range of activity:

Which of the following choices correctly classiﬁes a committed ﬁxed cost and a discretionary ﬁxed cost?

Paige Corporation observed that when 25,000 units were sold, a particular cost amounted to $75,000, or $3.00 per unit.When volume increased by 10%, the cost totaled $82,500 (i.e., $3.00 per unit).The cost that Paige is studying can best be described as a:

Gentry Industries has the following information about maintenance costs in the past six months. The cost formula that expresses the behavior of Gentry's maintenance cost is:

Brock Morton has a fast-food franchise and must pay a franchise fee of $45,000 plus 4% of gross sales.In terms of cost behavior, the fee is known as a:

Property taxes are an example of a(n):

Which of the following methods of cost estimation relies on only two data points?

Data below 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?

Volcano Hot Wings has budgeted the following costs for a month in which 12,000 wings will be cooked and sold. Each wing sells for $1.60 each.How much would Volcano Hot Wings' proﬁt increase if 100 more wings were sold?

Which type of ﬁxed cost (1) tends to be more long-term in nature and (2) can be cut back more easily in bad economic times without doing serious harm to organizational goals and objectives?

Which of the following is not an example of a committed ﬁxed cost?

An example of a discretionary cost is the cost of research and development.

Which of the following would not typically be classiﬁed as a discretionary ﬁxed cost?

Bogata Enterprises has determined that three variables play a key role in determining company revenues.To arrive at an objective forecast of revenues for the next accounting period, Bogata should use:

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

Multiple regression is a statistical method that estimates a linear (straight-line) relationship between one dependent variable and one independent variable.

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

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

Inventory Management and Economic Order Quantity (EOQ) Analysis

Filters