Question 1

Why is managerial judgment essential to predicting cost behavior?

Accepted Answer

Managerial judgment is important because

Question 2

Margolo Company makes cross-country skis. The company controller wants to calculate the fixed and variable costs associated with janitorial services incurred by the factory. Data for the past six months were collected.
   Required:

Accepted Answer

The answer of Margolo Company makes cross-country skis. The company...

Question 3

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 $75,620

Accepted Answer

A)  is the independent variable. 
B)  is the dependant variable. 
C)  is the intercept. 
D)  is the variable rate. 
A)  is the independent variable. 
B)  is the dependant variable. 
C)  is the intercept. 
D)  is the variable rate.

Question 4

Select the appropriate item for each of the definitions listed below.
a.
high-low method
b.
scatter-graph method
c.
method of least squares
-involves plotting data points on a graph

Accepted Answer

The answer of Select the appropriate item for each of...

Question 5

Select the appropriate item for each of the definitions listed below.
a.
dependant variable
b.
independent variable
c.
intercept
d.
slope
-it corresponds to the fixed cost

Accepted Answer

The answer of Select the appropriate item for each of...

Question 6

Which of the following would probably be a fixed cost in a fast-food restaurant?

Accepted Answer

A)  cost of hamburger 
B)  cost of french fries 
C)  shift manager's salary 
D)  utility cost 
A)  cost of hamburger 
B)  cost of french fries 
C)  shift manager's salary 
D)  utility cost

Question 7

Managerial judgment is critically important in determining cost behavior.

Accepted Answer

A) True 
 B)False

Question 8

If output decreases

Accepted Answer

A)  total fixed costs will remain the same. 
B)  total variable costs will increase. 
C)  per-unit fixed costs will decrease. 
D)  All of these are correct. 
A)  total fixed costs will remain the same. 
B)  total variable costs will increase. 
C)  per-unit fixed costs will decrease. 
D)  All of these are correct.

Question 9

Which of the following would probably be a variable cost at a college?

Accepted Answer

A)  salary of the head janitor 
B)  cost of registration forms 
C)  salary of the college president 
D)  none of these options 
A)  salary of the head janitor 
B)  cost of registration forms 
C)  salary of the college president 
D)  none of these options

Question 10

Select the appropriate item for each of the definitions listed below.
a.
committed fixed cost
b.
discretionary fixed cost
c.
mixed cost
d.
step cost
-the y-intercept corresponds to the fixed cost

Accepted Answer

The answer of Select the appropriate item for each of...

Question 11

Fixed costs that cannot be easily changed and typically involve a long-term contract are known as ___________________.

Accepted Answer

committed

Question 12

Total variable costs

Accepted Answer

A)  increases as output increases. 
B)  decreases as output decreases. 
C)  equal a variable rate * amount of output. 
D)  all of these are correct. 
A)  increases as output increases. 
B)  decreases as output decreases. 
C)  equal a variable rate * amount of output. 
D)  all of these are correct.

Question 13

A discretionary fixed cost can be changed relatively easily at management discretion.

Accepted Answer

A) True 
 B)False

Question 14

MATCHING
Select the appropriate cost behavior for each of the costs listed below.
a.
variable
b.
fixed
-factory supervisor's salary

Accepted Answer

The answer of MATCHING
Select the appropriate cost behavior for each...

Question 15

Olson Company makes hearing aids. Olson has found that total electricity cost for the factory can be represented by the following formula: total annual electricity cost = $149,000 + $2.75x, where x = labor hours. Last year, Olson incurred 212,000 labor hours.
Required:

Accepted Answer

The answer of Olson Company makes hearing aids. Olson has...

Question 16

Discretionary fixed costs

Accepted Answer

A)  cannot be easily changed. 
B)  often involve a long-term contract. 
C)  can be changed relatively easy at management discretion. 
D)  increase as output increases. 
A)  cannot be easily changed. 
B)  often involve a long-term contract. 
C)  can be changed relatively easy at management discretion. 
D)  increase as output increases.

Question 17

Figure 3-14.
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 five months were collected.
  
-Refer to Figure 3-14. Using a regression program, the forecasted utility cost at 2,600 machine hours (rounded to the nearest dollar) is

Accepted Answer

A)  $28,288. 
B)  $33,589. 
C)  $45,945. 
D)  $10,631. 
A)  $28,288. 
B)  $33,589. 
C)  $45,945. 
D)  $10,631.

Question 18

Select the appropriate type of cost for each of the definitions listed below.
a.
variable
b.
fixed
c.
mixed
d.
step
-has a discontinuous cost function

Accepted Answer

The answer of Select the appropriate type of cost for...

Question 19

Figure 3-12.
The method of least squares was used to develop a cost equation to predict the cost of monthly equipment maintenance. The following computer output was received:
   The driver used was the number of machine hours.
-Refer to Figure 3-12. Using the cost formula for the equipment maintenance cost, what is the predicted cost of equipment maintenance for April assuming that 5,000 machine hours will be incurred in April?

Accepted Answer

A)  $32,000 
B)  $125,000 
C)  $157,000 
D)  None of these are correct. 
A)  $32,000 
B)  $125,000 
C)  $157,000 
D)  None of these are correct.

Question 20

Select the appropriate item for each of the definitions listed below.
a.
dependant variable
b.
independent variable
c.
intercept
d.
slope
-its value depends on the value of another variable

Accepted Answer

The answer of Select the appropriate item for each of...

Why is managerial judgment essential to predicting cost behavior?

Margolo Company makes cross-country skis. The company controller wants to calculate the fixed and variable costs associated with janitorial services incurred by the factory. Data for the past six months were collected. Required:

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 $75,620

Select the appropriate item for each of the definitions listed below. a. high-low method b. scatter-graph method c. method of least squares -involves plotting data points on a graph

Select the appropriate item for each of the definitions listed below. a. dependant variable b. independent variable c. intercept d. slope -it corresponds to the fixed cost

Which of the following would probably be a fixed cost in a fast-food restaurant?

Managerial judgment is critically important in determining cost behavior.

If output decreases

Which of the following would probably be a variable cost at a college?

Select the appropriate item for each of the definitions listed below. a. committed fixed cost b. discretionary fixed cost c. mixed cost d. step cost -the y-intercept corresponds to the fixed cost

Fixed costs that cannot be easily changed and typically involve a long-term contract are known as ___________________.

Total variable costs

A discretionary fixed cost can be changed relatively easily at management discretion.

MATCHING Select the appropriate cost behavior for each of the costs listed below. a. variable b. fixed -factory supervisor's salary

Olson Company makes hearing aids. Olson has found that total electricity cost for the factory can be represented by the following formula: total annual electricity cost = $149,000 + $2.75x, where x = labor hours. Last year, Olson incurred 212,000 labor hours. Required:

Discretionary fixed costs

Select the appropriate type of cost for each of the definitions listed below. a. variable b. fixed c. mixed d. step -has a discontinuous cost function

Select the appropriate item for each of the definitions listed below. a. dependant variable b. independent variable c. intercept d. slope -its value depends on the value of another variable

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 3: Cost Behavior

Why is managerial judgment essential to predicting cost behavior?

Margolo Company makes cross-country skis. The company controller wants to calculate the fixed and variable costs associated with janitorial services incurred by the factory. Data for the past six months were collected. Required:

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 $75,620

Select the appropriate item for each of the definitions listed below. a. high-low method b. scatter-graph method c. method of least squares -involves plotting data points on a graph

Select the appropriate item for each of the definitions listed below. a. dependant variable b. independent variable c. intercept d. slope -it corresponds to the fixed cost

Which of the following would probably be a fixed cost in a fast-food restaurant?

Managerial judgment is critically important in determining cost behavior.

If output decreases

Which of the following would probably be a variable cost at a college?

Select the appropriate item for each of the definitions listed below. a. committed fixed cost b. discretionary fixed cost c. mixed cost d. step cost -the y-intercept corresponds to the fixed cost

Fixed costs that cannot be easily changed and typically involve a long-term contract are known as ___________________.

Total variable costs

A discretionary fixed cost can be changed relatively easily at management discretion.

MATCHING Select the appropriate cost behavior for each of the costs listed below. a. variable b. fixed -factory supervisor's salary

Olson Company makes hearing aids. Olson has found that total electricity cost for the factory can be represented by the following formula: total annual electricity cost = $149,000 + $2.75x, where x = labor hours. Last year, Olson incurred 212,000 labor hours. Required:

Discretionary fixed costs

Select the appropriate type of cost for each of the definitions listed below. a. variable b. fixed c. mixed d. step -has a discontinuous cost function

Select the appropriate item for each of the definitions listed below. a. dependant variable b. independent variable c. intercept d. slope -its value depends on the value of another variable

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters