Exam 3: Cost Behavior

Select the appropriate item for each of the definitions listed below. a. high-low method b. scatter-graph method c. method of least squares -results in the best-fitting line through a set of data points

The cost of advertising is usually a discretionary fixed cost.

Using regression, the value of 'X Variable 1' equals the slope of the line.

Select the appropriate item for each of the definitions listed below. a. relevant range b. cost behavior c. driver d. variable cost e. fixed cost -the range of output over which the assumed cost relationship is valid

The ________________________ is a variable whose value depends on the value of another variable.

MATCHING Select the appropriate cost behavior for each of the costs listed below. a. variable b. fixed -depreciation

The method of least squares

Figure 3-6. Taran Company incurred the following costs for the months of January and February. -Refer to Figure 3-6. Assume that output was 5,000 units in January and 10,000 units in February, utility cost is a mixed cost, and the fixed cost of utilities was $3,000. What was the variable rate per unit of output for utilities cost?

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. What was the cost formula for equipment maintenance?

The formula for a mixed cost is

Select the appropriate type of cost for each of the definitions below. a. variable b. fixed c. mixed d. step -remains the same in total within the relevant range

The slope of a mixed cost line is equal to the fixed element of the cost.

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 the estimate of Okafor Company's total lease cost be at a level of 500 machine hours?

If a cost's step-cost behavior follows very narrow steps, the costs may be approximated using:

The cost formula for monthly depreciation cost in a factory is Total cost = $10,000 This cost

Mixed costs have both a fixed and a variable component.

Coefficients shown by a regression program are: Required:

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

Graphically, the ______________ is the point at which the cost line intercepts the cost (vertical) axis.

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 value of the X Variable 1 (rounded to the nearest penny) is