Question 1

Which of the following is an example of a discretionary fixed cost?

Accepted Answer

A)  Depreciation of manufacturing facilities 
B)  Donations to charitable organizations 
C)  Salaries of production supervisors 
D)  Property taxes on manufacturing facilities 
A)  Depreciation of manufacturing facilities 
B)  Donations to charitable organizations 
C)  Salaries of production supervisors 
D)  Property taxes on manufacturing facilities

Question 2

Parts used in manufacturing digital cameras would best be classified as what type of cost?

Accepted Answer

A)  Variable cost 
B)  Fixed cost 
C)  Mixed cost 
D)  Step cost 
A)  Variable cost 
B)  Fixed cost 
C)  Mixed cost 
D)  Step cost

Question 3

The wheels on an automobile are classified as a variable cost with respect to the volume of cars produced in an automobile assembly plant.

Accepted Answer

A) True 
 B)False

Question 4

As a consequence of automation and product diversity, in cost estimation:

Accepted Answer

A)  A facility level approach to estimating costs is increasingly important 
B)  Companies no longer need to pay attention to estimating overhead 
C)  Cost estimation is improved with the inclusion of non-unit cost drivers 
D)  Direct labor is playing an increasingly important role in cost determination 
A)  A facility level approach to estimating costs is increasingly important 
B)  Companies no longer need to pay attention to estimating overhead 
C)  Cost estimation is improved with the inclusion of non-unit cost drivers 
D)  Direct labor is playing an increasingly important role in cost determination

Question 5

The longer the time period of each observation, the higher the probability of error in matching costs and activity,

Accepted Answer

A) True 
 B)False

Question 6

Cooper and Kaplan developed the framework used to classify manufacturing activities. List the four categories of activities and provide an example of each activity level.

Accepted Answer

Unit level:
●Cost of raw materials
●Cost

Question 7

Rock Bottom's Brew is a successful brewery engaged in the development and production of specialty micro brews. It uses manufacturing cost hierarchy to allocate costs to various activities. During the past year, it has incurred:
  
-Using the manufacturing cost hierarchy, what is the total cost that would be classified as batch-level activity costs?

Accepted Answer

A)  $ 450,000 
B)  $ 350,000 
C)  $ 600,000 
D)  $ 625,000 
A)  $ 450,000 
B)  $ 350,000 
C)  $ 600,000 
D)  $ 625,000

Question 8

Assume the Paul's Custom Print Shop has the following information on the number of sales orders received and order-processing costs.
   Plot the data on a scatter diagram. Using the information from representative high- and low- volume months, and develop a cost-estimating equation for monthly production costs.

Accepted Answer

@#IMG-DLM& Variable costs = ($9,750 - $3,000) / (6

Question 9

Andrea Company manufactures and sells specialty items. The following representative direct labor-hours and production costs are provided for a four-month period:
   a = fixed production costs per month
b = variable production costs per direct labor hour
n = number of months
X = direct labor-hours per month
Y = total monthly production costs
Using the symbols above, indicate the cost estimation equation based on number of direct labor hours per month, and calculate total monthly production costs for May using the high-low method, assuming the direct labor hours for May are expected to be 2,250.

Accepted Answer

Y = a + bX
b = ($40,500 - $22,500) / (3,

Question 10

When developing a cost model for a firm or segment of a firm, the cost model is only applicable within the __________ range of capacity of fixed costs.

Accepted Answer

A)  Operating 
B)  Average 
C)  Marginal 
D)  Relevant 
A)  Operating 
B)  Average 
C)  Marginal 
D)  Relevant

Question 11

The development of accurate cost-estimating equations requires the matching of the activity to:

Accepted Answer

A)  Changes in technology and prices 
B)  Production 
C)  Related costs within each observation 
D)  All of the above 
A)  Changes in technology and prices 
B)  Production 
C)  Related costs within each observation 
D)  All of the above

Question 12

Phenning Company had the following costs for the past three years in which it produced 40,000, 48,000, and 60,000 units, respectively. 
   Identify which of the costs were variable, fixed, and mixed.

Accepted Answer

The answer of Phenning Company had the following costs for...

Question 13

Number of invoices is most appropriate as a cost driver for which of the following types of activity costs?

Accepted Answer

A)  Machining 
B)  Purchasing 
C)  Assembly 
D)  Payroll 
A)  Machining 
B)  Purchasing 
C)  Assembly 
D)  Payroll

Question 14

The following procedure performed at the United States mint is not a batch level activity:

Accepted Answer

A)  Inspecting the first units produced to verify proper set-up 
B)  Movement of manufactured coins to finishing stations 
C)  Setting up machinery for the stamping process 
D)  Stamping each individual coin 
A)  Inspecting the first units produced to verify proper set-up 
B)  Movement of manufactured coins to finishing stations 
C)  Setting up machinery for the stamping process 
D)  Stamping each individual coin

Question 15

George Rentals offers machine rental services for concrete cutting. Consider the following costs of the company over the relevant range of 4,000 to 10,000 hours of operating time for its concrete cutting equipment.
  
-What is the estimated total cost per hour at a volume of 8,000 hours?

Accepted Answer

A)  $12.50 
B)  $14.25 
C)  $18.00 
D)  $15.25 
A)  $12.50 
B)  $14.25 
C)  $18.00 
D)  $15.25

Question 16

The Johnson Furniture Company has the following information available regarding costs at various levels of monthly production:
   Develop an equation for total monthly production costs using the high-low method of cost estimation, and predict total costs for a monthly production volume of 18,000 units.

Accepted Answer

Variable costs = ($155,300 - $114,800) /

Question 17

The high-low method is likely to produce an inaccurate cost estimating equation when the organization has mixed costs.

Accepted Answer

A) True 
 B)False

Question 18

As volume increases, average cost per unit decreases because:

Accepted Answer

A)  Total fixed costs increase 
B)  Total variable costs increase 
C)  Total fixed costs stay the same 
D)  Total variable costs stay the same 
A)  Total fixed costs increase 
B)  Total variable costs increase 
C)  Total fixed costs stay the same 
D)  Total variable costs stay the same

Question 19

Marci Johnson uses gas to heat her home. She has accumulated the following information regarding her monthly gas bill and monthly heating degree-days. The heating degree-days value for a month is found by first subtracting the average temperature for each day from 65 degrees and then summing these daily amounts together for the month.
  The equation representing the relationship between the gas bill (Y) and heating degree-days (X) is:

Accepted Answer

A)  Y = $0.14 
B)  Y =$10 + $0.14X 
C)  Y =$10 - $0.14X 
D)  Y =$60 + $0.14X 
A)  Y = $0.14 
B)  Y =$10 + $0.14X 
C)  Y =$10 - $0.14X 
D)  Y =$60 + $0.14X

Question 20

Over the short term, which type of costs is indifferent to activity level changes?

Accepted Answer

A)  Variable costs 
B)  Fixed costs 
C)  Mixed costs 
D)  Step costs 
A)  Variable costs 
B)  Fixed costs 
C)  Mixed costs 
D)  Step costs

Which of the following is an example of a discretionary fixed cost?

Parts used in manufacturing digital cameras would best be classified as what type of cost?

The wheels on an automobile are classified as a variable cost with respect to the volume of cars produced in an automobile assembly plant.

As a consequence of automation and product diversity, in cost estimation:

The longer the time period of each observation, the higher the probability of error in matching costs and activity,

Cooper and Kaplan developed the framework used to classify manufacturing activities. List the four categories of activities and provide an example of each activity level.

When developing a cost model for a firm or segment of a firm, the cost model is only applicable within the __________ range of capacity of fixed costs.

The development of accurate cost-estimating equations requires the matching of the activity to:

Phenning Company had the following costs for the past three years in which it produced 40,000, 48,000, and 60,000 units, respectively. Identify which of the costs were variable, fixed, and mixed.

Number of invoices is most appropriate as a cost driver for which of the following types of activity costs?

The following procedure performed at the United States mint is not a batch level activity:

George Rentals offers machine rental services for concrete cutting. Consider the following costs of the company over the relevant range of 4,000 to 10,000 hours of operating time for its concrete cutting equipment. -What is the estimated total cost per hour at a volume of 8,000 hours?

The Johnson Furniture Company has the following information available regarding costs at various levels of monthly production: Develop an equation for total monthly production costs using the high-low method of cost estimation, and predict total costs for a monthly production volume of 18,000 units.

The high-low method is likely to produce an inaccurate cost estimating equation when the organization has mixed costs.

As volume increases, average cost per unit decreases because:

Over the short term, which type of costs is indifferent to activity level changes?

Managerial Accounting: Tools for Decision Making

Cost-Volume-Profit Analysis and Planning

Relevant Costs and Benefits for Decision Making

Product Costing: Job and Process Operations

Activity-Based Costing, Customer Profitability, and Activity-Based Management

Additional Topics in Product Costing

Pricing and Other Product Management Decisions

Operational Budgeting and Profit Planning

Standard Costs and Performance Reports

Segment Reporting, Transfer Pricing, and Balanced Scorecard

Capital Budgeting Decisions

Appendix: Managerial Analysis of Financial Statements

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Exam 2: Cost Behavior, Activity Analysis, and Cost Estimation

Which of the following is an example of a discretionary fixed cost?

Parts used in manufacturing digital cameras would best be classified as what type of cost?

The wheels on an automobile are classified as a variable cost with respect to the volume of cars produced in an automobile assembly plant.

As a consequence of automation and product diversity, in cost estimation:

The longer the time period of each observation, the higher the probability of error in matching costs and activity,

Cooper and Kaplan developed the framework used to classify manufacturing activities. List the four categories of activities and provide an example of each activity level.

When developing a cost model for a firm or segment of a firm, the cost model is only applicable within the __________ range of capacity of fixed costs.

The development of accurate cost-estimating equations requires the matching of the activity to:

Phenning Company had the following costs for the past three years in which it produced 40,000, 48,000, and 60,000 units, respectively. Identify which of the costs were variable, fixed, and mixed.

Number of invoices is most appropriate as a cost driver for which of the following types of activity costs?

The following procedure performed at the United States mint is not a batch level activity:

George Rentals offers machine rental services for concrete cutting. Consider the following costs of the company over the relevant range of 4,000 to 10,000 hours of operating time for its concrete cutting equipment. -What is the estimated total cost per hour at a volume of 8,000 hours?

The high-low method is likely to produce an inaccurate cost estimating equation when the organization has mixed costs.

As volume increases, average cost per unit decreases because:

Over the short term, which type of costs is indifferent to activity level changes?

Managerial Accounting: Tools for Decision Making

Cost-Volume-Profit Analysis and Planning

Relevant Costs and Benefits for Decision Making

Product Costing: Job and Process Operations

Activity-Based Costing, Customer Profitability, and Activity-Based Management

Additional Topics in Product Costing

Pricing and Other Product Management Decisions

Operational Budgeting and Profit Planning

Standard Costs and Performance Reports

Segment Reporting, Transfer Pricing, and Balanced Scorecard

Capital Budgeting Decisions

Appendix: Managerial Analysis of Financial Statements

Filters