Question 1

Why is identification of a relevant range important?

Accepted Answer

A)  Product costs are higher outside of the relevant range 
B)  Cost behavior outside of the relevant range is linear, which distorts CVP analysis. 
C)  It directly impacts the number of units of product a company must sell to be profitable. 
D)  It allows a company to rely on cost behavior for planning purposes. 
A)  Product costs are higher outside of the relevant range 
B)  Cost behavior outside of the relevant range is linear, which distorts CVP analysis. 
C)  It directly impacts the number of units of product a company must sell to be profitable. 
D)  It allows a company to rely on cost behavior for planning purposes.

Question 2

The finance manager has provided you with the following overhead cost function in a Y = m(X) + b format: Total monthly overhead costs = $2.50 (machine hours used) + $4,300. Given this cost function, identify the (a) variable cost; (b) the cost driver; (c) the fixed costs; and whether these monthly overhead costs are considered variable, fixed, or mixed in total.

Accepted Answer

a) Variable cost = $2.50 per machine hou

Question 3

If costs are purely fixed in determining the cost line equation,

Accepted Answer

A)  regression analysis must be used. 
B)  the equation of the line becomes Y = m(X). 
C)  the equation of the line becomes Y = b. 
D)  the equation of the line remains Y= m(X) + b. 
A)  regression analysis must be used. 
B)  the equation of the line becomes Y = m(X). 
C)  the equation of the line becomes Y = b. 
D)  the equation of the line remains Y= m(X) + b.

Question 4

Describe the fundamentals of cost behavior.

Accepted Answer

Costs must be monitored and managed in o

Question 5

Lennox Custom Home Designs has just hired Janesh to pack all orders for shipping to customers. It took Janesh 3 minutes to pack her first box of goods, with an estimated learning curve of 85%. Compute the time predicted per unit when packaging the following quantities for customer shipment and total time to package.

Accepted Answer

The answer of Lennox Custom Home Designs has just hired...

Question 6

If a company expands capacity by 40% or 40,000 units by increasing its fixed costs, and its unit selling price and unit variable cost remain the same, its total profit will

Accepted Answer

A)  stay the same if no additional units are sold because the revenue remains the same. 
B)  increase if 2,000 additional units are sold. 
C)  decrease by the amount of the additional fixed costs if no additional units are sold. 
D)  increase by the selling price per unit if 2,000 additional units are sold. 
A)  stay the same if no additional units are sold because the revenue remains the same. 
B)  increase if 2,000 additional units are sold. 
C)  decrease by the amount of the additional fixed costs if no additional units are sold. 
D)  increase by the selling price per unit if 2,000 additional units are sold.

Question 7

Which of the following would most likely be considered a mixed cost for an attorney's office?

Accepted Answer

A) Electricity costs for the attorney's office complex 
B) Cost of the copy machine 
C)  Cost of wages of paralegal clerks 
D) Cost of auto expenses for office vehicles driven to and from the courthouse. 
A) Electricity costs for the attorney's office complex 
B) Cost of the copy machine 
C)  Cost of wages of paralegal clerks 
D) Cost of auto expenses for office vehicles driven to and from the courthouse.

Question 8

Jaimin reported the following amount of time to production of the MCG products:

Accepted Answer

: Learning Curve = 70%; 4th Un

Question 9

Which of the following statements is true regarding the concept of a learning curve?

Accepted Answer

A)  As additional units are produced, it will require the same amount of time, but cost per unit will decrease. 
B)  As additional units are produced, each additional unit will require less time, and thus, will result in cost savings. 
C)  As additional units are produced, the amount of time required may increase or decrease depending on the training of the production worker. 
D)  As additional units are produced, each additional unit will require less time, but the cost will increase per unit due to increased training costs for the production worker. 
A)  As additional units are produced, it will require the same amount of time, but cost per unit will decrease. 
B)  As additional units are produced, each additional unit will require less time, and thus, will result in cost savings. 
C)  As additional units are produced, the amount of time required may increase or decrease depending on the training of the production worker. 
D)  As additional units are produced, each additional unit will require less time, but the cost will increase per unit due to increased training costs for the production worker.

Question 10

A cost driver is a(n)

Accepted Answer

A)  system that tracks prior costs. 
B)  activity that causes a particular cost. 
C)  group of accumulated costs. 
D)  rate used to assign costs. 
A)  system that tracks prior costs. 
B)  activity that causes a particular cost. 
C)  group of accumulated costs. 
D)  rate used to assign costs.

Question 11

In a professional services firm such as a medical doctor's practice, which of the following overhead costs most likely represents a mixed cost function?

Accepted Answer

A)  Medical assistant salaries 
B)  Double-declining balance depreciation on office computers 
C)  Copy machine costs 
D)  Disposable patient gowns 
A)  Medical assistant salaries 
B)  Double-declining balance depreciation on office computers 
C)  Copy machine costs 
D)  Disposable patient gowns

Question 12

Brianna Wellington is the new accountant at Advanced Auto Corporation. She has been assigned the task of determining the next month's costs for her department. She only has partial information available from the previous month as follows: high activity level of 350 units at a total cost of $3,280. She also knows from the accounting records, that the total fixed costs are estimated at $970. Determine the amount of the variable cost per unit and the estimated total costs for next month assuming that 330 units are going to be produced.

Accepted Answer

Variable cost per unit = $6.60; 
High Ac

Question 13

Futuristic Fashions reports the following cost information for the period:   Determine the linear cost function equation of a line using the data provide for Futuristic Fashions.

Accepted Answer

Total Cost at a Given Activity Level = U

Question 14

The regression method

Accepted Answer

A)  uses only two actual data points to estimate a cost line. 
B)  can estimate a cost line but cannot separate total costs into variable and fixed costs. 
C)  uses every point in a data set to create a straight-line equation to estimate future costs. 
D)  uses the same methodology as the high-low method. 
A)  uses only two actual data points to estimate a cost line. 
B)  can estimate a cost line but cannot separate total costs into variable and fixed costs. 
C)  uses every point in a data set to create a straight-line equation to estimate future costs. 
D)  uses the same methodology as the high-low method.

Question 15

Wally World provided the following data concerning its costs of operating and the number of riders of its Scream ride and the related linear regression for selected operation months:   Using the high-low method, what is the unit variable cost for the Scream ride?

Accepted Answer

A)  $2.25 
B)  $2.42 
C)   $2.47 
D)  $2.60 
A)  $2.25 
B)  $2.42 
C)   $2.47 
D)  $2.60

Question 16

Tracy has started her own business producing custom candles. For now, she is starting slowly, and offering only certain designs in the custom candles. Her favorite design, which was her first candle produced, had the following production time and costs:   Tracy expects to experience a learning curve of 90% in making subsequent candles for her customers. Required: 
a. Computer the total cost of for the first candle that Tracy produced.
b. Compute the cost of four candles if Tracy does not account for a learning curve.
c. Compute the total cost of four candles and the cost per unit if Tracy does account for a learning curve.

Accepted Answer

a. Cost for first candle = (.5 lbs. x $6

Question 17

The fixed portion of the cost equation is called the

Accepted Answer

A)  p value. 
B)  Intercept coefficient. 
C)  t statistic. 
D)  standard deviation. 
A)  p value. 
B)  Intercept coefficient. 
C)  t statistic. 
D)  standard deviation.

Question 18

Identify the two, straightforward methods for predicting costs and explain the how each method is used to predict future costs?

Accepted Answer

The two straightforward methods for pred

Question 19

In using a regression method, and determining the statistical significance of the slope of the cost line, the larger the t-statistic,

Accepted Answer

A)  the stronger or more significant the relationship between the independent variable, X and the dependent variable, Y. 
B)  the weaker or less significant the relationship between the independent variable, X and the dependent variable, Y. 
C)  the more relevant the intercept is in the cost equation. 
D)  the less relevant the intercept is in the cost equation. 
A)  the stronger or more significant the relationship between the independent variable, X and the dependent variable, Y. 
B)  the weaker or less significant the relationship between the independent variable, X and the dependent variable, Y. 
C)  the more relevant the intercept is in the cost equation. 
D)  the less relevant the intercept is in the cost equation.

Question 20

Define variable costs, fixed costs and mixed costs and explain their relevance in predicting future costs.

Accepted Answer

Variable costs are costs that change in

Why is identification of a relevant range important?

If costs are purely fixed in determining the cost line equation,

Describe the fundamentals of cost behavior.

If a company expands capacity by 40% or 40,000 units by increasing its fixed costs, and its unit selling price and unit variable cost remain the same, its total profit will

Which of the following would most likely be considered a mixed cost for an attorney's office?

Jaimin reported the following amount of time to production of the MCG products:

Which of the following statements is true regarding the concept of a learning curve?

A cost driver is a(n)

In a professional services firm such as a medical doctor's practice, which of the following overhead costs most likely represents a mixed cost function?

Futuristic Fashions reports the following cost information for the period: Determine the linear cost function equation of a line using the data provide for Futuristic Fashions.

The regression method

Wally World provided the following data concerning its costs of operating and the number of riders of its Scream ride and the related linear regression for selected operation months: Using the high-low method, what is the unit variable cost for the Scream ride?

The fixed portion of the cost equation is called the

Identify the two, straightforward methods for predicting costs and explain the how each method is used to predict future costs?

In using a regression method, and determining the statistical significance of the slope of the cost line, the larger the t-statistic,

Define variable costs, fixed costs and mixed costs and explain their relevance in predicting future costs.

Cost Accounting Has Purpose

Refresher on Cost Terms Road Map

Cost-Volume-Profit Analysis

Cost Accounting Has Purpose

Mastering the Master Budget

Capital Budgeting Choices and Decisions

Job Costing

Activity- Based Costing

Variance Analysis and Standard Costing

Process Costing

Absorption Versus Variable Costing

Data Analytics

Support Department Costing

Joint Costs and Decision-Making

The Art and Science of Pricing to Optimize Revenue

Management Control Systems and Transfer Pricing

Business Strategy, Performance Measurement, and the Balanced Scorecard

Filters

Exam 3: Cost Behavior and Estimation

Why is identification of a relevant range important?

If costs are purely fixed in determining the cost line equation,

Describe the fundamentals of cost behavior.

If a company expands capacity by 40% or 40,000 units by increasing its fixed costs, and its unit selling price and unit variable cost remain the same, its total profit will

Which of the following would most likely be considered a mixed cost for an attorney's office?

Jaimin reported the following amount of time to production of the MCG products:

Which of the following statements is true regarding the concept of a learning curve?

A cost driver is a(n)

In a professional services firm such as a medical doctor's practice, which of the following overhead costs most likely represents a mixed cost function?

Futuristic Fashions reports the following cost information for the period: Determine the linear cost function equation of a line using the data provide for Futuristic Fashions.

The regression method

Wally World provided the following data concerning its costs of operating and the number of riders of its Scream ride and the related linear regression for selected operation months: Using the high-low method, what is the unit variable cost for the Scream ride?

The fixed portion of the cost equation is called the

Identify the two, straightforward methods for predicting costs and explain the how each method is used to predict future costs?

In using a regression method, and determining the statistical significance of the slope of the cost line, the larger the t-statistic,

Define variable costs, fixed costs and mixed costs and explain their relevance in predicting future costs.

Cost Accounting Has Purpose

Refresher on Cost Terms Road Map

Cost-Volume-Profit Analysis

Cost Accounting Has Purpose

Mastering the Master Budget

Capital Budgeting Choices and Decisions

Job Costing

Activity- Based Costing

Variance Analysis and Standard Costing

Process Costing

Absorption Versus Variable Costing

Data Analytics

Support Department Costing

Joint Costs and Decision-Making

The Art and Science of Pricing to Optimize Revenue

Management Control Systems and Transfer Pricing

Business Strategy, Performance Measurement, and the Balanced Scorecard

Filters