Question 1

Describe the steps in the high-low method.

Accepted Answer

Answers will vary
The steps in the high-

Question 2

A disadvantage of the high-low method is that the high point and low point may not be representative of the total data set available.

Accepted Answer

A) True 
 B)False

Question 3

Select the term from the list provided that best matches each of the following descriptions.The first is done for you.

Accepted Answer

The answer of Select the term from the list provided...

Question 4

What is meant by the phrase,"relevant range?" How does the concept of relevant range affect fixed costs?

Accepted Answer

Answers will vary
The relevant range is

Question 5

If the company's volume increases to 5,000 units,the total cost per unit will be:

Accepted Answer

A)  $18.00. 
B)  $20.00. 
C)  $20.50. 
D)  $22.50. 
A)  $18.00. 
B)  $20.00. 
C)  $20.50. 
D)  $22.50.

Question 6

When selecting the high and low observations under the high-low method of analyzing mixed costs,the selection should be based on the dependent variable (cost).

Accepted Answer

A) True 
 B)False

Question 7

Assuming that cost behavior did not change over the two-year period,what is the company's annual fixed general,selling,and administrative cost?

Accepted Answer

A)  $6,500 
B)  $6,000 
C)  $3,000 
D)  $2,500 
A)  $6,500 
B)  $6,000 
C)  $3,000 
D)  $2,500

Question 8

The total variable cost increases in direct proportion to volume.

Accepted Answer

A) True 
 B)False

Question 9

The BRC Company is considering the introduction of a new line of high end electronics.Because there is considerable uncertainty with regard to the demand for the products,the company would probably be served better by a variable cost s

Accepted Answer

A) True 
 B)False

Question 10

Which of the following items would not be found on a contribution format income statement?

Accepted Answer

A)  Fixed cost 
B)  Variable cost 
C)  Gross margin 
D)  Net income 
A)  Fixed cost 
B)  Variable cost 
C)  Gross margin 
D)  Net income

Question 11

The excess of revenue over variable costs is referred to as:

Accepted Answer

A)  gross profit 
B)  gross margin 
C)  contribution margin 
D)  manufacturing margin 
A)  gross profit 
B)  gross margin 
C)  contribution margin 
D)  manufacturing margin

Question 12

Select the incorrect statement regarding the use of average unit costs.

Accepted Answer

A)  Average costs should be calculated for a sufficiently long time period to capture seasonal fluctuations in costs. 
B)  Average costs are often more relevant for decision making than are actual costs. 
C)  Average cost information can help managers evaluate performance of the company or departments in the company. 
D)  Cost averaging should be used only for fixed costs,and not for variable costs. 
A)  Average costs should be calculated for a sufficiently long time period to capture seasonal fluctuations in costs. 
B)  Average costs are often more relevant for decision making than are actual costs. 
C)  Average cost information can help managers evaluate performance of the company or departments in the company. 
D)  Cost averaging should be used only for fixed costs,and not for variable costs.

Question 13

The contribution margin format income statement classifies costs according to their behavior patterns.

Accepted Answer

A) True 
 B)False

Question 14

What is the high-low method used for?

Accepted Answer

Answers will vary
The high-low

Question 15

Grant Company and Lee Company compete in the same market.The following budgeted income statements illustrate their cost s

Accepted Answer

(a)Grant Company income statement \[\beg

Question 16

Cool Runnings operates a chain of frozen yogurt shops.The company pays $5,000 of rent expense per month for each shop.The managers of each shop are paid a salary of $3,000 per month and all other employees are paid on an hourly basis.Relative to the number of shops,the cost of rent is which kind of cost?

Accepted Answer

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

Question 17

When using least-squares regression to determine variable and fixed costs,the r-square refers to the degree to which the change in the dependent variable can be explained by a change in the independent variable.

Accepted Answer

A) True 
 B)False

Question 18

A low magnitude of operating leverage is best for most companies.

Accepted Answer

A) True 
 B)False

Question 19

A cost that contains both fixed and variable elements is referred to as a:

Accepted Answer

A)  mixed cost. 
B)  hybrid cost. 
C)  relevant cost. 
D)  nonvariable cost. 
A)  mixed cost. 
B)  hybrid cost. 
C)  relevant cost. 
D)  nonvariable cost.

Question 20

Executive management at Ballard Books is very optimistic about the chain's ability to achieve significant increases in sales in each of the next five years.The company will most benefit if management creates a:

Accepted Answer

A)  low operating leverage cost structure. 
B)  medium operating leverage cost structure. 
C)  high operating leverage cost structure. 
D)  no operating leverage cost structure. 
A)  low operating leverage cost structure. 
B)  medium operating leverage cost structure. 
C)  high operating leverage cost structure. 
D)  no operating leverage cost structure.

Describe the steps in the high-low method.

A disadvantage of the high-low method is that the high point and low point may not be representative of the total data set available.

Select the term from the list provided that best matches each of the following descriptions.The first is done for you.

What is meant by the phrase,"relevant range?" How does the concept of relevant range affect fixed costs?

If the company's volume increases to 5,000 units,the total cost per unit will be:

When selecting the high and low observations under the high-low method of analyzing mixed costs,the selection should be based on the dependent variable (cost).

Assuming that cost behavior did not change over the two-year period,what is the company's annual fixed general,selling,and administrative cost?

The total variable cost increases in direct proportion to volume.

The BRC Company is considering the introduction of a new line of high end electronics.Because there is considerable uncertainty with regard to the demand for the products,the company would probably be served better by a variable cost s

Which of the following items would not be found on a contribution format income statement?

The excess of revenue over variable costs is referred to as:

Select the incorrect statement regarding the use of average unit costs.

The contribution margin format income statement classifies costs according to their behavior patterns.

What is the high-low method used for?

Grant Company and Lee Company compete in the same market.The following budgeted income statements illustrate their cost s

When using least-squares regression to determine variable and fixed costs,the r-square refers to the degree to which the change in the dependent variable can be explained by a change in the independent variable.

A low magnitude of operating leverage is best for most companies.

A cost that contains both fixed and variable elements is referred to as a:

Executive management at Ballard Books is very optimistic about the chain's ability to achieve significant increases in sales in each of the next five years.The company will most benefit if management creates a:

Management Accounting and Corporate Governance

Analysis of Cost,Volume,and Pricing to Increase Profitability

Cost Accumulation,Tracing,and Allocation

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, Process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters

Exam 2: Cost Behavior, Operating Leverage, and Profitability Analysis

Describe the steps in the high-low method.

A disadvantage of the high-low method is that the high point and low point may not be representative of the total data set available.

Select the term from the list provided that best matches each of the following descriptions.The first is done for you.

What is meant by the phrase,"relevant range?" How does the concept of relevant range affect fixed costs?

If the company's volume increases to 5,000 units,the total cost per unit will be:

When selecting the high and low observations under the high-low method of analyzing mixed costs,the selection should be based on the dependent variable (cost).

Assuming that cost behavior did not change over the two-year period,what is the company's annual fixed general,selling,and administrative cost?

The total variable cost increases in direct proportion to volume.

The BRC Company is considering the introduction of a new line of high end electronics.Because there is considerable uncertainty with regard to the demand for the products,the company would probably be served better by a variable cost s

Which of the following items would not be found on a contribution format income statement?

The excess of revenue over variable costs is referred to as:

Select the incorrect statement regarding the use of average unit costs.

The contribution margin format income statement classifies costs according to their behavior patterns.

What is the high-low method used for?

Grant Company and Lee Company compete in the same market.The following budgeted income statements illustrate their cost s

When using least-squares regression to determine variable and fixed costs,the r-square refers to the degree to which the change in the dependent variable can be explained by a change in the independent variable.

A low magnitude of operating leverage is best for most companies.

A cost that contains both fixed and variable elements is referred to as a:

Executive management at Ballard Books is very optimistic about the chain's ability to achieve significant increases in sales in each of the next five years.The company will most benefit if management creates a:

Management Accounting and Corporate Governance

Analysis of Cost,Volume,and Pricing to Increase Profitability

Cost Accumulation,Tracing,and Allocation

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, Process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters