Question 1

A fixed cost within the relevant range

Accepted Answer

A)  increases in total as output decreases. 
B)  does not change in total as output changes. 
C)  decreases in total as output increases. 
D)  All of these are correct. 
A)  increases in total as output decreases. 
B)  does not change in total as output changes. 
C)  decreases in total as output increases. 
D)  All of these are correct.

Question 2

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

Accepted Answer

committed

Question 3

Figure 3-10.The following cost formula was developed using the monthly data for an accounting firm.Total cost = $87,100 + ($210 * number of tax returns)
-Refer to Figure 3-10. The term "total cost"

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

When the volume of activity increases within the relevant range, the fixed cost per unit

Accepted Answer

A)  decreases. 
B)  increases at first, then decreases. 
C)  remains the same. 
D)  increase. 
A)  decreases. 
B)  increases at first, then decreases. 
C)  remains the same. 
D)  increase.

Question 5

The high-low method is an objective method to separate the cost behavior of a mixed cost.

Accepted Answer

A) True 
 B)False

Question 6

Select the appropriate type of cost for each of the definitions listed below.
-has a discontinuous cost function

Accepted Answer

A) variable 
B) fixed 
C) mixed 
D) step 
A) variable 
B) fixed 
C) mixed 
D) step

Question 7

__________________________ is critically important in determining cost behavior and is by far the most widely used method in practice.

Accepted Answer

Managerial

Question 8

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 9

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

Accepted Answer

A)  is strictly variable. 
B)  is strictly fixed. 
C)  is a mixed cost. 
D)  is a step cost. 
A)  is strictly variable. 
B)  is strictly fixed. 
C)  is a mixed cost. 
D)  is a step cost.

Question 10

As output increases variable cost per unit will also increase.

Accepted Answer

A) True 
 B)False

Question 11

Select the appropriate type of fixed cost for each cost listed below.
-property taxes

Accepted Answer

A) discretionary 
B) committed 
A) discretionary 
B) committed

Question 12

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?

Accepted Answer

A)  $19,606 
B)  $19,556 
C)  $16,464 
D)  $18,546 
A)  $19,606 
B)  $19,556 
C)  $16,464 
D)  $18,546

Question 13

Cost relationships may change at output levels outside of the relevant range.

Accepted Answer

A) True 
 B)False

Question 14

A committed fixed cost

Accepted Answer

A)  can easily be changed. 
B)  often involves a long-term contract. 
C)  changes when the level of output changes. 
D)  all of these are correct 
A)  can easily be changed. 
B)  often involves a long-term contract. 
C)  changes when the level of output changes. 
D)  all of these are correct

Question 15

A mixed cost

Accepted Answer

A)  will vary in direct proportion to changes in output. 
B)  stays the same regardless of output. 
C)  has the same cost behavior as a step cost. 
D)  will decrease in total when output decreases. 
A)  will vary in direct proportion to changes in output. 
B)  stays the same regardless of output. 
C)  has the same cost behavior as a step cost. 
D)  will decrease in total when output decreases.

Question 16

The scatter-graph method

Accepted Answer

A)  displays a constant level of cost for a range of output. 
B)  has the advantage of subjectivity. 
C)  may reveal the presence of outliers. 
D)  all of these are correct 
A)  displays a constant level of cost for a range of output. 
B)  has the advantage of subjectivity. 
C)  may reveal the presence of outliers. 
D)  all of these are correct

Question 17

Select the appropriate item for each of the definitions listed below.
-its value depends on the value of another variable

Accepted Answer

A) dependant variable 
B) independent variable 
C) intercept 
D) slope 
A) dependant variable 
B) independent variable 
C) intercept 
D) slope

Question 18

Figure 3-2.  
-Refer to Figure 3-2. What is the materials cost per unit of output?

Accepted Answer

A)  $0.10 
B)  $0.20 
C)  $0.60 
D)  $0.40 
A)  $0.10 
B)  $0.20 
C)  $0.60 
D)  $0.40

Question 19

Which of the following would be an example of a fixed cost?

Accepted Answer

A)  wages for an assembly line worker 
B)  electric bill 
C)  depreciation on equipment 
D)  materials used 
A)  wages for an assembly line worker 
B)  electric bill 
C)  depreciation on equipment 
D)  materials used

Question 20

Using the high-low method, the calculation of the cost line uses the highest and lowest activity period.

Accepted Answer

A) True 
 B)False

A fixed cost within the relevant range

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

Figure 3-10.The following cost formula was developed using the monthly data for an accounting firm.Total cost = $87,100 + ($210 * number of tax returns) -Refer to Figure 3-10. The term "total cost"

When the volume of activity increases within the relevant range, the fixed cost per unit

The high-low method is an objective method to separate the cost behavior of a mixed cost.

Select the appropriate type of cost for each of the definitions listed below. -has a discontinuous cost function

__________________________ is critically important in determining cost behavior and is by far the most widely used method in practice.

Total variable costs

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

As output increases variable cost per unit will also increase.

Select the appropriate type of fixed cost for each cost listed below. -property taxes

Cost relationships may change at output levels outside of the relevant range.

A committed fixed cost

A mixed cost

The scatter-graph method

Select the appropriate item for each of the definitions listed below. -its value depends on the value of another variable

Figure 3-2. -Refer to Figure 3-2. What is the materials cost per unit of output?

Which of the following would be an example of a fixed cost?

Using the high-low method, the calculation of the cost line uses the highest and lowest activity period.

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

A fixed cost within the relevant range

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

Figure 3-10.The following cost formula was developed using the monthly data for an accounting firm.Total cost = $87,100 + ($210 * number of tax returns) -Refer to Figure 3-10. The term "total cost"

When the volume of activity increases within the relevant range, the fixed cost per unit

The high-low method is an objective method to separate the cost behavior of a mixed cost.

Select the appropriate type of cost for each of the definitions listed below. -has a discontinuous cost function

__________________________ is critically important in determining cost behavior and is by far the most widely used method in practice.

Total variable costs

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

As output increases variable cost per unit will also increase.

Select the appropriate type of fixed cost for each cost listed below. -property taxes

Cost relationships may change at output levels outside of the relevant range.

A committed fixed cost

A mixed cost

The scatter-graph method

Select the appropriate item for each of the definitions listed below. -its value depends on the value of another variable

Figure 3-2. -Refer to Figure 3-2. What is the materials cost per unit of output?

Which of the following would be an example of a fixed cost?

Using the high-low method, the calculation of the cost line uses the highest and lowest activity period.

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