Question 1

Consider the following linear mixed-cost function: Y = $72,000 + $7.70X
Where: Y = total annual maintenance cost
  What does the $72,000 represent?

Accepted Answer

A) variable cost per patient-day 
B) total variable cost 
C) fixed cost per patient-day 
D) total fixed cost 
A) variable cost per patient-day 
B) total variable cost 
C) fixed cost per patient-day 
D) total fixed cost

Question 2

Moonlight Motel's cost function is given as: Y = $50,000 + $7.50X
Where:
Y = annual custodial cost
X = number of guest-days of occupancy
In the current year,Moonlight Motel has 8,000 guest days.In the next year,Moonlight Motel expects an occupancy level of 10,000 guest days.(All costs next year will remain in the same relevant range as the current year.)What is the expected total variable custodial cost for next year?

Accepted Answer

A) $60,000 
B) $75,000 
C) $125,000 
D) $137,500 
A) $60,000 
B) $75,000 
C) $125,000 
D) $137,500

Question 3

________ and ________ rely on a logical analysis of the cost environment instead of an explicit analysis of prior cost data.

Accepted Answer

A) engineering analysis; account analysis 
B) activity analysis; account analysis 
C) visual fit method; high low method 
D) least-squares regression analysis; activity analysis 
A) engineering analysis; account analysis 
B) activity analysis; account analysis 
C) visual fit method; high low method 
D) least-squares regression analysis; activity analysis

Question 4

In a linear cost function,the constant or intercept measures variable cost per unit of the cost driver.

Accepted Answer

A) True 
 B)False

Question 5

Which statement regarding fixed costs is true?

Accepted Answer

A) Discretionary fixed costs preserve management's flexibility. 
B) Committed fixed costs preserve management's flexibility. 
C) Both discretionary and committed fixed costs preserve management's flexibility. 
D) Discretionary fixed costs limit management's flexibility. 
A) Discretionary fixed costs preserve management's flexibility. 
B) Committed fixed costs preserve management's flexibility. 
C) Both discretionary and committed fixed costs preserve management's flexibility. 
D) Discretionary fixed costs limit management's flexibility.

Question 6

A cost function is an algebraic equation used to describe the relationship between a cost and its cost driver(s).

Accepted Answer

A) True 
 B)False

Question 7

Yesterday Company used regression analysis to predict the annual cost of indirect materials.The results were as follows:   The linear cost function is ________ where Y = Total indirect materials cost and X = Number of units produced.

Accepted Answer

A) Y = $2.1876 + $9,960X 
B) Y = $11.75 + $14,885X 
C) Y= $9,960 + $14,885X 
D) Y = $14,885 + 11.75X 
A) Y = $2.1876 + $9,960X 
B) Y = $11.75 + $14,885X 
C) Y= $9,960 + $14,885X 
D) Y = $14,885 + 11.75X

Question 8

Understanding the relationship between costs and their cost drivers allows managers in all types of organizations to make proper short-run marketing decisions.

Accepted Answer

A) True 
 B)False

Question 9

During an engineering cost analysis,knowledge about new costs may be obtained from experiments with prototypes.

Accepted Answer

A) True 
 B)False

Question 10

Knowledge about relationships between costs and cost drivers is useful for managers to ________.

Accepted Answer

A) plan controls 
B) provide feedback to managers 
C) make decisions about the most efficient use of resources 
D) all of the above 
A) plan controls 
B) provide feedback to managers 
C) make decisions about the most efficient use of resources 
D) all of the above

Question 11

Step costs change abruptly at different intervals of activity.

Accepted Answer

A) True 
 B)False

Question 12

In an economic downturn,a company could temporarily reduce or eliminate ________.

Accepted Answer

A) depreciation expense on corporate building 
B) bond interest payment 
C) property taxes on corporate building 
D) advertising and promotion 
A) depreciation expense on corporate building 
B) bond interest payment 
C) property taxes on corporate building 
D) advertising and promotion

Question 13

A compensation plan where the sales force is paid salary plus commission is a ________.

Accepted Answer

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

Question 14

A cause and effect relationship between a ________ and a ________ is desirable in order to obtain accurate and useful cost functions.

Accepted Answer

A) cost driver; cost function 
B) cost function; resource cost 
C) cost driver; resource cost 
D) step cost; capacity cost 
A) cost driver; cost function 
B) cost function; resource cost 
C) cost driver; resource cost 
D) step cost; capacity cost

Question 15

Which of the following statements about step costs is FALSE?

Accepted Answer

A) If the individual chunks of cost are relatively large and apply to a specific,broad range of activity,the step cost is considered to be a fixed cost over that range of activity. 
B) When individual chunks of cost are relatively small and apply to a narrow range of activity,step costs are considered to be variable costs. 
C) Some step costs can be assumed to be variable costs for planning purposes with little loss of accuracy. 
D) Step costs are the same as mixed costs. 
A) If the individual chunks of cost are relatively large and apply to a specific,broad range of activity,the step cost is considered to be a fixed cost over that range of activity. 
B) When individual chunks of cost are relatively small and apply to a narrow range of activity,step costs are considered to be variable costs. 
C) Some step costs can be assumed to be variable costs for planning purposes with little loss of accuracy. 
D) Step costs are the same as mixed costs.

Question 16

The first step in estimating or predicting costs is cost measurement.

Accepted Answer

A) True 
 B)False

Question 17

Presented below is the production data for six months of the year showing the mixed costs incurred by Columbia Company.   Columbia Company uses the high-low method to analyze mixed costs.The total fixed cost is ________.

Accepted Answer

A) $4,000 
B) $4,500 
C) $10,417 
D) $10,500 
A) $4,000 
B) $4,500 
C) $10,417 
D) $10,500

Question 18

In the linear cost function derived from regression analysis,the cost driver is the ________ variable and the cost to be explained is the ________ variable.

Accepted Answer

A) dependent; independent 
B) independent; dependent 
C) fixed cost; variable cost 
D) mixed cost; dependent 
A) dependent; independent 
B) independent; dependent 
C) fixed cost; variable cost 
D) mixed cost; dependent

Question 19

The following data has been assembled for Lion Company.Use the high-low method.   The variable cost per hour is ________.

Accepted Answer

A) $1.52 
B) $1.84 
C) $8.64 
D) $10.40 
A) $1.52 
B) $1.84 
C) $8.64 
D) $10.40

Question 20

The decisions made by managers influence cost behavior throughout the entire value chain.

Accepted Answer

A) True 
 B)False

Consider the following linear mixed-cost function: Y = $72,000 + $7.70X Where: Y = total annual maintenance cost What does the $72,000 represent?

and rely on a logical analysis of the cost environment instead of an explicit analysis of prior cost data.

In a linear cost function,the constant or intercept measures variable cost per unit of the cost driver.

Which statement regarding fixed costs is true?

A cost function is an algebraic equation used to describe the relationship between a cost and its cost driver(s).

Yesterday Company used regression analysis to predict the annual cost of indirect materials.The results were as follows: The linear cost function is ________ where Y = Total indirect materials cost and X = Number of units produced.

Understanding the relationship between costs and their cost drivers allows managers in all types of organizations to make proper short-run marketing decisions.

During an engineering cost analysis,knowledge about new costs may be obtained from experiments with prototypes.

Knowledge about relationships between costs and cost drivers is useful for managers to ________.

Step costs change abruptly at different intervals of activity.

In an economic downturn,a company could temporarily reduce or eliminate ________.

A compensation plan where the sales force is paid salary plus commission is a ________.

A cause and effect relationship between a and a is desirable in order to obtain accurate and useful cost functions.

Which of the following statements about step costs is FALSE?

The first step in estimating or predicting costs is cost measurement.

Presented below is the production data for six months of the year showing the mixed costs incurred by Columbia Company. Columbia Company uses the high-low method to analyze mixed costs.The total fixed cost is ________.

In the linear cost function derived from regression analysis,the cost driver is the variable and the cost to be explained is the variable.

The following data has been assembled for Lion Company.Use the high-low method. The variable cost per hour is ________.

The decisions made by managers influence cost behavior throughout the entire value chain.

Managerial Accounting, the Business Organization

Introduction to Cost Behavior and Cost-Volume Relationships

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus

Relevant Information for Decision Making With a Focus

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 3: Measurement of Cost Behavior

Consider the following linear mixed-cost function: Y = $72,000 + $7.70X Where: Y = total annual maintenance cost What does the $72,000 represent?

________ and ________ rely on a logical analysis of the cost environment instead of an explicit analysis of prior cost data.

In a linear cost function,the constant or intercept measures variable cost per unit of the cost driver.

Which statement regarding fixed costs is true?

A cost function is an algebraic equation used to describe the relationship between a cost and its cost driver(s).

Yesterday Company used regression analysis to predict the annual cost of indirect materials.The results were as follows: The linear cost function is ________ where Y = Total indirect materials cost and X = Number of units produced.

Understanding the relationship between costs and their cost drivers allows managers in all types of organizations to make proper short-run marketing decisions.

During an engineering cost analysis,knowledge about new costs may be obtained from experiments with prototypes.

Knowledge about relationships between costs and cost drivers is useful for managers to ________.

Step costs change abruptly at different intervals of activity.

In an economic downturn,a company could temporarily reduce or eliminate ________.

A compensation plan where the sales force is paid salary plus commission is a ________.

A cause and effect relationship between a ________ and a ________ is desirable in order to obtain accurate and useful cost functions.

Which of the following statements about step costs is FALSE?

The first step in estimating or predicting costs is cost measurement.

Presented below is the production data for six months of the year showing the mixed costs incurred by Columbia Company. Columbia Company uses the high-low method to analyze mixed costs.The total fixed cost is ________.

In the linear cost function derived from regression analysis,the cost driver is the ________ variable and the cost to be explained is the ________ variable.

The following data has been assembled for Lion Company.Use the high-low method. The variable cost per hour is ________.

The decisions made by managers influence cost behavior throughout the entire value chain.

Managerial Accounting, the Business Organization

Introduction to Cost Behavior and Cost-Volume Relationships

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus

Relevant Information for Decision Making With a Focus

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

and rely on a logical analysis of the cost environment instead of an explicit analysis of prior cost data.

A cause and effect relationship between a and a is desirable in order to obtain accurate and useful cost functions.

In the linear cost function derived from regression analysis,the cost driver is the variable and the cost to be explained is the variable.